RTDs: Kicking to victory

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Related tags: Alcopop, Rtds

It has been an interesting few years for Global Brands (GBL). The company started out in 1997 as a drinks distributor and then entered the...

It has been an interesting few years for Global Brands (GBL). The company started out in 1997 as a drinks distributor and then entered the ready-to-drink (RTD) market with its own brand, Vodka Kick (VK).

What has been very noticeable in recent years has been the company's desire to differentiate itself - moving away from RTDs to shooter brands such as Corky's and, perhaps most significantly, into imported premium packaged lagers. Here was proof, the industry suggested, of the market's slow but certain move away from the RTD.

And yet, as we stand in 2007, VK is one of the few long-term RTD success stories. While some may have dismissed it two to three years ago, the brand has managed to hold its own while many bigger names have imploded.

According to managing director Steve Perez GBL's internal sales figures show a seven per cent rise year-on-year, worth up to six million cases of VK annually. And it is increasing its market share - according to Nielsen statistics from May this year, VK is the only RTD brand, apart from WKD, to grow its volume share of the market year-on-year.

More than any other company GBL has proved that sticking to the very traditional values of RTDs (good times, parties and targeting the core crowd of 18 to 24-year-old drinkers) is a smart strategy; much more so than shouting about health benefits, or quality ingredients.

In the past year GBL has toured the country with its 'Vote for the three-day V Kend' promotion. The campaign kicked off with a 17-date city tour which saw the VK bus and promo team hitting towns and supporting up to 10 venues per night by giving out goodies, offering various promotions and essentially canvassing for a 'three-day V Kend'. And recently VK has furthered its connection with football through full shirt sponsorship of its local league team Chesterfield FC.

Here Steve Perez tells The Publican why VK has succeed where many others have failed.

1. Maintaining brand and price equity

"A lot of RTDs came out, like Bacardi Breezer and Smirnoff Ice, that were highly priced with high ABVs. The whole point of VK was to ask the question why should an RTD be any higher priced than PPLs? And we pitched it at that level.

"Of course, when the duty rise came in during 2002 a lot of these brands either reduced their ABV or the size of their bottles. We have always been the same and our brand integrity has therefore been maintained."

2. In it for the long-haul

"In 2001 and 2002 a large number of me-toos hit the market and they were mostly poorly marketed and there was no investment in them - they were all sold on price. So as soon as the market fell away they were never going to last.

"The market will not grow again as it did - I always thought it would find its own level and it has done - just like PPLs did before it. The category is not over. It will be around forever, but it just won't be as it used to be."

3. Not trying to be too clever

"We have stuck to our guns. We have not tried to be too sophisticated. We did bring in cranberry because the retailers told us we should - they said it was a popular flavour and a touch more sophisticated. The customers never asked for that flavour. And of course it bombed.

"We haven't introduced a new flavour for two years and things are going very well. There was so much experimentation in RTDs before but now people have gone back to the classics, the bestsellers: the Blue, the Ice and the Orange.

"I think it is very difficult for anyone new to come into the category right now - innovation is hard. I mean, if Diageo can't do it then no one can! [referring to the withdrawal of Quinn's].

"I just don't think that kind of sophisticated drink works in a 275ml bottle over the bar. You need to have a different style.

"You are trying to serve it in a sophisticated style, in a glass - but the product has no heritage! How can you make something sophisticated if it has no heritage?"

Related topics: Ready to Drink

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