The "P" word: value of a premium offer

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Lawrence Mallinson, managing director of soft drinks producer James White offers a powerful argument in favour of making your drinks range more...

Lawrence Mallinson, managing director of soft drinks producer James White offers a powerful argument in favour of making your drinks range more premium.

Mallinson, best known in the on-trade for his company's Big Tom tomato juice, doesn't profess to have all the answers to pubs' struggles in today's tough trading conditions, but what he will suggest is that going upmarket fits the bill for many.

Essential message

Premiumisation - it may be a horrible-sounding word, but this is the essential message he will put across. In keeping with the theme of the conference as a whole, Mallinson will look at how pubs are increasingly realising the value of soft drinks for which they may pay more, but which can in turn lure customers through your door and generate greater profits.

James White emerged from the ashes of a Suffolk-based insolvent cider company in 1989. The development of its range and the changing perceptions among trade customers to the company's products since then illustrates how the pub trade is turning round to this point of view, Mallinson claims.

There have been several key breakthroughs:

• Using buzzwords to set apart premium products - Mallinson entered the market initially competing against Appletizer with a range of apple juices.

"The problem was how do you introduce another apple juice which in fact is better quality but which says 'we're better and therefore more expensive', which the consumer will accept," he says.

At first, he tried to do this via marketing three freshly-squeezed apple juices, each made from individual varieties of the fruit - Cox, Bramley and Russet. But, he says, this proved "too complicated for the consumer to understand".

"What I found an easier sell was doing an organic apple juice. That immediately says 'this is a bit special'.

"They are buzzwords which enable the pub to put out the message that this is not just any old apple juice, this is a special one and that justifies a specially high price."

• In-pub marketing - "I found that almost nowhere sold Bloody Marys 10 years ago, when I first started marketing Big Tom to pubs. But the ones that did had a sign outside saying so. Ask them how much they sold, and they would tell you they sold absolutely loads of it.

"Other pubs just down the road from them with exactly the same clientele didn't advertise it. Ask them how much tomato juice they sold and they would say 'none, there's no demand'."

This demonstrates the effectiveness of simple marketing, and how easily customers can be persuaded to try new things.

• Cash margins - "Until about five years ago, I had issues with selling Big Tom to pubs.

"They would say 'you're asking me to pay 40 or 50p more a unit for this spicy tomato juice than I pay for my Britvic ones. What I do is I get my Britvic tomato juice in for 10p a unit, multiply that by 10 and sell them at that price. What you're asking me to do is sell Big Tom for £5 or £6 and nobody is going to pay that.'

"What some have shifted to realise since is that, once you've got the customer there, what matters is the cash margin, not the percentage margin.

"If you buy your Big Tom for 50p and sell it for £2, you've made a cash margin of £1.50. If you buy a Britvic tomato juice for 10p and sell it for 90p, you've only made a cash margin of 80p. The £1.50 cash margin is obviously better, cash margin being what you're banking.

"Managed pubs have realised that, but the general pub world is still grappling with it," he concludes.

Don't go downmarket

Mallinson clearly believes in the premium message and its value now. Prior to James White, he established Covent Garden Soups, a successful company based on a similar ethos.

As he points out, James White set out with its philosophy of quality and higher prices during the country's last recession - his messages are as applicable in the troubled economic times now as they were then.

While it might seem the appropriate tactic to cut costs when times are tough, Mallinson - like many in the trade - claims that the opposite may be true. He says: "The answer for some now may be to go slightly more upmarket.

"My instinct tells me that cutting prices and going downmarket is not the answer. Look at your consumers - they're not the same bunch of people as they were.

"The times, they are a-changing. I do believe that we are offering the right sort of answers to give some pubs opportunities."

Related topics: Beer

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