Marketing premium spirits

In this episode, Simon and Laura dive into the evolving premium spirits category to learn about the consumer motivations behind alcohol purchasing decisions. They are joined by Paul Thomas, International Insight Director and Global Head of Shopper Insight at Suntory, who shares insights on consumer planning, luxury goods spending, and brand marketing strategies. 

Paul discusses how consumer behaviour is shifting towards quality over quantity, the role of effective storytelling in brand marketing and authentic brand purpose in marketing. The episode also touches on how modern social trends influence purchasing decisions and how brands can navigate these changes.

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This is an 18Sixty production for The Forge.

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Transcript

Laura: Hi, I’m Laura Halliday.

Simon: And I’m Simon Garnett.

Laura: And this is the Persuasion Game, the Forge’s podcast about the art of persuasion and how it helps us to influence consumer behaviour, drive growth and be better marketers.

Simon: Each episode we speak to someone who uses the superpower of persuasion in their everyday lives, helping us understand what we can do to apply it to ours.

Laura: Well Simon, we’re in luck today — we’re talking all things alcohol. Good good, great time to be us

Simon: not going to lie. Good conversation topic, looking forward to it.

Laura: So let’s get real — when we’re in a restaurant trying to impress Mrs G as much as we can, what wine are we ordering? Are we going for the second cheapest on the menu?

Simon: Bail me out, why don’t you Laura. I mean, come on, all my secrets! Do you know what, it’s a really great question isn’t it, because there’s always that thing of the second cheapest so you don’t look like the cheapo. I definitely think there was a time when that would have been a consideration. I am not an absolute wine aficionado but I do quite like experimenting. So honestly, I’m one of those people that will ask someone — will ask what I want to drink.

Laura: Not too proud to ask.

Simon: Never too proud to ask. I mean honestly I have a little bit the same thing about when I’m ordering food — I’m like “well what’s best, you guys eat here every single day, you would know.” But I do think that’s really interesting — that whole point around social pressure, and again, particularly if you don’t really know what you’re making a choice based on. There are lots of categories where you just see all this choice and one of the questions I always ask is on what basis am I making a choice between paying, I don’t know, £20 or £40? It could be any category — £5 or £10, or 50p or £1.50. On everything that we do there are different reasons why we pay for what we pay for, but if you don’t know that, if it’s not a category you understand, then those decisions are pretty arbitrary.

Laura: Yeah absolutely. And it’s interesting to talk about that today because what we’re seeing is with core inflation being so high and people being very choiceful about where they spend their money, actually rather than it always being the second cheapest thing on the menu, as you say, some people are saying “I’m going to invest in having the most elevated experience that I can.” So whether that’s asking for advice and then paying £5 more, people are actually looking to maximise it because they’re setting it within a wider context of this being the little luxury that they can have. Interestingly, did you know it’s been disproven that the second cheapest wine is wildly overpriced?

Simon: Really? How interesting. I wonder whether it was true and now, as so many people know about it, whether restaurants and bars and pubs have said “well we need to change that.” I buy loads of my wine from Lidl where the prices are superb and they’ve got really easy ways to help people navigate what it is they’re buying — they’ve got their point score so you can see what you’re getting. And again, they’ve done such a great job of making it feel like yes, it’s that little treat, that little thing that’s available for you, but doing it in a way that feels accessible and doesn’t feel like something only a few people can have.

Laura: I think that’s a brilliant example because it’s somewhere where people are actually willing to spend more on wine, but the value that they’re tapping into is very different from perhaps historically what it might have been. It’s not the Threshers experience, it’s not the sort of concierge advice on wine — it actually is the quality. And there’s a sense of having hacked value in some way, by going in there and knowing that what you’ve actually paid for is the quality of the wine.

Simon: Yeah, rather than anything that’s just badge value or just unnecessary stuff. It makes you feel that what you’re paying for is absolutely the quality inside that bottle — and not just because someone’s got a bit greedy and decided to charge five times as much as the bottle’s worth.

Laura: And that’s something we want to talk about with today’s guest — which is that people are still spending on luxury goods. In fact, a 2023 Diageo survey showed that 22% of people were still investing in luxury goods, which is quite surprising when you think that core inflation was incredibly high and the cost of living was really making people in the UK feel the pinch. But to your point, what are they actually framing value as? It might not be going in and having that concierge experience with the wine expert. It might be being your own expert and really feeling like you’ve hacked the system to get better quality in the bottle itself. Talking about what levers to pull and what makes people feel like something is worth it is something we’ll be really interesting to explore today.

This episode we’re going to be joined by Paul Thomas, International Insight Director and Global Head of Shopper Insight at Suntory. He’s worked for Kinder Surprise, Ferrero, Johnnie Walker, Tanqueray, Guinness and Peroni, drinks are on him. He’s going to teach us all about how he’s on a mission to make consumer planning and insight the lifeblood of every business he works for, and also talk a little bit about how he sways audiences into the luxurious side of spirits. Both internally and with consumers. And as legal have kindly reminded us, when we’re talking about alcohol we will of course be talking about audiences of legal drinking age, including when we refer to Gen Z.

Laura: Paul, thank you so much for joining us.

Paul: Hi Simon, hi Laura, nice to be here.

Laura: Lovely to see you Paul. Tell us a little bit about your role at Suntory Global Spirits — what are you responsible for, what do you look after?

Paul: So I look after all the research for our EMEA region — in Suntory terms that means not the US and not Asia, but pretty much everywhere else. I also look after our global shopper capability, so I sort of have two hats but sadly I’m only paid for one role.

Simon: Them’s the rubs my friend, them’s the rubs. Start by telling us a little bit about some of the consumer insight and behavioural challenges that you look after.

Paul: I think those are really great questions. Currently within the alcohol industry you’ve got two big mega forces, two big sharks in the water. The first is health. People monitoring their behaviour, wearables, people more and more aware of their physical and mental health — which is obviously a huge positive but it’s a challenge for the industry. So a big behaviour change you need to try and get across to consumers is “well, alcohol can still be part of that lifestyle, but not perhaps the way it was 20 years ago.”

And then the second, yet to be alleviated by our new government, given time — is that it’s really tough out there. Across the whole world financially it’s better than it was a couple of years ago, but it’s much worse than it was before Covid. So alcohol is a discretionary purchase and you’ve got to try and make consumers understand why that should be part of their spend even though their overall spending ability is getting lower day by day.

Laura: You made a great point about cost of living and obviously that’s affected different markets in different ways. What are some of the levers that you’ve been pulling to try and persuade people to be part of that discretionary spend?

Paul: Well I think alcohol has an advantage that we often call it a “lipstick category” — in so far as however tough times are, you know, certainly my wife will still spend a lot of money on makeup and lipstick. However, tough times are! Alcohol is a little bit the same. Our job also, in the light of the challenge of people wanting generally to drink less as a pattern, is to try and persuade consumers to not think about volume and bang for buck, but to think about quality.

Laura: So you’re kind of pairing up the two challenges of increased moderation and trying to make that into a benefit for a premium proposition.

Paul: Well exactly, and to a certain extent we’d love to take credit but consumers do it for us. We are seeing huge trends in all food categories, as well as beer, where people are saying “look, I don’t just want volume — what I’m after is not ten drinks, it’s two really good ones.” There was a stat in some research I saw something like 70% of UK consumers would rather have fewer drinks but better ones. If you’d asked that ten years ago you could just about imagine it, twenty years ago — no chance.

Simon: And that leads to a really interesting question which is — how do you define better? What is a better drink?

Paul: Really good question. I think the first thing to say is better is entirely subjective. It’s the equivalent of your mum bringing out the better china — the china might still be rubbish but it’s better than what it was before. So everyone has their own version of premium. If you are at a certain point on the pricing ladder, just not buying the own label one is a premium purchase. If you are a highly wealthy person at the top end, suddenly $500 a bottle of whisky isn’t enough — you’re going to spend $1,000.

So first, it’s all subjective. Secondly, what are the levers that make people willing to spend more when it comes to spirits and beer? Because fundamentally, it all has the same end result. It’s all about working out what matters to people. Fundamentally, all premium really is — if you want to simplify — is being willing to pay more for something that matters to you. That might be for some people — and I’ll look at you Simon — a whisky that is net positive from a carbon point of view, from a sustainability point of view. You might go “actually that really matters to me, I’m willing to pay extra for that.” For other people it might be the provenance — it’s a whisky from the Philippines, I’ve never heard of that before, I’d like to try it. For other people it’s “I’ve heard it’s triple distilled, that means it’s purer.” For some people it’s the packaging — it looks nice. And then finally, what we mustn’t forget — alongside all those rational and thought-through reasons — there’s also just the fact that we all want to look quite good and project an image of ourselves. There are so many different reasons why people are willing to pay more. It’s just working out which ones your brand has a right to play with.

Laura: I was really interested in your point about anything better than own label being premium for some people. And actually what we’ve seen with a number of other categories is that people are very worried about private label because there’s a feeling of parity — once it’s been tried, you can’t put the genie back in the bottle. But it feels like alcohol has been quite resistant to that so far. And you also touched on a retail role — we were just talking about how much the retail landscape for alcohol has changed. Actually going to Aldi and finding a really great bottle of wine and feeling quite proud of that is something a lot of people can relate to. Do you think some of the cues and codes around shopper behaviour have changed when it comes to premium as well?

Paul: So we know from a lot of research we’ve done that the more you’re going to spend, the more research you do upfront. Without giving away any exact figures, I think you engage with double the number of touchpoints for a premium purchase in your total shopper journey, compared to a mainstream purchase where it’s much more “I’m going to get a basket, I’m going to find what’s on offer, if it’s an acceptable brand, kaching, put it in my basket, go home.”

Some shoppers buying at the higher end of spirits will engage with six, seven, eight touchpoints before they even go to the store. They’ll research online, go to the brand website, go to Amazon reviews. But yes, we are seeing more and more that you almost have to win with the shopper before they get to the supermarket. The average shopper has eight whisky brands in mind when they go to a supermarket. So number one, you’ve got to be in one of the eight — that’s already quite a big challenge because the average retailer might stock 100. You’ve got to be in the top ten. And then you’ve got to break through in store — you’ve got to have your fundamentals: distribution, availability, display and impact. And then you’ve got to give them a reason to buy you, and that’s more than just price.

Simon: So in terms of influencing and persuading that decision, it feels like there are an awful lot more different things that you have to line up. It’s not just a straight shootout when people are at the shelf – not just “I might try and influence decision A or B” – and  it’s all the groundwork you’re doing before they even get there.

Paul: The great news from a marketing point of view is it makes us be truly omni-channel. You can’t just think about your shopper strategy versus your consumer, or your ATL versus your BTL — you have to think “what’s the full plan to reach this person?” Because the second the decision comes down to only in-store, it becomes a shootout about price.

And we have seen that particularly in the world of beer. Here’s a statistic for you — 70% of Peroni is sold on deal in the UK. And that’s the most premium of most of the lagers. But people are so used to that category being price promoted that they just wait for it to be on offer and stock up. In spirits, yes there are brands that rely on promotional battles – Gordon’s versus Beefeater, Smirnoff versus whoever else, all the vodka brands – Absolut. But the higher you go, the less important price and promo is. Doesn’t mean it’s not important, doesn’t mean turn down a brand because it’s on promo — but you’re not so reliant on it.

And that’s good, because the second you get into that point — I can tell you as a confectioner when I worked at Ferrero, in order to sell in the discounts we didn’t make any money on any chocolate we sold. When I’ve worked for beer companies your margins get down to single digits just so you can sell on promo, and then you’ve got to pay the privilege of being on promo in those retailers as well. So the more you can do to build brand equity upfront, the more that hopefully when the shopper gets in store that mental availability will hold. Provided you’re there, at an acceptable price point and visible, you then hope they’ll go on to pick you.

Simon: One of the things I always think is fascinating in this world, particularly in the premium spirits world, is that you’ve absolutely got an audience who — for want of a better word — love geeking out on this. They love the stories, the provenance, the backstory, the history, the absolute nuance — and there’s a language that comes with that which frankly is pretty inaccessible to the average person. But that’s such a core of fandom. And yet, as you’ve said yourself, you’ve also got a load of people that probably are buying it because of how it might look, because it looks quite cool, great packaging and so on. How do you go about balancing that persuasion when at best you’ve got audiences influenced and persuaded by different things and possibly at worst, the thing that persuades one audience almost alienates the other?

Paul: Look, I’m going to give you an example of a brand here – which is Monkey Shoulder – which has come through a massively disrupted whisky. If you look into it, it’s got all the credentials of anyone out there, it’s a fantastic product. At the same time it is fun, it appears at music festivals, it’s done all the activations. And also let’s not forget the most important thing – it tastes bloody nice.

For most people – and there might be some exceptions where there’s actually a benefit in tasting a bit challenging because you want to be able to say you can do it – but for 99% of people, the number one reason they want to drink is because it tastes good. So the way to appeal to everyone is by never forgetting to remind people how good it tastes. Because the purchase frequency for a bottle of whisky is less than once per year in a retailer — so don’t assume that people remember exactly how it tastes. Tell them. Smoky, subtle, honey, vanilla, whatever it might be.

Plus, make sure you have beautiful packaging. I think the whisky category for many years forgot the need to look good. All the semiotics of the packaging was identical. You’d have white label, black or blue font for the brand name, aged 18 years, picture of a deer or some rolling Scottish Highlands, and then something indecipherable about where it was built. All the brands looked like that. Now you see much more cut-through in terms of trying to be different and engaging. So yeah, I think whisky, I hate to say it, a traditionally dusty old man category is having to dust off its smoking jacket and get some more modern threads, and try and appeal to more people through how it looks and feels as well.

Simon: Like one of your legendary flowery shirts, Paul.

Paul: Well, that is a niche audience!

Simon: But on a more serious note, what it does make me think — and this is really interesting — is this idea of breaking the rules, of standing out and persuading by doing something completely different to what other people do. And I guess whenever a brand or business tries to do that there’s enormous risk, but potentially enormous upside because you might be able to completely stand out and do something nobody else has done. But with that some significant risk

Paul: Sipsmith has a wonderful story about being the gin which started the craft revolution, because it was the gin brand that appealed to the government to repeal the old gin production laws. Right back to the 1700s, gin was prohibited to be produced above a certain amount because basically you had people, probably like me, producing really dodgy, really dangerous high ABV stuff — so the government banned it. You’ve seen the paintings of Gin Lane, that’s where all that comes from. So it was Sipsmith that came along and overturned this. It was rebellious, it started the craft revolution, then it didn’t tell anyone about it. Twenty years later, it still hasn’t told people about it.

And I think often what I observe in marketing isn’t a willingness to take a risk — it’s a willingness to be proud of it and tell people about it. That “under the bushel” thing that so many marketers have, like “people won’t want to hear about that” — consumers are desperate to hear something different because they hear the same thing all the time.

The honest truth is there are very few brands that do take risks, is the honest truth. Most play it safe and they’ll either grow with a category or decline with a category, and they’ll get lucky with their pricing and promo strategy. You could take Guinness as a brand that does break the rules and do things differently — but outside that and the Sipsmith example, there are very very few honestly.

Simon: That’s really interesting — the point you make about brands not perhaps feeling confident or willing to tell their stories and their truths that they have. Why do you think that might be? Is there a fear, a reluctance?

Paul: There is no one more bored than a brand marketer. A brand marketer every day reads their brand DNA documents — they do a hundred documents that have got their brand logo on it and talk about their brand history, so they know it inside out. They forget that consumers really don’t. And the number of brand stories that any of us have got in our heads is minimal.

How do you build brand stories? You keep telling them and you’re consistent. But you’ve got all these wonderful stories and they’re hidden at the back of a brand document. So you’ve got marketers who think everyone knows it, marketers who get bored of the same campaign, and then finally creators who don’t push it. So you end up with either big brand purpose ads, or generic stuff, or stuff that changes year on year.

Laura: I wanted to ask about reaching people through new channels and thinking about reaching new audiences. I’m trying to remember the exact expression but essentially when people take photos of their food they say “the camera eats first.”

Paul: Well, I mean, let’s talk about cocktails. We did some research in Germany, Spain, the UK and Australia. In those markets over 70% of cocktail drinkers regularly posted pretty cocktails on Instagram. They’re never going to post the bottle. Our equity is built to a large extent in the on-trade, right? You try it, it’s beautifully served by an expert mixologist, or maybe you take part in a fantastic activation with the brand, and that builds a memory structure that then helps you overcome that barrier. So seeing it on social media, seeing a beautiful cocktail — a really good example of it done very simply was Gordon’s Pink. Sadly, it wasn’t my innovation when I was at Diageo, I was on Tanqueray, the second biggest. Gordon’s was the first – the buggers.

Simon: Pipped at the post. Unlucky.

Paul: It was a category that kind of lost its va-va-voom in many ways. Lots of people like pink — you’ve only got to see the recent success of Barbie as a film. Simply by creating a beautiful pink drink that you could make at home — pink gin and tonic, slice of something, in a beautiful round glass — that’s Instagrammable. Glassware is another absolutely fantastic way that we can do it. Beer does it better than spirits but it can also be done through spirits. If you want people to take photos of you, make it beautiful — it’s as simple as that. And there are very few more enjoyable things that we can talk about here than good food and good drink. You want people to know that you’ve got a beautiful cocktail. So as an industry we’re in a really good position to leverage that kind of social currency and social trends.

Laura: Thinking about social currency — it feels like status and what is prestigious has evolved a lot, especially when you’re talking to Millennials or legal drinking age Gen Z. How is status seen today and how does that inform what you do in your marketing?

Paul: Whisky traditionally is stuck in old world status — we all know that. However, what we shouldn’t forget is that Gen Z and younger Millennials grew up in the social media age and they have more abilities to project status than anyone ever did before. Now every day, if you want to, you can show people how good your life is.

So there’s often a misassumption about Gen Z — that they’re all into community causes, it’s all very ethical and equitable. They are a generation that has the capability to project status more than anything else. Being a brand associated with the right social cause is a projection as well, and brands can do that really well and really authentically. To name an example, Talisker from Diageo does a huge amount of work about reclaiming rubbish in the sea. They can do that because their distillery is built on the sea and it’s integral to it. So that’s another way of building status now, it’s associated with the right important causes.

But by God that can go wrong. I’ve been in boardrooms and meetings where people go “right, how do we target Gen Z, how do we get them to hold our brand up?” And about five years ago the answer was “we need to tell them about our brand purpose.” And then the next comment in the room was “well what the hell is our brand purpose — we haven’t got one, let’s make one.” And I’m not really exaggerating that there were so many attempts to try and build status through “aren’t we good, we’re doing this, we’re saving that.” And I think consumers could see through it. Status might be changing, alcohol still has a role to play in it, but what it can’t try and do is bandwagon on different causes to try and get status.

Laura: So clearly you’re not afraid to speak truth in a situation in the interest of the brand or in the interest of consumers. Can you give us some war stories about the art of persuasion internally when a lot of stakeholders are invested in maybe a particular outcome you’re not sure about?

Paul: No, what I’m here to do is help you make it brilliant. Because if I help you make it brilliant — this is what happens to your brand equity, this is what happens to your market share, this is the return on investment you get. So by flipping it from “I’m here to be the school teacher and pass or fail your research” to “we’re on the same boat mate, we’re going the same direction — there’s an iceberg over there, I can either tell you there’s not one or I can help you change the direction of the wheel – what do you want me to do” — once you start working in that honest, brand-centric way, people will forgive you if you’re sometimes a little bit too honest or too flowery in your language and feedback.

Laura: It’s really interesting to hear you say “I’m working in the interest of the brand” — because I feel like perhaps in research there’s a “we’re the voice of the consumer” which almost sets up a bit of a tension of “therefore we just need to persuade the consumer.” Whereas actually what you’re saying is we’re all pushing in the same direction.

Paul: If you want to be objective you can just use your agency. Our job is to take the new data or insight we have, pass it through the filter of what we know and what we’ve done before and what we understand, and give a data-based argument to our marketers. Objectivity is something I don’t want from anyone, I want people to have opinions. Otherwise you might as well just give people an Excel sheet.

Simon: I remember once being given some feedback when I worked client side. I was doing a sort of innovation role and I was given feedback that our job was not to sell. And I couldn’t have disagreed more. I mean our job absolutely is to sell, our job is not to lie, or hoodwink or sell snake oil.

Laura: What was your job meant to be then, if it wasn’t to sell?

Simon: The feedback I got was “you’re just there to be objective and present the facts.” And I’m like, no — my job is, well, back to the whole point of this podcast — my job is the persuasion game. But exactly as you say Paul, you can’t persuade if you don’t have the reality, the evidence, the proof, the data, the fundamental understanding of what’s going on.

Paul: It’s exactly that. And fundamentally, the agencies I work with that I have the best success with are the ones that understand that I’m not paying them for objectivity — I’m paying them for their opinion. An opinion which has been formed using data and research.

Laura: Yeah, Fantastic. Are there any particular research capabilities or new ways of discovering things that you’re particularly excited about and why?

Paul: I think this industry needs to stop magpieing — as in going for every shiny new thing. Now, I have been an early proponent of AI in a lot of work that I’ve done. I’ve done online qual, I’ve done so much award-winning stuff no less using AI. However, very often the best research is a good moderator sitting in a room, engaging with people who have been recruited well, having a brilliant conversation, leaning in, looking at the eyes, reading the body language, coming in and debriefing face to face.

I had a face-to-face debrief this morning before coming here — I can’t tell you the last time I had one. The power of it, everyone was listening, everyone was engaging, no one was turning their camera off to make a cup of tea or scratch their arse or, frankly more often, write an email. Everyone engaged and leaned in and listened and it was brilliant.

So what I’m excited about is that new tools will come and they’ll be integrated into our toolkit, but we won’t forget the basics of what makes insight special which is insightful people taking you through insightful decks in an interesting and engaging way. I wish we’d all remember that’s what we’re here for sometimes.

Simon: Love it. Brilliant. Paul, no doubt we could continue chatting long into the evening over a few glasses of spirits and mixers no doubt, but we’re going to have to call it time. Thank you so much for joining us today — it’s been brilliant and incredibly insightful as always.

Paul: Thank you, really great to see you guys.

Simon: So Laura — absolutely fascinating chat from Paul. Always a man with a strong opinion, an opinion almost as loud and extroverted as his shirts. Paul obviously comes from quite a marketing background, so that is his world of marketing and insight. But there are a couple of things that I thought really stood out to me today and have an applicability beyond the world of just brand marketing.

One of the things I’ve really taken from this that I want to talk about is this point around boredom — about telling your story and consistently telling your story, and that as individuals we think people are bored of stuff way before they actually are. I’m doing a piece of pro bono work for a charity at the moment, just looking at some of their marketing materials and stories, and one of the things that’s so interesting is that there’s this incredible richness to the personal story and the mission that, because the founder is so close to it and sees it on a daily basis, it’s almost become wallpaper to them.

Laura: I’ve seen that before, with founder led businesses where people are like “ I don’t want to know about that, I’ve talked about that already.” And you’re like — I’ve never heard it, and you’ve been going 20 years, so clearly you haven’t done it as much as you thought you had.

Simon: And that power of human connection — there’s an individual and a story, and in a world where there’s quite a lot of cynicism about corporates being big and soulless and not for people like me, these human stories that are there are just hidden in plain sight. I thought it was fascinating — Paul’s view, and I have a lot of time for it — that we just get bored of it ourselves and assume because I’ve heard it a lot that everyone else has heard it a lot and everyone else is bored.

Laura: Yeah, consistency. The one that made me want to stand up and clap was when he said “we’re meant to be invested, we’re meant to have a point of view, and that point of view is to make the brand grow.” I do think there’s a danger, certainly in the world of research, that because we want to demonstrate robustness we sort of fall into this lens of consumer purity, and that gets muddled up with total objectivity — “I’m just here with the data.” No, we’re here to sell. We’re all here to sell. And actually saying “I’m as invested as you are in making this brand really strong” is a really interesting way of navigating out of those conflicts between departments. So I loved that.

Simon: Loved it. Brilliant.

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