Ireland gets lucky as the LMG family descends on Dublin

SHANE T WILLIAMS REPORTS ON THE ANNUAL LIQUOR MARKETING GROUP CONFERENCE IN DUBLIN.

More than 230 delegates from the Liquor Marketing Group (LMG) gathered in Dublin last month for the group’s annual national conference. With a number of business sessions, visits to the Guinness Storehouse, Jameson Bow Street Distillery and a gala dinner at the Slane Castle, the conference was an opportunity for the LMG family to come together, learn, network and enjoy the city of Dublin.

LMG CEO Gavin Saunders speaks to delegates at the opening business session

In his opening address LMG CEO Gavin Saunders announced that the theme for the 2018 conference was ‘shopper first’, which he said was a reflection on how LMG sees the market.

Expanding on the ‘shopper first’ theme, Saunders said there’s a terminology floating around called new world retail, which has some negative connotations because it involves change. The speed of change in the market is daunting but putting the shopper and experiences first is where retailers need to be.

“This is a continuation of change that’s been happening over many years and it’s our responsibility at LMG to adapt and meet shopper demand. It’s not a revolutionary change from a retail perspective; it’s more the evolution of the shopper,” said Saunders.

The challenge is e-commerce and it’s happening right around the globe and it’s happening quicker and quicker in the Australian market.

Mick Tait, Clive Johnson, Ben O’Callaghan, Scott Hogan, Ben White & Marty Smith at the Jameson Distilery

“While traditional bricks-and-mortar retail has been impacted by digital disruption from the likes of Amazon, Australian liquor retailing is not immune,” said Saunders. He said. “Examples like Dan Murphy’s has ‘click-and-collect’ and 7-Eleven’s recent investment into Tipple highlights the emergence of technology disruption in liquor retailing. Convenience retailers have applied for the right to sell alcohol numerous times, we need to vigilantly review advancement of examples like Tipple as this may be an alternate method entering the market.”

Saunders updated that LMG is providing its members the ability to meet the challenge and evolve with the shopper need through the launch of the Bottlemart/Sip’n Save e-commerce platform, including web ordering, app and integrated delivery solution in as little as one hour. Saunders said “e-commerce is complementary for bricks-and-mortar retailers and meets the needs of the shopper,” and that “initial results of the Brisbane trial were positive and LMG would be rolling out the e-commerce platform nationally”.

He went on to say that the evolution of the shopper has evolved from buying commodities to goods to services and now to experiences. Saunders used the example of the coffee bean as a commodity, instant coffee as the good, a take away coffee as the service and Nespresso as the experience. He added that people will pay well over the odds to buy Nespresso due to the experience element.

Faye Hartley, Carol Negline, Kim Coleman and Jane Crosbie at the Jameson Distillery

Damien Page, Glen Scarlett, Aneka Taylor and Scot Hayman at Jameson Distillery.

Taking it back to liquor retailing, Saunders said: “Our industry sells fun in a bottle, cask, or a can. We are better placed to find that connection, we are better able to service our customers and provide those experiences and earn the premium consumers will pay.”

Saunders also questioned what has driven the shopper evolution, he told delegates: “It’s a shopper need, the shopper need defines the retail evolution and that selling of a commodity in ‘new world retail’ will be challenging. If you’re just selling a commodity on a shelf with a price then this is not going to cut it given the current market price transparency.

“Experience equals value and bricks-and-mortar are able to provide those experiences. If you think of the interaction between a consumer and an online retailer they can’t possibly get that connection.”

So putting the ‘shopper first’ and providing great customer service with excellent retail execution, speed of service and marketing and promotions which champion brands engages the consumer coupled with e-commerce, provides a great shopper experience.

LMG EXPERIENCES GROWTH IN EVERY STATE AND EVERY CATEGORY

In a challenging retail environment LMG has achieved an average national growth rate of 4.5 per cent, with growth coming from all states and territories and all major categories.

“Not only is it growth, it is good growth from five consecutive quarters across all states and all major categories,” said Saunders as he opened the first business session.

Saunders said: “We’ve had to fight for every single percentage point of growth over the past few years and this is a fantastic result. There’s not just one state driving growth, all states are contributing which at times can be challenging given external factors that can influence individual states and territories”.

Saunders told delegates that packaged beer, bottled wine, spirits and RTD were all in growth, in all states and were tracking ahead of the industry average.

Matt McEvoy, Wayne Bayfield and Gavin Saunders watching the Wallabies at the Ferryman Hotel in Dublin

Aaron Dewar, Elena Lees, Frank Palumbo & Rob Lees

“Having consistency of growth across all states and all categories has not come by buying volume or pushing individual categories, it’s come from the continual evolution of our programs. Our programs are working well and we’ll continue to focus on them over the coming year.” From a head office perspective, Saunders said that for F18, 62 per cent of all revenue will be invested back into the business of driving our members’ performance. This means greater support for members, more funds for marketing programs, advertising, go to market strategies, fitouts, pricing and rebates.

He said that LMG has been able to rationalise its overheads as well as maintain and support the national field team. He emphasised that LMG is a membership-based group and their focus was on supporting members, not on making profits at head office.

Saunders said that marketing investment for F18 was up 33 per cent and as their competitors pull back, LMG had never been in a better position to prosper, to amplify and up-weight their programs.

Saunders said the group was in good health holding approximately eight per cent of the off-premise retail market, had 750 premium outlets and was growing by 4.5 per cent. He went on to say that given their current platform and momentum, along with an additional 10.9 per cent investment in FY19 he was comfortable to say that growth next year would be much higher than four or five per cent.

LMG MARKETING UPDATE

The Head of Merchandising and Marketing Damien Page spoke to delegates about where growth was coming from and how LMG plans to continue to grow. Page told delegates there would be a renewed focus on key trading periods; he flagged Shopper Tracker performance results which highlighted that Bottlemart/Sip’n Save continue to lead convenience liquor retailers in price perception, premium execution and overall shopper satisfaction. He also said that LMG’s strong performance had been achieved through their strong category programs and identified additional opportunities for members to grow.

Winning with the shopper was the opening message from Page. He highlighted how LMG had continued to outperform in key areas and plans to continue to increase its investment ahead of its competitors with additional support on advertising and price support where required, as well as effective category strategies.

Page said that LMG will continue to invest in press, catalogue, social and digital media ahead of the 33 per cent increase in investment they spent last year. In terms of priorities, he said the most critical element for LMG was to win during the key trading periods throughout the year.

LMG delegates enjoying the Dublin pub crawl.

“We need to be winning throughout the entire year, but particularly at key selling periods, and we’ll continue to up-weight and amplify our marketing plans with social and digital so that the year ahead is about being ‘always on’.”

Page discussed the challenge independents face every year around key trading periods, saying that twice a year the gap in market share between the chains and the independents widens.

He said that LMG will target ‘once-a-year’ or occasion-based shoppers and pull them away from the chains and into LMG bannered stores. LMG plans to add additional catalogues and leverage its strongest platforms as well as promote with additional national press to reverse this market share divergence over those periods.

SIP’N SAVE TURNS 40

The South Australian-based banner group Sip’n Save turns 40 in 2019 and Page told delegates there will be a big celebration to mark the milestone in May next year. There will be additional media coverage across both print and digital, as well member and consumer events. Page also said they are working on a number of retro pack promotions over the period.

“This brand is an absolute powerhouse; it’s a leading SA independent with 20 per cent market share. We really want to celebrate what is an iconic South Australian brand,” said Page.

Gavin Saunders, Elena and Rob Lees, Craig Power and Doug May at the Nancy Hands, Dublin

OVERALL CATEGORY PERFORMANCE

With all major categories at LMG in growth, Page spoke about some of the factors that contributed to this success. Premium programs as well as pack formats have helped deliver growth.

“While there is only a small portfolio of brands in the premium spirits program, it’s driving 18 per cent of total spirit growth. Further growth has come from one litre full sized bottled spirit (FSBS) growing at 33 per cent while Bourbon and gin are outperforming the rest of the market in every state.”

After a number of years in decline, the RTD category is back in growth and Page told delegates that Bourbon and Coke RTD, NPD and 10-packs were ahead of market and extremely positive.

“Sixty-six per cent of growth from RTD is coming from 10-packs, we got onto this early as a business and we’ll continue to refresh those units to make sure we’re creating activations around 10-packs,” he said.

Page also said that 56 per cent of growth had come from NPD and that five of the top 10 performing NPD were in 10-pack formats. He said that LMG over-indexed compared to the rest of the market in 10-packs and are often first to market with NPD.

In the beer category Page said that contemporary beer has been the driving force for growth in the overall market and that LMG was in a good position as it also over-indexed in this segment.

“Great Northern has been a huge contributor to this success. We have over-indexed in contemporary beer for as long as I can remember. We have an exclusive pack with Great Northern and this has contributed to it being our number one beer brand growing at 51 per cent.”

Craig Power, Andrew Negline, Paul Crosbie & Matt McEvoy

On the craft beer front Page told delegates that members should expect to see a new Craft Beer Program presenter with supporting point of sale updates shortly that will further lift this category.

The wine category is the single biggest opportunity to drive profits for members and the premium wine program aims to improve category performance. Page said that when the average shopper basket includes a brand from the premium wine program, the size of the basket increased by 60 per cent.

“Over the last three years the program has doubled in size, with half of our bottled wine growth coming from the program. It isn’t just about getting the ranging right or the distribution right, it’s about how we can take it to market and get more shoppers in.”

THE VALUE EQUATION

LMG will be trialling a new marketing and point of sale program in Queensland around the ‘value equation’. Page said shoppers need to be able to identify value and easily evaluate what they are saving.

According to Page, with effective in-store ticketing 26 per cent of shoppers will buy more than they intended while 23 per cent of shoppers will buy something different or not on promotion. LMG plans to identify these value equations, trial them in Queensland and if they get the results they’re looking for they’ll roll it out across the country.

USING DATA TO BETTER UNDERSTAND YOUR BUSINESS

Data continues to play a key role by providing insights at a store, state and national level. LMG Data and Insights Manager Ben Kizny Gordon addressed delegates on how they use top line data to better understand their business. “Using data to make decisions leads to better outcomes. The better information we can get internally, the better decisions we make. We can go back and see what has worked and what hasn’t worked and that leads to better outcomes.”

Manuel & Nitsa Kotis, Dom Condo, Faye Hartley, Heather Condo & Brooke Hartley

In a rapidly changing retail environment Kizny Gordon says the world is “changed by your example, not by your opinion. We need examples of what works and what doesn’t, it’s no good having an opinion on why it will or won’t work. We want to prove it, evaluate it and make sure it works”.

LMG category managers in each state have access to this information to help better plan promotions. “They are able to see how well a promotion is working, understand when products sell, what time of day and what day of the week. We can start to get a feel for the core metrics, what’s driving growth. Was it more shoppers coming through the door or was it an increase in spend?”

Kizny Gordon uses the Premium Wine Program as an example on how data can be used to see how a program is performing. Data shows a significant increase in the ‘per basket’ spend when a wine from the program is included in the basket. He added, “Clearly they are buying more than just one bottle of wine; they’re buying a few other things. We know when we bring a more valued shopper in they want more than that one ranged product”.

Using data to analyse the premium wine program, LMG continues to experience an increase on the average wine spend, this went up 17.4 per cent on last year. “We are premiumising our wine consumers. When a shopper comes in to buy a bottle of wine we are doing a good job at moving them up the scale and encouraging them to buy a more premium bottle of wine.”

LMG Chairman Wayne Bayfield and CEO Gavin Saunders at the gala dinner hosted at Slane Castle.

The use of data on a national scale allows LMG to build a profile of what a premium wine shopper looks like, what products they are more likely to buy and what products they are less likely to buy. “The shoppers we bring in-store to buy from the Premium Wine Program are a more valued shopper and when they spend additional dollars in-store, it’s spent on buying other premium products from other premium categories.”

Insights can also be gained from other LMG programs like spirits and craft beer, “when we look across all these programs, not only are they bringing more valued shoppers in-store, their basket sizes are getting bigger, they spend more, buy additional products and are more likely to buy premium products from other categories”.

Kizny Gordon said that data and analysis is also used to support individual LMG members with their sales performance, stock holdings and promotional effectiveness. Getting these national and store level insights from stores nationally allows LMG to better plan their promotional activity and support members.