PwC's Paul von Kesmark and Birger Maekelburger discussed recent consumer trends and implications for the drinks industry at The Drinks Association Network Breakfast on March 21.
von Kesmark has spent more than 20 years working in the retail and consumer goods sector, while Maekelburger is the Director Strategy & Retail & Consumer Goods at PwC and has 13 years of combined industry and consulting experience in retail and consumer goods.
von Kesmark outlined the top four things that PwC believes the drinks industry should address to face an increasingly complicated future with confidence and clarity.
"Consumers are demanding more choice, employees are asking for more from their employers, retailers are demanding more from their suppliers, producers are facing increased environmental and cost pressures, and technology providers are creating more tools and offering more capabilities," he said.
von Kesmark warned that consumer expectations are higher than the industry is currently matching. Customers are seeing new experiences and products at a much faster rate, while grassroots campaigns are becoming much more effective than large, expensive launches, which he described as "shouting".
"Shouting at the consumer occasionally with large launches means you leave long silences in between," he said. "Focus on grassroots engagement and building a conversation rather than shouting every so often."
von Kesmark said the power of the influencer will continue to grow and suggested drinks companies work with them more closely.
"Collaborate with them," he said. "Around 25% of the market is buying off the back of influencers. Talk to them about what their followers want that's new, there can only be advantages to that dialogue."
von Kesmark said constant innovation was vital to survive and thrive in the current consumer landscape. "You should be looking at doubling your NPD pipeline in two years and tripling it in three," he advised.
The carry-out: 4 things to do now
These were von Kesmark's four big suggestions for attendees at The Drinks Association Network Breakfast.
1. Fast brands - review your NPD pipeline and list all the gaps you would fill without constraints.
2. Innovation loves company - create a cross-functional forum and use design Thinking or another process-driven approach.
3. Structuring for speed - If you doubled your NPD pipeline, what would be the bottleneck? Now triple it.
4. Win in the boardroom - a mandate will be needed for change, and it starts with pitching a portfolio.
Don't overestimate the digital threat
Maekelburger focussed on global consumer trends and insights for liquor retailing. He said the online sales threat wasn't as strong for the drinks industry as other sectors, as customers still want interaction and advice about their liquor purchases in bricks and mortar stores.
To protect in-store sales, retailers needed to focus on increasing their service offering rather than relying on loyalty rewards.
He said there were four overarching trends in retail that are impacting the way alcohol is sold:
In an omni-channel shopping experience, customers expect the very best of the online and offline worlds, with 51% researching online before purchase, 56% shopping in store and being prepared to pay more for faster and more convenient delivery options.
Maekelburger noted that contrary to popular thought, Generation Z and Millennials aren't wedded to shopping online.
"They visit physical stores more regularly than the general population, with 62% visiting weekly," he said.
The top attributes customers were looking for in store were ease of navigation, followed by knowledgeable staff, convenient payment methods and a fun experience.
"They want to go to tastings, be invited to specialised events, visit festivals and attend masterclasses," he said.
Thank you to everyone who attended the Networking Breakfast.