It’s a whole new world facing the drinks industry and it is happening right now. This was Steve Donohue’s message to guests at Tuesday’s Drinks Association Network Breakfast when he presented and Pernod Ricard's Jeff McKenzie acted as MC for the morning.
As far as the “knowable horizon” is concerned, the CEO and Managing Director of the Endeavour Group suggested that businesses need to adapt, be ready for “the new”, integrate rich digital content as part of their strategy and most importantly, that they get interested in consumer data.
“Data is more important than ever before, because the way customers are shopping is changing faster than ever before,” Mr Donohue said.
In 2015, Endeavour Group were ranging 3000 new products a year. Today, it is ranging 11,000. Forty per cent of what the Endeavour Group sells in store today did not even exist eight years ago. The business is ranging 250 new lines a week and 85 per cent of in-store growth in the past three years has come from new products.
It makes new product development one of the most exciting parts of the business and the most challenging. The route and speed at which new products come to market is so quick, so different.
The consumption habits of the Milz are the driving force of this change. Milz encompass Gen Z and Millenials and is also known as Zillenials. They will account for half of Endeavour’s customer population by 2026.
These digital natives do not differentiate between the physical and digital world. It is all one and the same. They grew up on Netflix and Spotify: personalised consumption is their norm.
“They don’t wait to see what they like next, they wait to be told what to like next,” Mr Donohue explained.
They re-define convenience. It is not something they drive to, rather, “it is in their hand and on their screen,” Mr Donohue explained.
And importantly, their spending is in part guided by their conscience when it comes to sustainability and community.
“They will divert their spend based on how much you demonstrate you care and whether you are aligned with them when it comes to the way you offer your product,” he said.
It is an interesting combination: a population that is at once highly individualised, eternally connected as well as being community minded.
Endeavour Group is adapting to this shifting landscape quickly which means moving away from traditional marketing strategies. The business poured tens of millions into its digital capabilities to personalise the customer experience and improve its convenience offering via digital platforms.
But it is not just the Milz for whom convenience means right here and right now. The trend to indulgence as we emerge from the life changing experience of COVID means that:
“Everyone wants the best stuff, life is apparently too short and ‘I’d like it right now, thanks very much’,” explained Mr Donohue.
The physical store remains of paramount importance to the shopper experience in bringing the product closer to the customer, as well as establishing a presence in community and supporting the sense of connection which Mr Donohue says is central to Endeavour’s business motivations.
“The convergence of technology in the hand and in-store is bringing the store more to life,” he said.
He cited the example of electronic shelf labels which take people on tour through the store and explained that about half of the products sold by Endeavour – whether in-store or online - have been researched and contemplated in a digital environment prior to the point of purchase. To this end, he cautioned manufacturers, using wine makers as an example:
“And if you’re wondering whether you should have a different bar code for every vintage, and if it is anything that sells for over $20, I hope the penny is dropping. Because you’re just not going to be able sell product anymore unless you’ve got data in the product, in the platforms that people like us are enabling that allows the customers to make an informed decision about what you’re trying to sell.”
With six million members in My Dan’s all waiting for the next offer that’s going to come to them through personalisation, Endeavour’s data offering is substantial.
“There is a value exchange that is going on. They are willing to give us their information, if we are willing to use it effectively,” he said.
Endeavour Group is experimenting with its retail offerings from place to place and making visits an experience for consumers. The singular look to the franchise continues but with local permutations – and ‘experiments’ - such as the newly-opened premium Dan Murphy’s Cellar in Lane Cove, or its recent non-alc pop up store in Hampton which was not about selling non-alc drinks but reminding people that Dan Murphy’s are ‘the largest player in the non-alc category’, the fastest growing category in market.
On-premise, ALH has partnered with me&u’s ordering platform across all of its venues to gather data and be able to improve the personal experience for their consumer. It captures data such as what they like to drink with their steak – Pinot Noir or Shiraz, or when it is time for a birthday Champagne.
It is part of that “value exchange”.
In embedding itself as a community force for good, Mr Donohue did call out to the room for all drinks businesses to start owning their role in the responsible service of alcohol.
“For too long, we have thought that our obligation ends once we slap the label on the bottle or sell the product. But the world has changed. People expect us to be thoughtful beyond the sale of our product. And we’ve learnt that the hard way…We are tying to live our purpose by thinking about responsible consumption.
“It won’t be the slippery slope that tobacco went through if we genuinely recognise that we all have a role to play on the consumption side of the agenda. It doesn’t stop when you’ve sold it.”
“Better outcomes in communities” is something to really strive for; to educate communities, to partner with Drinkwise for example, in order to try to ensure the communities in which Endeavour operates are safer places.
That’s about as strong as connection with community gets.