Drinks de Luxe

Predictions of economic growth bode well for the luxury sector with key markets such as China and India doing well. So how can drinks brands maximise their luxury appeal? asks Robyn Lewis

I was sitting in my dining room last Saturday morning having a little luxury moment of my own prior to spending my afternoon writing this very article (they say time is the new luxury, after all). I had a steaming cup of single-estate Costa Rican coffee, a pain au chocolat that had been purchased from Maison Blanc that very morning, a pile of the weekend newspapers and (okay, I admit it, though this will bring the tone down) a copy of Heat ready for my perusal. I was, indeed, enjoying a bit of the good life and, on opening the first of the newspapers, I discovered I could expect to be doing so for the foreseeable future.

“Feeling prosperous this morning?” asked The Guardian. “You certainly should be, at least according to the FTSE 100.” It transpired that the traditional barometer of UK business was on its best form since the summer of 2001 – pre 9/11. And further good news came from an edition of the FT earlier in the month which quoted HSBC in an article on luxury goods group PPR (owners of Gucci, Yves St Laurent and Bouceron, among others) forecasting that “between 2004 and 2009 the US would enjoy an annual growth rate of 12%, compared with 9% globally”. Apparently, this is a situation the big European luxury goods groups could take advantage of as, “18% of their sales on average derive from the US”.

So it seems the luxury sector is looking buoyant with key markets like China and India also doing well. But has this translated into growth for the luxury drinks sector as well, or have health concerns and the obesity crisis emerging in the West confined luxury growth to the shoe and handbag sector?

Well, it seems not. Thankfully, for those of us in a trade that relies on alcohol sales, higher priced luxury and prestige drinks are looking good. “Yes, the market is strong and in growth,” confirms Jean Noel Girard at Champagne Devaux. “Champagne, as the ultimate luxury drink, is still experiencing good growth and there continue to be premium versions of drinks being brought to market, whether that is beer, vodka or whisky, which reflects well on the premium sector of the market.”

Cautionary note

But Girard’s rosy outlook is tempered with a cautionary note. “We still have to be careful as we grow,” he says. “While we are finding future growth, luxury brands must be careful to balance the need to give consumers more access to the product in the right sort of environment, but at the same time not to devalue it, as happened with brands like Burberry or Calvin Klein, who stretched their brand values too far, and, as a consequence, their image suffered. 

“People expect the whole experience around buying a premium product to be constantly luxurious,” he continues. “Ranging from where you buy it, how you buy it, who sells it you, who delivers it to you, how it looks and the after-sales experience. A slip-up in any of these affects the overall brand image. We focus on hand-sell environments for these reasons, where the inherent quality of our product can be explained and/or endorsed at point of sale.”

Tinned tomatoes

Does this mean then that the current area of growth in retailing – the big multiple grocers – will not provide an area for expansion for the luxury drinks sector? Some would disagree, arguing that a luxury proposition can sit just as happily alongside value tinned tomatoes and washing powder as Chanel perfume and Mont Blanc pens. “The off-premise sector trades well in luxury products when you stop to consider that consumers are walking through super-markets that sell not only baby food and deodorant but luxury fine wines and Champagnes as well,” says Paul Beavis, commercial and marketing director at Lanson International. But, as useful as the channel might be for sales, will the association with three-for-twos and infamous bogofs do a luxury brand any favours?

Bogofs and beyond

For some, even at this end of retail, promotions like bogofs are a useful tool. “We regard them as such, to increase awareness and visibility of the brand,” says Christophe Lagrange, sales and marketing director for Champagne Jacquart. “Bogofs provide consumers with an opportunity to trial a product but they need to be well targeted and only used strategically as part of a promotional package.”

For others it is the on-trade that provides a more suitable arena for luxury drinks, and they tailor their strategies accordingly. “Pommery is well established in the premium on-trade sector, so it is avoiding the price-competitive, discounted nature of the supermarkets,” comments Colin Cameron, marketing manager at Percy Fox and Justerini & Brooks. “Heidsieck Monopole has worked hard in recent years on building the perceived value of the marque. As well as ensuring more responsible levels of promotions, we also look to add value to the marque via gift packs or appropriate communication in retailer media. People expect a luxury product to be positioned within an environment that complements the status of a product and that includes a premium-positioned price.”

Sarah McNeill, head of the Reserve Brands Group at Diageo, agrees with this view but points out that consumers often shop for value as well as luxury within the same shopping trip. “Buying luxury is like buying in any other category,” she says. “The only difference is the stakes are much higher, and when buying at the top end it isn’t that ‘I want more’ but that ‘I want better.’ People do, in the same Tesco shop, buy value beans and an organic, corn-fed, free-range chicken. And when you look at the success that Tesco has had with its Finest range in stores, you can see how the two work together. The range is merchandised separately, positioned correctly and given a more quality feel, and that is what luxury is all about. Buying a luxury product has to appeal to all your senses and make you feel special. If you are paying for a top quality whisky, for example, you wouldn’t want it in a Tetrapak.”

That being said, packaging is undoubtedly a vital element of the whole luxury experience, is it not?

“Well, yes and no,” says Paul Foulkes-Arellano of packaging specialists Wren and Rowe. “Packaging can be extremely important or not at all. Many celebs, for example, would happily drink Louis Roederer Cristal from a PET bottle as long as it was branded.

“At the same time, consumers look for Baccarat crystal, ceramics and lots of glitter and gold with most other brands. Where we tend to look for influences on luxury packaging are the fashion and fragrance worlds which have a huge influence. The Pucci/Veuve Clicquot and the Matthew Williamson/Moët & Chandon [and now the Dom Pérignon and Karl Lagerfeld tie up] are the ultimate expression of that idea. The really great luxury brands are multi-faceted and have huge brand stretch. I’m not sure about Jaguar eau de parfum but Prada Champagne… there the brand would be everything. Who cares what’s in the bottle?”

Or would we? It can’t all be style over substance can it? Surely the quality of the product is still the vital element of a luxury purchase – or is it the brand

these days that signifies luxury status rather than the product itself? 

“We think it’s probably a bit of both,” says Luke Tegner of The Glenrothes whisky. “We believe that it is the product that matters, which is why The Glenrothes is all about the whisky and the flavours and not a designer-led brand. However, as consumers discover the product, it is really the brand itself or the name that becomes associated with quality and luxury. So, all communications around the brand need to repeatedly talk about the liquid and the care taken to craft it over many years.”

At Dom Pérignon (possibly one of the best-known luxury brands of all) the answer is more complex. “For us the brand is hugely important,” says Mark Harvey, brand manager for the Champagne at Moët Hennessy UK. “It is the brand that carries the message and the dream beyond the product. There is a trend at the moment towards the idea of authenticity and so the product itself is becoming more important again in the consumer’s eyes – the idea of hand-crafting and provenance and limited supplies and so on. But in the end those messages have to be carried by the brand itself.”

Perhaps the final word should go to Andrew Hawes, managing director at Mentzendorff, who answered simply, “You can’t separate quality and brand values, both elements are part of the luxury package. Show me a successful, long-established luxury brand that isn’t high in quality.”  db

STATUS SYMBOLS

When researching this piece I asked all those I interviewed one extra question: “Please give an example of a brand/product from outside the drinks category that you think people consider to be a luxury? And what is it about this brand that makes it a luxury?” The answers make for a diverting read…

• Jean Noel Girard, Champagne Devaux: “Chanel perfume. It’s priced and packaged expensively, advertised in glossy magazines and linked to haute couture.”
• Paul Beavis, Champagne Lanson: “Mont Blanc or Omega have the wow factor. They provide a status symbol with immaculate attention to detail that you receive in the service. They are stretching but affordable.”
• Colin Cameron, Percy Fox and Justerini & Brooks: “Rolls Royce is an obvious one. The physical size of the car and its specifications (engine and gizmos) puts it at the top of its class. Clever marketing over the years has helped

  establish that and the price also positions it in the luxury sector as it is realistic only to a minority of car purchasers.”

• Sarah McNeill, Reserve Brands Group, Diageo: “For me it is paying business class to go on holidays. Some might say it is a waste of money but for me it is about making the absolute most of the few days holiday I have a year.”
• Paul Foulkes-Arellano, Wren and Rowe: “Prada – the whole mystique. Every TV report, every ad in Wallpaper. The creative genius behind it.”
• Luke Tegner, The Glenrothes: “Bentley, which for me epitomises the area of discrete luxury compared to, say, Rolls Royce or Porsche.”
• Mark Harvey, Dom Pérignon: “I would consider Hermes to be a true, leading luxury brand. The quality of the product is well communicated and understood, which allows for a level of creative overlay to communicate the brand.”
• Andrew Hawes, Mentzendorff: “Sunseeker. The brand embodies quality as well as the expectation of a pleasurable and emotional experience.”  db
  

GIFT BOX

Gifting has always been an important part of the luxury sector and, outside the traditional Christmas period, birthdays, anniversaries, mother’s and father’s day and Valentine’s day all provide the opportunity for year-round sales. As Francois Le Grelle, managing director of Hine Vintage Cognacs points out, the luxury category is particularly relevant to the drinks category as, “People may buy items that are more expensive, and not necessarily needed, as a gift because they know the recipient will appreciate the thought behind it.”

This state of affairs has provided brand managers and owners with the opportunity to “add value” to their product through innovative packaging and product tie-up ideas. At Hine this year this has culminated in the repackaging of Hine Marriage (a blend of Grande Champagne Cognacs from 1921 to 1959). “We have packaged it in a unique Baccarat crystal decanter and a contemporary red lacquer box which could be used afterwards either as a cigar humidor or a jewellery box,” explains Le Grelle. “In the case of consumer goods given as gifts, a beautiful box or decanter is a happy reminder of the person who has given it and the occasion on which it was given long after the product has been consumed.”

The practical approach continues at Champagne Taittinger, where they have created the Cool-Air Tube, a re-usable cooler that keeps bottles fresh for up to four hours after initial chilling. “The bespoke Cool-Air tube has been created especially for Taittinger’s signature Brut Reserve NV Cuvée and is available exclusively at Selfridges until the end of the year,” says Lynn Murray, marketing controller for Hatch Mansfield, UK agents for Taittinger. “We chose to use the tube for its obvious aesthetic and functional benefits but also because we recognise that the striking presentation will make a great gift for any Champagne lover,” she continues.

Meanwhile, over at Laurent-Perrier they are already looking to Valentine’s day with the launch of a gift-packaged bottle of rosé and handcrafted, heart-shaped, red leather coasters. At Krug this autumn they have introduced a wine merchant’s wooden box for sales of the Krug Grand Cuvée. “It is important to be able to add value to prestige brands such as Krug,” UK brand director, Fred Scarlett says. “Each box contains 12 bottles of Krug Grand Cuvée individually wrapped and the wooden box bearing the Krug branding is made in Bordeaux by the same company making wooden boxes for first growth clarets.”

But it isn’t just Champagne houses that are looking to add value to gift options. Malcolm Cowen is offering a boxed Ketel One vodka and branded cocktail shaker pack in its gift portfolio along with Glenfiddich with a hip flask. db