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An Exploration of Trends in The Spirits Category
Behind The Bottle An Exploration of Trends in The Spirits Category |
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Contents | Background and Objectives Industry Overview
Research Results - Consumer Purchase Behavior - Gifting and Entertaining - Touchpoint Influence Best Practices |
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Background, Objectives, Outcomes
Through a combined Havas/Evolve Media research partnership, we wanted to deepen our knowledge of sentiment, decision-drivers and purchase behavior of the Spirits consumer to support targeting efforts, and enhance our understanding of the role of media touchpoint Objectives Business Outcomes Uncover trends in Spirits consumption Understand the relationship between consumer behavior and brand adoption Identify key drivers of seasonal gifting Uncover the impact of each media touchpoint in the decision journey Understand the role of digital media in driving consideration Inform communication strategies across consumer cohorts Develop guidelines/best practices for communi- cation strategy across media channels Develop tactics that drive trial and brand choice Identify opportunities for increasing digital advertising campaign efficiency and effectiveness Inform Creative messaging |
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Industry Overview |
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Consistent YOY category growth
2015 vs 2014 Consistent YOY category growth 4.1 % Growth Up 3.4 % U.S. spirits supplier 2015 revenues $24.1B Growth Up Volume growth up 2.3 % Revenue growth up 4.1 % Export volume growth up 3.4 % 2.3 % V V Growth Up V |
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Spirits is pulling share from the beer category
55.5 % 49.8 % 48.8 % 48.3 % 47.8 % 47.5 % 28.7% 33.3% 34.3% 34.7% 32.5% 35.4% 15.7% 16.9% 16.9% 17.0% 17.0% 17.0% 2000 2010 2012 2013 2014 2015 wine spirits beer | Source: DISCUS Distilled Spirits Council of the US – February 2015
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Growing interest in Dark Spirits reflected in sales trend
Dark Spirits Bourbon, Rye, Whiskey White Spirits Vodka, Gin, Rum, Tequilla 9-Liter Cases %Change 9-Liter Cases %Change 58 MM 0.0% 100 MM 0.0% 2010 2010 58 MM 1.1% 105 MM 5% 2011 2011 59 MM 2.5% 110 MM 4.1% 2012 2012 60 MM 3.4% 110 MM 1.4% 2013 2013 63 MM 2.3% 113 MM 0.7% 2014 2014 65 MM 2.5% 114 MM 0.8% 2015 2015 | Source: The Beverage Information & Insights Group, Liquor Handbook 2015/Mintel
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Media investments have followed the shift to dark spirits
Ad Spending (MM) Ad Spend ($00) $150 $130 $110 $90 $70 $50 $30 $10 $0 300 275 250 225 200 175 150 125 100 75 25 -$56 MM -29% | Vodka -9% | Tequilas +$52 MM 14% | Rum 63% | Bourbon Whiskey -9% | Whiskey 79% | Scotch Whiskey 78% | Brandy & Cognac -12% | Gin 2011 2015 2011 2015 7% | Canadian Whiskey White Spirits Brown Spirits 2011 2012 2013 2014 2015 | Source: Kantar Stradegy,
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With the proliferation of smartphones,
consumers have more access to each other and to new ideas % of Adults Who Own… In 2016, people spend 2 hours and 11 minutes MORE on digital media Than they did 5 years ago. 45% 2015 92% 2015 83% 2011 68% 2015 10% 2011 35% 2011 v Tablet Smartphone Cellphone | Source: Pew Research; eMarketer
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68% of Millennials Agree:
“I like to experiment with new cocktails” |
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We wanted to know more How are On-premise vs. off-premise experiences are impact brand choice? What is the Opportunistic potential of Gifting and Entertaining? Where are consumers finding inspiration and information? How can brands win in this environment? |
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Executive Summary BRAND MATTERS -- There is a very high level of brand preference in the Spirits category both on and off premise. Implications for Spirits Brands; brands are built (and market share) before consumers/shoppers enter the premises. AFICIONADOS BUILD BRAND AMBASSADORS -- Knowledge of spirits is rapidly becoming social currency, especially among Millennials, who will order name brands as a way of impressing others. Millennials are more interested in top shelf brands than other age segments. Implications for Spirits Brands; on location “intelligence” matters. LIVING ROOM LOUNGE -- The high level of brand loyalty and preference for off-premise consumption is driving the movement to “bring the bar home” GIVE THEM A REASON TO SPLURGE – Presentation, aesthetics and personalization trumps budget when purchasing a gift. Presentation matters. |
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What We Learned? | On and off premise brand preference
How entertaining and gifting affect spirits choices Key consumer influences and touchpoints |
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Location Bias? Depends on the Spirit…
Does location put consumers in the mood for specific spirits? Results from our study suggest that there is such a thing as location bias. While all spirits are consumed everywhere, certain types tend to be consumed more heavily in certain environments. Gin: Cognac: 125 Index At a home 75 Index At a restaurant After Dinner Cordial 147 Index At a restaurant 40 Index At a bar/nightclub 162 Index At a bar/nightclub 57Index Special Occasion/Event Bars: Gin, Irish Whiskey Restaurants: After Dinner Cordials Home: Cognac To Read: Gin drinkers are 62% more likely to drink Gin at a bar/nightclub vs other locations Q3: Where did you drink these beverages in the past 30 days? | Source: Havas/Evolve Spirits Study 2016
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Brand Matters: High level of brand preference in spirits category
Brand choice for personal consumption slightly outpaces on-premise preference On-Premise Brand Preference Agnostic 72% 70% 64% 71% 76% 63% 78% 28% 30% 26% 29% 24% 37% 22% Off-Premise Brand Preference Agnostic 83% 80% 88% 74% 79% 84% 85% 17% 20% 12% 26% 21% 16% 15% | Source: Havas/Evolve Spirits Study 2016
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Personal favorites |
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On premise | 52% 28% 20% Typically Order
While brand selection begins before entering – nearly half of patrons can be influenced on premise 52% Typically Order Prefer Specific Brand or Top Shelf Not Picky 28% 20% Bartender/ Server Recommendation Q4: When ordering drinks while out at a bar, restaurant or nightclub, what type of brands do you typically order/ | Source: Havas/Evolve Spirits Study 2016
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Millennials rely on server recommendations more than other cohorts
When it comes to driving trial among brand agnostics, Servers and Bartenders are more likely hold sway over Millennials relative to older cohorts- regardless of the type of spirit. That doesn’t mean that older generations aren’t open to suggestion.. Index: v Millennial (21-34) v Gen X (35-54) v Boomers ++ 240 210 180 150 120 90 60 30 - Millennials: Vodka, Rum, Bourbon, Scotch, Single Malt, Irish Whiskey, Cognac GenX: American Whiskey, Canadian Whiskey Boomers: Tequila Scotch Whiskey Irish Whiskey Tequila Base: Rely on server recommendations | Source: Havas/Evolve Spirits Study 2016
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Millennials more interested in impressing peers than other cohorts
I sometimes order a premium brand name just to impress my peers (% agree) Millennial Gen X Boomer 28% 20% 11% White non Hispanic n=1209 Multicultural n=391 Millennial (21-34) n=497 Gen X (35-54) n=611 Boomers ++ n=497 Less than 100K n=822 Income of 100K+ n=745 Emerging Affluent n=165 Q17: On scale of 1 to 5, with 1 being the highest, how much do you agree with the following statements? | Source: Havas/Evolve Spirits Study 2016
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Going for the Best: Millennials more interested in top shelf brands than older generations
Total Millennials (21-34) Gen X (35-54) Boomers ++ Typically Orders Top Shelf Brands (on premise) 40 30 20 10 Vodka Gin Tequila Rum Bourbon Scotch American Canadian Single Irish Cognac After Whiskey Whiskey Whiskey Malt Liquor Whiskey Q4: When ordering drinks while out at a bar, restaurant or nightclub, what type of brands do you typically order? | Source: Havas/Evolve Spirits Study 2016
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Buying in Store | 61% 23% 15% Typically Order
Consumers decision to purchase are more defined; opportunity exists for more in-store activation 61% Typically Order I Buy Preferred or Premium Brand Not Picky 23% 15% Rely on Store Assoc. Recommendation Q6: When purchasing for yourself to drink at home, what do you typically buy? | Source: Havas/Evolve Spirits Study 2016
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Top shelf brands see less generational bias for off-premise consumption
Total Millennials (21-34) Gen X (35-54) Boomers ++ Typically Purchase Top Shelf Brands to Drink at Home Top Shelf Preference Strongest for Vodka and Tequila Irish Gin Single Malt Rum Bourbon Scotch Tequila Vodka Cognac After Dinner Whiskey Whiskey Whiskey Brandy Cordial Q6: When purchasing for yourself to drink at home, what do you typically buy? | Source: Havas/Evolve Spirits Study 2016
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Top shelf brands rule at the bar; preferred brands are brought home
On-Premise Brand Preference Agnostic 72% 70% 71% 76% 63% 78% 28% 30% 29% 24% 37% 22% Off-Premise Brand Preference Agnostic 83% 80% 88% 74% 79% 84% 85% 17% 20% 12% 26% 21% 16% 15% 28% 30% 72% 28% 72% 28% 37% 28% 22% 22% 24% 28% 29% 28% 28% 26% 64% 26% 74% Q4 & 6: When (…), what type of brands do you typically order/purchase | Source: Havas/Evolve Spirits Study 2016
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Consumption behavior implications
The high degree of brand preference in the Spirits category may pose a challenge to increasing market share. Conversion may be difficult, but the payoff is worth it. Bars are a great place for top shelf discovery, but Brand Agnostic consumers may need prior familiarity with the brand before deciding to try it. Server and bartender recommendations have a relatively low influence over brand discovery, except among Millennials who tend to rely on server suggestions especially for Brown Spirits. Knowledge of spirits is rapidly becoming social currency among Millennials, who will order name brands as a way of impressing others. Servers can take the role of social currency “bankers” by helping to educate customers on brand differentiation. The high level of brand loyalty and preference for off-premise consumption, especially among Millennials, is driving the movement of the Living Room Lounge, ie bringing the bar experience home. |
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What We Learned? | On and off premise considerations
How entertaining and gifting affect spirits choices Key consumer influences and touchpoints |
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39% have given spirits as a gift
More common among younger, affluent and multicultural segments % have purchased spirits for gifts 50% 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% 43% 37% 45% Millennial 21-34 Gen X 35-54 Boomers 55+ Less than 100K Income of 100K+ Emerging Affluent White Non- Hispanic Multicultural Q5: In the past year, did you purchase any of the following beverages in the store for your own personal needs or give a gift? | Source: Havas/Evolve Spirits Study 2016
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Spirits interest spikes in Q4 holiday season
| Source: Google
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Brand Name is Primary Factor in Driving Purchase
All Use Average 1 Brand Name Tried and True/Favorite Brand Primary Purchase Drivers 2 Recommendation from friend/family Low Price/Value Secondary Purchase Drivers 3 Bottle/ Package Design High Price Tertiary Purchase Drivers Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand | Base: Total Respondents (n=1605)
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Top 5 factors when purchasing…
But for gifting and entertaining, other factors affect brand selection Top 5 factors when purchasing… Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand to… | Base: Total Respondents (n=1605)
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Top 5 factors when purchasing…
At home, experience and value trump experimentation. Brand name is less important Top 5 factors when purchasing… Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand to… | Base: Total Respondents (n=1,605)
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Tried and true / Favorite brand
At home, brand name and origin matter more to boomers. Value and mixability matter more to millennials. Most important factors when purchasing for myself for drinking in my home Millennial (21-34) Gen X (35-54) Boomers ++ 61% 57% 49% 47% 39% 39% 32% 35% 29% 19% 15% 11% 9% 9% 8% Tried and true / Favorite brand Brand Name Country of Origin Low Price / Value Mixability Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand to… |
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Personal favorites |
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Top 5 factors when purchasing…
When entertaining, brand is more important. Spirits must please the crowd and be versatile (mixable) Top 5 factors when purchasing… Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand to… | Base: Total Respondents (n=1,605)
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For entertaining, price and mixability matter to Millennials more than older segments
Brand matters to Millennials, but when entertaining, additional levers such as price and mixability factor into the purchase decision Most important factors when purchasing for guests/entertaining Millennial (21-34) Gen X (35-54) Boomers ++ 55% 48% 47% 44% 43% 35% 35% 26% 23% 22% 16% 14% 11% 10% 8% Tried and true / Favorite brand Brand Name Low Price / Value Mixability Bottle / Package design | Source: Havas/Evolve Spirits Study 2016
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Parties = stock the bar | "cover all the bases" vodka rum whiskey gin
variety - list (whsikey gin and vodka); "beyond" jager and tequila Cara Brad Chris no preset budget, whiskey and brandy, in-store impulse choices, no budget |
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Top 5 factors when purchasing…
When gifting spirits, image matters Top 5 factors when purchasing… Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand to… | Base: Total Respondents (n=1,605)
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Gifting conveys an image
Caroline 5-option 5 (packaging) 0:01-0:20 AND bought boss Grey Goose Brad 4-gift 0:04 - 0:11 AND 1:06- 1:21 JW Blue with engraved initials Beth 4-gift 0:18 - 0:25, 0:38-1:04 best brand I can afford, put a basket togheter with glasses |
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Gift packaging more important to millennials vs. older generations
Most important factors when purchasing for a gifting 44% 47% 58% Brand Name Millennial (21-34) Gen X (35-54) Boomers ++ 39% 37% 30% 29% 19% 18% Bottle / Package design Tried and true / Favorite brand | Source: Havas/Evolve Spirits Study 2016
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Compared to other categories, whiskey and
Cognac are most likely to be gifts Q5: In past year, did you purchase any of the following beverages in the store for your own personal needs or to give a gift? | Base: Total Respondents
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Gifts more likely to carry high price point
When it comes to the amount consumers will spend on Spirits, gifts are meant to impress. More people will spend $30 or more on a gift than they will for themselves or for entertaining % Spent $30 or more on a bottle Among consumers who… Purchased for Themselves Purchased for Entertaining Purchased for a Gift 50% 53% 67% | Source: Havas/Evolve Spirits Study 2016
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Gift occasions reduce price sensitivity among lower income
“Low price/value” is top 3 consideration 20% 17% Gifting $100K+ Income (B) 20% 28% 20% Entertaining 20% <$100K Income (A) 32% For Myself Q10: In addition to taste, which are your THREE most important factors you consider when choosing an alcohol brand to… | Source: Havas/Evolve Spirits Study 2016
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Gifting conveys an image
Caroline 5-option 5 (packaging) 0:01-0:20 AND bought boss Grey Goose Brad 4-gift 0:04 - 0:11 AND 1:06- 1:21 JW Blue with engraved initials Beth 4-gift 0:18 - 0:25, 0:38-1:04 best brand I can afford, put a basket togheter with glasses |
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Holiday season implications | 1 2 3 4 5
Brand matters. Brand name is #1 factor for gifting and entertaining in the spirits category. Personal recommendations are crucial. Recommendations from friends/family are important in all use occasions. With personal consumption, factors related to personal taste, value, and authenticity are most important (tried and true/favorite brand, price, and country of origin). When entertaining, mixability is a top consideration, especially for Millennials who tend to serve up cocktails over straight drinks. When giving a gift, package design and the appearance of the bottle matter more. Price matters less, even for lower income consumers. 1 2 3 4 5 | Source: Havas/Evolve Spirits Study 2016
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What We Learned? | On and off premise considerations
How entertaining and gifting affect spirits choices Key consumer influences and touchpoints |
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Planning against spheres of influence
Promotions Content Publishing TV/Video Content CRM Paid Social Word of Mouth Branded Events Organic Social Programmatic Advertising Partnerships Search Influencer Consumer PR Mobile Cause Marketing User-Generated Tools and Apps CULTURAL Networks Create Relevancy COMMUNITY Networks Build Trust PERSONAL Networks Drive Action and Stay Connected |
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Inspiration begins before entering the store or restaurant
Experience is part of the inspiration TRADITIONAL TV, Print, Radio 24% IN STORE Retail 29% DIGITAL Search, digital newsletters, mobile apps, social media 42% ON PREMISE Restaurants, Bars or Nightclubs 44% WOM Recommendations from Family, friend or co-worker 59% Design Note: This is a KEY slide in terms of how brands market and advertising. Key takeaways: Advertising is a necessity – engage before the ZERO MOMENT OF TRUTH Media Mix matters and one size does not fit all needs – reach influencers Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? | Source: Havas/Evolve Spirits Study 2016
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Family, friend or co-worker
Inner circle has most influence Spirit Drinkers Media WOM Recommendations from Family, friend or co-worker 59% WOM is particularly influential for: Boomers 67% …also rely on: 44% On Premise 41% Digital 30% In Store 18% Traditional Design Notes: Digital both promotes and support the conversation reinforcing the experience Brands need to earn the right to be a part of the conversation – digital plays a role in the relationship the brand needs to create with the consumer – offering cocktail recipes, ingredients and background similar to how the wine industry focuses on underlying ingredients Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? | Source: Havas/Evolve Spirits Study 2016
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On premise experiences motivate experimenting
Restaurants, Bars or Nightclubs 44% On Premise is particularly influential for: Affluent 51% Gen X 47% Emerging Affluent 46% …also rely on: 59% WOM 39% Digital 28% In Store 17% Traditional Design Notes: Digital both promotes and support the conversation reinforcing the experience Brands need to earn the right to be a part of the conversation – digital plays a role in the relationship the brand needs to create with the consumer – offering cocktail recipes, ingredients and background similar to how the wine industry focuses on underlying ingredients Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? | Source: Havas/Evolve Spirits Study 2016
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Digital encourages conversation, experimenting and reinforces the experience
45% agree: If an article I read on the Internet is relevant to me, it doesn't matter whether the article is written by the publisher of the website or an advertiser. (48% of Millennials) Top 3 Touchpoints DIGITAL Search, digital newsletters, mobile apps, social media 42% Digital is particularly influential for: Millennial 62% Gen X 48% Lower income <$100K 52% Emerging Affluent 63% …also rely on: 53% WOM 32% O Premise 20% Traditional 16% In Store Design Notes: Digital both promotes and support the conversation reinforcing the experience Brands need to earn the right to be a part of the conversation – digital plays a role in the relationship the brand needs to create with the consumer – offering cocktail recipes, ingredients and background similar to how the wine industry focuses on underlying ingredients Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? | Source: Havas/Evolve Spirits Study 2016
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Digital discovery focused around food and cooking content
(search,digital newsletters, mobile apps, social media) Design Notes: This slide confirms need to be a resource for ideation and a valued source Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |
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Information at the moment of need
Spent 1hr+ researching spirits online in past 30 days 43% of Millennials spent an hour or more researching spirits on mobile devices in the past 30 days (mostly on mobile) Total Millennials Gen X Boomers 42% 34% 32% 32% 26% 25% 25% 22% 20% 20% 9% 9% Computer Tablet Smartphone Q18: In the past 30 days, how many hours did you spend researching liquor brands and products on each of the following devices? | Source: Havas/Evolve Spirits Study 2016
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Food and beverage content provide further inspiration
53% agree: "I'm more likely to pay attention to an ad if it contains a recipe" (57% of Gen X) Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? | Source: Havas/Evolve Spirits Study 2016
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39% Agree: Sources of inspiration |
“I would rather see an advertisement that tells a story about the product rather than shows facts and information” |
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Media Implications 1 2 3 4 Identify expert influencers and amplify Experience drives experimentation Tell a story. Digital powers the conversation. Balanced media mix, targeting complementary passions Identify influencers and amplify [WOM] – personal networks Experience drives experimentation [ON PREMISE] – community networks Tell a story. Digital powers the conversation. [DIGITAL] – cultural networks Balanced media mix, targeting complementary passions [CULTURAL TOUCHPOINTS AND TRADITIONAL MEDIA] |
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Best Practices |
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Appendix
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Our approach | Quantitative and Qualitative Phases:
Online Interviews to hear the voice of the consumer, in their own words, focusing on spirits heritage, gifting and holiday entertainment (n=20) Online Survey to interview 1, adults in December 2015, exploring behaviors, influences and attitudes pertaining to alcoholic beverages Cognac drinkers n=305 Whiskey/whisky/bourbon drinkers n=963 Rum drinkers n=575 Vodka drinkers n=765 Tequila drinkers n=536 $100k+ HHI n=504 Millennial n=498 Emerging affluent n=184 Multicultural n=375 |
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