What you need to know:

• The Spirit and RTDs (ready-to-drink) category are "stronger and healthier" than beer and wine.
• Ad spends across the category is expected to continue to increase for the next five years.
• Suntory's ecommerce conversions remain small, with the category more useful as a marketing channel.

Beam Suntory Marketing Director ANZ Trent Chapman believes creativity will be crucial for success this year as spirit brands fight for a share of voice in a booming category.

Chapman, responsible for the Canadian Club and Jim Beam brands, told Mi3 spirits and RTDs (ready-to-drink) are the golden children of the broader alcohol category and “so much stronger and healthier than beer, wine and cider”.

Fuelled by consumer behaviours to stay home and splurge on cocktails and mixed drinks, spirit and RTD brands are enjoying a surge in popularity. The uncertainty of Covid-19, which saw the majority of brands sitting on the lion's share of their 2020 marketing budgets at the end of the year, created a perfect storm.

"Across the category, everyone was flush with cash and wanting to take advantage of the opportunity where consumers were choosing to purchase spirits over wine or beer, so we were all investing heavily to capitalise on that trend. We went from basically stopping all spend in Q1 to spending more than we had ever spent at the back end of the year."

Creativity now critical

Chapman says with the entire spirits category investing heavily, the emphasis on powerful creative to cut through the clutter is more important than ever.

“I think we had the luxury at the back end of the year of just spending like everyone did. But now you have to get at the forefront on that because everyone's got bartenders making cocktails or a theme pack in RTD that's a bit bigger size, we're going to have to be more creative to cut through.”

“The small brands are investing to the levels of big brands, and the big brands have spent more than they ever have, which is good from a marketing standpoint, and it's a really exciting period, to be frank. We believe we’ll continue to see a heavy investment in the spirits and RTD market for the next five years because of Covid – not just with us, that's everyone.”

The increased competition also adds to the category's growth as both CUB and Lion Nathan enter the spirits categories with new RTD launches.

Ecommerce: More comms than commerce

Chapman says Covid forced Suntory to think differently about its strategy, which had focused on owning city precincts and metropolitan hubs through TV, out-of-home, digital touchpoints, geotargeting and social media. It moved to increase its digital presence and embrace ecommerce and online ordering.

However, while Chapman says ecommerce was a significant growth area, the sales conversions were low.

“We found ecommerce delivered a very small conversion rate to actual purchase. It was very much a comms strategy, versus it having to be a purchase channel.”

“The percentage growth is phenomenal because you're starting at zero base effectively. So, it'll be more important in the future. But we were very conscious that we use it as a marketing channel and not a purchase channel.

“People couldn't go out to a bar or restaurant and socialise, so being able to go and pick up a case of RTD, that was a little outlet and a part of the theatre that you would get in an on-premise venue, and you could get still in-store, versus buying via your iPhone.”