Arnott's David McNeil and Lion's Gerard Smith are the first heavyweight marketers to depart this year as both businesses grapple with what appears to be significant structural change.

Arnott's finds itself under the ownership of American private equity powerhouse Kohlberg Kravis Roberts (KKR), joining the likes of MYOB, GFK and Sonos in its expansive portfolio.

Lion, meanwhile, finds itself a victim of a shifting consumer landscape, as an increasing number of Australians drink less alcohol and seek healthier versions of their tipple - if not alternatives.

Trouble brewing?

Confirming Smith's departure was his own choice, a Lion spokesperson said the former marketing chief had made inroads into new markets while bringing new beverages to existing customers.

"Gerard Smith made the decision to leave Lion at the end of 2019.  During his time as marketing director, Gerard evolved our portfolio of brands and led the in-market launches of Hahn Ultra Crisp, the world’s first legitimate mainstream gluten-free beer, Byron Bay Premium Lager and Australia’s first alcoholic seltzer, Quincy as well as national launches for Furphy and Iron Jack Red.  We thank Gerard for his contribution to Lion and wish him all the best for the future."  

While Lion remains the major spender in the alcohol advertising market, accounting for $21.3 million of the total $104m spent during the 2019 calendar year, according to Nielsen data, the overall sector is in decline.

One former alcohol marketer told Mi3 that the trend toward "authenticity over legacy" evident in the rise of craft beer and small breweries with a "unique and approachable" story is putting pressure on the likes of VB, Carlton, Tooheys and Hahn.

"A lot of the [consumer] attitude, particularly in the beer market at the moment, is to be against the big brands. People are seeing them as stale and uninteresting as craft brands continue to build excitement and more personal relationships with their customers," they said.

"If you are looking for a new beer and can simply drive over to the brewery, meet the people who make it and sit there and drink it, you're more likely to feel as though you understand what the brand is about."

The big brewers have long recognised that trend. Lion snapped up Geelong-based indie Little Creatures back in 2012, while CUB most recently bought Balter Brewing Company, formed by professional surfers Mick Fanning and Joel Parkinson.

The problem with Big Beer buying into the craft segment, the ex-sector marketer suggests, is that consumers lose their thirst and move onto other independent brews.

One agency leader who worked closely with CUB, disagreed with this point of view, suggesting that while some consumers may take this stance, they would only account for a single digit percentage of the overall market.

"It's unrealistic to believe that the average beer-drinker would look that closely at who owns what business," he said. "Take a brand like Great Northern, they now outsell XXXX in Queensland and were marketed as a mid-strength alternative - but no one seemed to care that they were born from the same business."

He thinks there are other economic factors at play.

"The combination of the craft and private label brands made by Coles and Woolworths is what really puts the squeeze on the big legacy brands. Those guys have also taken a cost out approach - and while they may still find ways to ensure they hold onto some level of profitability as the market dwindles - they'll soon find out that they're running out of road."

Alongside healthier lifestyles, both commentators agreed cost is also a major factor in influencing attitudes and unit sales.

"It's very expensive to drink in pubs and bars now. The younger drinker simply can't afford to go out to the pub and have 6-8 schooners. They might drink at home or elsewhere, but they're also now finding alternatives to going out drinking - and the bigger players are certainly feeling the pinch."

On the flip side, the craft category has some insulation: "Those in the craft space generally position themselves as a premium product from the start and are therefore already engaging a consumer who is willing to spend that level of money."

Cookies crumble

Arnott's found a buyer willing to pay $3.2bn for its biscuit empire as well as APAC distribution of Campbell's brands. But the traditional snack industry, particularly biscuits, is facing the same pressure as the beer category as consumers seek healthier choices.

A report from IBISWorld states that Australian biscuit makers have faced "challenging conditions" for the past five years, with several manufacturers exiting the market as a result. It claims the sector's growth rate is -3.3 per cent between 2014-2019.

Recognising the challenge, Arnott's has attempted to react to changing consumer tastes. Former CMO David McNeil oversaw the launch of Fruits & Roots, a new brand of chilled juices and a range of fruit and vegetable biscuits. While the brand underperformed, McNeil had indicated that Arnott's would take a long term view.

An Arnott's spokesperson said McNeil had "resigned for personal reasons."

Whether McNeil's departure is related to the change in ownership is unclear, but raises questions over how the business will structure its marketing department going forward. 

While an incoming CMO usually seeks to make their mark, Arnott's key agency partners probably have little to worry about for now. The brand has only recently completed an exhaustive pitch process, appointing Publicis and its Power of One model. KKR is therefore unlikely to dramatic shake things up in the short-term - if its new partners can deliver a winning recipe.