Independent Liquor is no longer a minor player in the premier league of brewers, writes John Winters
WHILE THE majority of New Zealand’s food and beverage companies would be regarded as very conventional in the way they conduct their businesses, there are a few considered more “off the wall” and less traditional.
An example which springs immediately to mind is 42 Below, but even that company – now a brand – is now more conventional in its operations since becoming part of the Bacardi stable, even if its marketing still continues to set the pace.
Another company which fits the same profile is Independent Liquor. It was for long regarded as a maverick in the way it operated and its general marketing strategy when it was under the ownership of the late Michael Erceg.
But today under its new owners, the maverick status it once earned is now how it might have been perceived, but now is no longer the case.
True, its marketing may still be ‘off the wall’ and the innovation it delivers through its products is anything but conventional, but that’s where any similarity with the past ends.
For Independent Liquor has been quietly developing significant market share in the beer category in this country while continuing to grow its important RTD business.
For this was the liquor company in Australasia that recognised in its early days that RTDs were an opportunity not to be missed, while the other big local players like Lion Nathan and DB sat on their hands and decided not to get involved.
Significant segment
Both major brewers have since realised the error of their ways and, like Jim Beam and The Mill, who are also key players, have since launched product into this significant segment of the liquor market.
Once regarded as the minor player in the premier league of brewers in this country, this perception is now far from the case.
For not only has Independent Liquor continued with further development in the beer category with its own brands in addition to further offshore brands, it is further developing its RTDs in other directions and moving into a totally new non-liquor category aimed principally at the grocery channel.
Last April, Julian Davidson, who was the company’s chief finance officer, was promoted to general manager of the New Zealand operations. With many years’ experience in the Australasian brewing industry including a period as managing director of Lion Nathan in New Zealand and a former board member of the New Zealand Food & Grocery Council, he has brought a much-needed stability to the company after the uncertainties caused by Michael Erceg’s tragic death.
Admitting that the company has had a chequered history, he jokes about being asked when arriving for a meeting with a South Island customer where he had tethered his horse.
But he says today, while the marketing and product development thinking might still be described as unconventional, the way the company operates its business is far closer to the traditional supplier footprint.
Tucked away on the outskirts of Papakura, one of Auckland’s southern extremities, Davidson admits that much of the work Independent Liquor does stays very much under the radar.
In the beer category ten years ago it had just two of its own brands, New Zealand Lager and Ranfurly ale. In the days before beer went on sale in supermarkets, the company found it tough to get ranging among the independents.
Several of the liquor chains were under the ownership of the country’s two brewers and that effectively kept its beer off their shelves.
But when beer went into supermarkets, overnight it gave Independent Liquor over 400 new outlets throughout the country. Effectively owning the “budget beer” brand, it was just the break the business needed.
Two ways
Since then it has developed its beer offering in two ways – through brewing global brands like Carlsberg, Tuborg and Kingfisher. It also used to brew Grolsch, but sold the New Zealand rights to Coca-Cola. And this year it launched Casa, the Mexican beer brand, and Davidson says the beer is tracking well.
Some years ago with its own brands, the company introduced Haagen and, through doing so, expanded the budget beer category into a premium segment. For a while it ran with just the one Haagen Lager varietal, but has since extended the Haagen brand into a family of beers.
First came Haagen Blonde, a low carb full strength, full flavour lager. This was followed by Haagen Pure, which is brewed in accordance with the Provisional German Beer Law, traditionally containing no additives and no preservatives.
Recently, the family grew to four with the launch of Haagen Real Ale in eye-catching red packaging.
In terms of packaging, one small change has been made in the Casa label switching it to silver labelling and the brand is reported to be “going quite well”.
Independent Liquor has 10% of the packaged beer market in this country and, Davidson says, the company’s aiming to be a significant and competitive player.
Where in the past it has been slow in coming forward, when it came to supporting its brands with advertising and promotions, that’s all changing.
Carlsberg is now being advertised on TV and Haagan NZ Pure and Casa are appearing on billboards.
Upgrading packaging
At the same time, the company is upgrading the packaging on all its beer products, which is set to help drive sales even further upwards as Davidson reports that all his beer brands are in growth.
“We were the only company growing volume and share in the New Zealand beer market for most of this calendar year,” says Davidson.
Some 61% of its beer business goes through grocery and the balance is off premise independents.
“The beer portfolio for us is a really important driver going forward,” he continues.
As far as the grocery customers are concerned, Davidson admits that Independent Liquor has had to put in some work to help them understand what the company is all about.
“So they don’t view us just through the lens of a 10% player in the beer market,” he says. “For, in terms of the volumes we have been achieving this year (2009) we are actually the No 2 player in the beer market.
“We have the same corporate responsibilities to observe as the other players in the market place and we have moved to that level of responsibility.”
In terms of market shares in this country, it has 10% of the beer market, a whopping 60% of the RTDs market and 13% of the spirits market.
Davidson says the company has a significant investment in infrastructure, with 150 people employed on the Papakura site and a further 100 in the field. And the set-up in Australia is similar to New Zealand, with further businesses in the United States and Canada.
The company has also significantly grown its exports with some $54 million earnings from sales to Korea, the Philippines, a little into Japan and the rest spread among smaller Asian markets.
“I am trying to educate people and let people see Independent Liquor for the role it plays in New Zealand,” continues Davidson.
The company’s liquor portfolio takes it into beer, RTDs, spirits, liqueurs and it has a small amount of wine. It is also expanding its Cruiser RTD brand into the cider category as well as into beer.
Beer and cider
In a family of new labels for Cruiser, not only does it have the Lady Luck sub brand for the double distilled vodka with flavours of Dry Lime and Tonic, Blood Orange and Yumberry, but it has Blonde Lager under the Hummingbird sub-brand and Dolce Cider under Apparella.
With the introduction of the Apparella cider brand, Davidson says they are now marketing to the opposite end of the drinker base than they did in the past with this brand aimed at more senior drinkers.
“People can see that the RTD category is an imaginative category.”
Davidson says they are working with the two supermarket groups now on the cider and the two Cruiser beers.
In terms of how it handles the different customer base between its beer brands and the rest of its liquor offering, Independent Liquor has carved off the spirits and liqueur brands under a new umbrella organisation called Momentum Brands.
Momentum Brands will handle all sales and marketing, leaving beer and RTDs under the parent company.
“We are looking to significantly grow our share of the spirits and liqueurs category. We are looking to bring innovation and competition into the category.”
The company is either No 1, 2 or 3 in the sub-categories in spirits, with its Seager gin brand being the second biggest in the country. Its Black Horse brand is the second biggest rum.
“Our RTDs are growing quite well and we are looking to consolidate our RTD position. We have launched a lot of power brands and they are all in growth. That has allowed us to carve out a significant liqueur and spirits business.”
Brands-building
Davidson said Independent Liquor is running a brands-building business, which it has never been into before.
“We are going to be really promoting our brands. For example, in addition to starting to advertise beer, we have advertised RTDs for the first time in New Zealand history.”
He said within the RTD market they had recognised that a significant amount of profile came from the Woodstock brand, Cody’s and Cruiser so advertising would be based around those three brands. The theme for its first TVC is “Crack a Woody!”
“The other thing we are doing is getting Coalface data and we have initiated performance measures for our sales people and are starting to measure execution standards in grocery and the traditional business to drive our execution business to more professional levels.”
And now the company has expanded into a completely new product sector – optimal health and energy, driving health and energy brands to the market place.
“We are driving new products to the market place and it is totally different from the rest of Independent Liquor’s business,” says Davidson.
The plan is to liquify a range of vitamins and health supplements and they have already appeared in the market under the Upshot brand with the slogan ‘Upshot one a day!’.
There are three variants – Upshot, Upshot Multi and Upshot Kids. “We have had to get involved in a lot of technology to get the products up to speed.”
Davidson’s previous brewing experience not only included being MD of Lion Nathan New Zealand having spent 15 years in various positions there, but he has worked in Australia for Tooheys, he was finance director of Lion Nathan Australia, CFO of Pepsi in Australia and finance director of the Swan Brewery in Perth.
