STRAWBERRY GIN FOREVER & STRAWBERRY GIN FOREVER SLIM

Oriana Paolillo D’Andria Carlos Fernandez Maria Barambio Itziar Benedicto Alonso Bertrand Mazeaud

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EXECUTIVE SUMMARY

INTRODUCTION
We have chosen Beefeater Gin, a spirit brand of Pernod Ricard due to its brand recognition and in the industry, being a market leader in Premium Gin in Spain as well as the over 100 countries that it is exported to. The product is distributed by the James Burrough company. Beefeater Gin is known for its fresh, clean and crisp taste with a subtle citrus and fruit edge. The gin brand takes pride on its multi-dimensional character, without losing its balance and robustness. The high demand for dietetic, non-sugary, low calorie alcoholic drinks in today’s society generates an opportunity to enter an exponentially growing market while focusing on a healthy product that satisfies our potential customers’ needs. We will also introduce a mix strawberry gin drink that is not of low caloric intake but readily mixed to take wherever.

COMPANY OVERVIEW

Beefeater’s roots go back to the 1820s, when John Taylor and his wife decided to open a small distillery in London’s Chelsea district. Beefeater Gin is a company originated in London offering the world’s most awarded gin, with its product bring a type of distilled gin made by redistilling spirit and natural flavors, mainly juniper berries. It has been ranked #2 gin in the world. The mother company, Pernod Ricard is ranked number 1 in premium and prestige spirits in the world, and carries over 37 premium international brands. Some of the different alcoholic beverages that Pernod Ricard offers include: Absolut Vodka, Chivas Regal, Beefeater, Jameson, Kahlúa, Malibu and Something Special.

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CORPORATE MISSION
AMBITION Pernod Ricard aims to become the leader of the wine & spirits industry by being a company that changes the rules to lead the industry’s growth. VISION Represented by their corporate signature: ‘Créateurs de convivialité’ seeking to bring people together to promote a sense of sharing. Pernod Ricard aims to do this with direct, friendly contact based on the awareness of individual responsibility. T MISSIONS To deliver value to shareholders by developing a long-term customer relationship that ensures a fair return. To provide a fulfilling role for employees, enabling them to develop their careers and rewarding them fairly by promoting best-practice sharing. CULTURE To strengthen its corporate culture of 18,000 employees in a decentralized organization, binding everyone together. The company encourages teamwork among its employees. The three culture values for the company: entrepreneurial spirit, mutual trust sense of ethics. The company’s unique culture serves as a competitive advantage by aiming to spread and strengthen the brand while working on positive customer relations. Pernod Ricard aims to blend its own culture while strengthening employee and customer relations with the development of leadership, managerial and technical skills.

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GLOBAL STRATEGY
Pernod Ricard’s growth model is based on five strategic drivers:
• • • • A portfolio of international Premium brands Decentralized Organization Strong corporate culture Historical commitment to ethics, people and the environment. Two strategic focuses o Premiumisation o Innovation

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MARKETING STRATEGY
Pernod Ricard benefits from its diverse markets, both in terms of value and geographical opportunities. The House of Brands brings together the major strategic brands, at international level and on local markets. Push strategies used with the company. Digital marketing is their latest innovative marketing technique, but their main strategy is B2B. Spain, United States, Canada, Japan, Travel Retail, United Kingdom, Russia, Czech Republic, France. With United Kingdom being the number 1 producer of the gin and the number 1 worldwide gin company as well.

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CORE COMPETENCIES
•Entrepreneurial •Spirit, mutual trust and a strong •Sense of ethics

CURRENT COMPANY PRODUCT
Brands The group Pernod Ricard possess a large premium brand portfolio. The 37 international premium brands are organised within the “House of the Brands”, they are prestigious references in which the group invest and develop strongly.

2 World Icons

7 Strategic Premiums
Spirituous

5 Strategic Premiums
Champagne & Spirituous

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18 Key local brands

4 Priority Premium wine Brand

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The group have grown both organically and also through a series of acquisitions. After the acquisitions, the business strategy is the “premiumisation” (systematic brand upscaling). The two World icons (Absolut and Chivas) receive a huge marketing coverage and are distributed across all channels. Beefeater is one of the seven strategic premiums spirituous and therefore a flagship of the group. Due to the positioning who tends to create an exclusive and privileged relationship between the buyer and the spirituous, the distribution is operated on restricted channels. The rest of the portfolio is designed to offer different spirituous, wine and champagne throughout the day (aperitif, table and digestives).

COMPETITIVE ANALYSIS
The competition reflects three aspects of the market, alcoholic beverages, spirituous in general and the core market: the product itself (gin). The spirituous that compete with our brand are mainly strong alcohol which is consumed during social events such as whisky, rhum, vodka. By our positioning the competition is restricted to premium product. Recorded alcohol per capita consumption (USA) by type of alcoholic beverage (2010/ World Bank) USA is the biggest gin market with 10.3 million litres sold in 2013 with sales value of 866 million according to the Distilled Spirits Council of the United States (DISCUS).

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Panorama of the competition (US market)

Bombay Sapphire (London, UK.) Nose: Bombay Sapphire opens with a touch of juniper, a ripe citrus and hints of spice in the fragrance. The palate is exceptionally smooth and allows the botanicals to open up one by one and mix in the most lovely way with juniper slightly at the forefront.. Finish: bolder but retains the spirit's brightness. Design award 2012, 2013

Tanqueray (London, UK.) Nose: Pine fresh juniper with subtle lemon zest and faint rootyness. Piney juniper, cedar, lemon zest and coriander wiith crystallised fruit and subtle floral and rooty note. Finish: Beautifully balanced and elegant with light peppery notes and lingering piney juniper.

Roundhouse Imperial Barrel Aged (Colorado, U.S.) Nose: Mango, pineapple, orange peel, dried flowers, herbal, cinnamon, molasses, cinnamon, spice cake, toasted malt, new wood. Palate: Mango, peaches, dried peaches, apricot, lemon peel, vanilla, almond, Graham cracker, treacle, chocolate, honey, caramel, rose, herbs, intense spice, cinnamon, allspice, oak, silky. Finish: Toasty, nutty, creamy vanilla bean, raisins, orange pekoe, herb, pepper, lingering. Double Gold Medal

Half Moon (New York, U.S.) Nose: Lemon, lime peel, lemon cream, honey, cassis, juniper, violet, rose, sandalwood, conifer. Palate: Butter cream, crème brûlée, molasses notes, toffee, coconut, big citrus, lemon, lime, verbena, slight juniper, dried flowers, violets, herbal, mint, pine, cinnamon, peppercorn, spice, complex layers. Finish: Orange peel, vanilla bean, violet, black licorice, creamy, lingering.
Double Gold Medal

Royal Dock Navy Strength (England) Nose: Juniper, lime, lime peel, lime soufflé, lemon peel, tangerine, herbal, floral, pine cone. Palate: Juniper berry, lemon grass, lemon curd, orange peel, peach, dried cherries, pine, pink peppercorn, pepper, spice, sweetness, menthol. Finish: Pistachio oil, cinnamon, sweet spice, eucalyptus, pepper, bark, medium. Double Gold Medal

Sipsmith London Dry (England) Nose: Mixed berries, rosewater, banana, Earl Grey tea, lemongrass. Palate: Vanilla, vanilla custard, creamy, molasses, dried fruit, apricot, lemon, lemongrass, bergamot, violets, coriander, pepper. Finish: Cinnamon, raisins, spicy, peppery spice, woody, medium.
Gold Medal

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Just like whisky, there are several kind of style: “London dry gin” which is made in or near London, “Old Tom” which is mix of full bodied genever and the sweeter, botanical London dry. Today, few gins are still distillated in London (Diaego who distils Gordon and Tanqueray, Sipsmith and Beefeater). The Top 5 Best Selling Brands of Gin Worldwide Company Name 4.30 million cases 3.38 million cases 2.41 million cases 2.10 million cases 2.01 million cases

Brand 1 2 3 4 5 Gordon's London Dry Gin

Diageo Pernod Seagram's Extra Dry Gin Ricard Beefeater London Dry Pernod Gin Ricard Tanqueray London Dry Gin Diageo Bombay Sapphire London Dry Gin Bacardi

We can see that in the top 5 Best-selling gin worldwide, Diaego and Pernod Ricard are the most important. The power of the two groups can allows both of them to market a new product with strong investment and brand awareness. This table must be explained because there are different strategies: while beefeater, Tanqueray and Bombay Sapphire are focused on premium products, Gordon and Seagram are more mass market oriented. Why this new product is needed? This product is needed because other spirituous have declined a traditional product such as rhum into a cocktail such as mojito and it has been a success. Based on this assumption we are trying to fill the gap on the market. It is also a very trending cocktail and people are currently doing homemade strawberry gin.

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THE OPPORTUNITY
We are present already in the market so the matrix is the development of this new product. We explore the actual current situation of the company and structure to achieve a better profitability and get more consumers by a new flavor of gin. About the product; we are recreating a product giving it a new value, is so rare that even in the USA there is no one product as us. Our secret recipe confers us an inimitable situation or at least difficult and with a high cost to imitate and, last but not less, we have already all the organization workers, packers, distributors and sellers.

SWOT ANALYSIS
Strength: • Secret recipe which makes us a first mover in the market. • One of the world´s best-selling dry gin; • Globally acclaimed and well-known • Strong distribution in the whole world. • Implantation in selective markets, the biggest. • Revenues consolidated and big that make available a big promotion campaign • Loyal fan base • Brand recall in public due to rich heritage and legacy

Weakness: • Presence for the new product in just a couple of countries. • Classic styling •Less innovative in the last years • Young age drinker, which are the most and are more likely to drink other spirits

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Opportunity: • Vast untapped market • Revenues and income, cash • An innovation that may give the brand a new look, more fashion and trendy Threats: • Big loyal fan base that might be disappointed by the flavor. • Discredit to the company • Typecasting as a drink for girls and homosexual because of its pink appearance • Selective target audience and perception of gin as a drink for elders. • Regulation and restriction against drinking

SEGMENTATION OF THE MARKET
The alcohol market is a mature market for many years with brands well known and consumers poorly encourage changing their favorite alcohol (rum, whisky, gin, vodka…) and their favorite brands. For this reason Beefeater Strawberry Gin Forever will be a great success, the new flavor of a well-known and established brand will encourage people to taste it, not just fans already of gin, but also consumers of other alcoholic drinks. So it is, that our potential market segment is the whole market of spirits consumers, however we will introduce the products just in two countries, the two where the gin consumption is the largest. United Kingdom has a case that could be defined as unique; is the land for gin and the home of London gin; the Wine and Spirit Trade Association (WSTA) reported a growth in the gins consumption of 0.4% in 2012 after some years of stagnation, but in no case, a decrease in spite of the international crisis. With such a good reputation, the success of a product innovative and high quality as our “strawberry gin forever” is secure. The Revenues of Beefeater are stable in this country and the fan´s support the biggest. The introduction in this market is a sure success, but moreover, we must move us quick; a gin came from Spain, called “Puerto de Indias”, who has a similar recipe is exporting this gin and becoming more and more popular in selected ambient. For this reason the 12

introduction in this country is mandatory before the other brand achieve as a well-known strawberry gin drink. The other country selected is The United States of America, the second largest gin market and by far the biggest export market for UK produced Gin (37 Million LPA worth £135 Million fob in 2013 and according to the DISCUS (Distilled Spirits Council of the United States) a large volume of UK label gin is produced in the USA, about 10´3 million. However, currently had been registered a decrees in the gin market, in 2013 approx. an 8% less comparing to 2009, something predictable taking into account the recession peaks. But moreover, this decrease has not affected the premium gins brands, such as Beefeater, that have held up and have a share of 60% of the market between the five major brands and have showed a 5% growth in the year 2013. About the USA´s market; spirits are just a 5% of the total market in terms of volume, while is a 36% of the market in economic terms. The total share of the spirits market is a 5% and Beefeater is the third gin consumed 14% percent of the market.

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More in depth, our target segment consumer on the market will be concentrated on middle/upper class male/female, 20 to 50 who are important for them to have fun and enjoy a trendy drink. And inside this amount of people are worth to mention the adaptation to the product to two segments of the mentioned target. The high class female 25 to 40 years old, independent, self-confident and showy, and the gay community;

With this product that might be mixed or drink alone, we can have a success such as the Cosmopolitan or Pink Panther, respectively the well-known cocktail for mature and successful women of Sex and the City, and, an alcoholic drink made by whisky and has a great success on the pubs in well-known neighborhoods with a gay community such as Chueca in Spain. Anyway, the promotion to this consumer segment should be subtle in order to not shoo away other segments of the potential consumers.

MARKET SALES AND FORECAST
Strawberry Gin Forever is created. Now we need a market placement to sell our new product. For that we will analysis sales all around the world and we will choose strong and stable markets. We want to increase sales in these countries with the new positive way of business cycle and expand our product diversification. We will forecast our sales based on last year’s performance and taking also into account macroeconomic data from UK and USA. Also we will check different markets outcomes to check the global standing of our company. Mixed performance in Europe (-1%) • • Improvement in Spain and satisfactory performance in France and the UK Consumption less dynamic but still in growth in Russia

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Decline in Germany, Poland and Travel Retail (more challenging business environment, unfavorable comparatives)

Continued growth in the Americas (+3%) • • • US sales down, but underlying trends unchanged vs. 2013/14 (+1%) Good start in Brazil Marked rebound of Travel Retail

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As we can see the markets it is starting to grow up again, but Beefeater is not yet working. This is one of the main reasons why we are launching our Strawberry Gin Forever spirit drink. We can reach new customers with the new product, but we need a strong push strategy in order to get all the demand aware of our new drink. We want to notice the global economic recuperation in our sales as soon as possible, and be able to maintain this grow constant on the following years with our new product.

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The sales have decrease in general for Pernod Ricard in 2014, but we expect a change in the behavior. We are targeting markets that are stable so we forecast growth for the next years in those markets (not only for Beefeater, for Pernod Ricard in general). Improved economic indicators are not yet translating into the Spirits market but some indicators show incoming recovery. Our estimations are quite optimistic base on the macroeconomics data from the world in general and of course from USA and UK. Consumption is rising, positive GDP growth (USA 3% and UK 0.8%) in the last two years that is starting to appear in the society, decrease in the unemployment rate (USA 5,8% and UK 7,1%) and in general more stability to the market.

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Price
We will target mostly medium and high-class income. The idea is to charge the same price for regular and free fat bottle (13,99€ for 70cl). This price is the same as the normal Beefeater. We want a different product with the same price as before.

MARKETING BUDGET
Our marketing budget is going to be focus on TV advertisement, private and public parties and magazine advertisement. The main idea is to make a strong push marketing campaign in the following year. To have productive expense on marketing, we analyze our possible demand. We make sure our TV advertisements are located in time schedule and programs that our target market is most likely to watch. For working adults would more likely watch television at nights or on weekends than during the day. So we will place ads on prime time during the nights. We need to get in the popular television programs such as American Idol so our main target customers can see our new product. We will negotiate spot prices by signing a one-quarter contract with the television stations in our national market. To keep costs down, we will run a few 15-second commercials for branding purposes instead of the more usual 30second ads. The average cost for a 15-second ad in USA is around 150,000€ and in UK 50,000€ (prime time and national TV). Also magazine placement is key. Women looking to fashion magazine and famous tabloid will be target by this kind of ad. The cost of one front-page ad magazine is around 100,000€ in Vogue or Glamour for example. The private and public parties are mainly to give the final customer the opportunity to try our new product for free. This factor is key to reach our goal.

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The product will be well accepted (base on the survey), so we just need to give one free try so the customer realize that new product is what they wanted. The private parties will be huge events where the main objective is to have famous personalities between 20-50 years well reputed and known. After these private parties videos and pictures from our photographers will be uploaded to the web social media (FB, Twitter and YouTube). Social media budget will be dedicated only for this kind of online marketing. The public parties are the place where we will give the product to our real customers. After the advertising and private party the idea is to have us much people as possible in these events. These new clients are the ones that will ask for the drink later on. Distributors (pubs, discos and supermarkets) will need to have our product in order to fulfill the demand we create with our strong marketing campaign. Annual marketing budget for USA and UK: Marketing promotion USA Annual Cost TV Add 10,8 Private parties events 0,5 Public parties events 0,4 Social media (FB, Twitter, 0,5 YouTube) Magazine Add 1,2 Marketing promotion total 13,4 million € Marketing promotion UK TV Add Private parties events Public parties events Social media (FB, Twitter, YouTube) Magazine Add Marketing promotion total Annual Cost 5,4 0,5 0,2 0,5 1,2 6,8 million €

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REFERENCES http://www.4-traders.com http://pernod-ricard.com www.adweek.com http://smallbusiness.chron.com/ http://www.southernwine.com/OfficesNationwide/Arizona/BrandAwareness/Spiri ts/Gin/Beefeater.aspx http://pernod-ricard.com/21/home

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