The Publication For The Grocery Trade

Cactus Jack's Schnapps Shotz - livening up the RTD market

The UK Ready To Drink (RTD) alcoholic beverages market is said to be in decline generally, but the phenomenon of young, independently minded consumers setting their own drinking style certainly is not! Independently owned drinks supplier InterContinental Brands (ICB) is finding fresh success in the RTD market through its strategy of creating and delivering new products and experiences for this stylish and fashion-conscious audience, who have the budget and the inclination to socialise and enjoy themselves and a desire for distinctive products that add to the occasion. One such success story from ICB is Cactus Jack's Schnapps Shotz, a 50cl bottle priced at an affordable £5.99, in a range of gem-like colours and whacky flavours, which has established itself both in the on-trade and the off-trade, where it represents a major profit opportunity, especially in the party season. John Hibberd, Joint MD of ICB, spoke to The Grocery Trader. The Grocery Trader - We last spoke to your Joint MD, Paul Burton, in September 2004. How has business been since then? Business has been good, thanks to a combination of new listings and new product development. After a fairly modest start to the year, we had a very good summer, and the last quarter is looking even better. GT - How big is ICB now in turnover? Our annual turnover is approaching £40 million. GT - This interview is primarily about RTDs for the take home market, but how are your wine and beer sales doing? Our wine and beer sales are on target, but our new wine brand Great Big Red, the only branded 15% ABV wine in the UK, is performing even better than expected. We also have some own label beer and cider contracts, including a low carb beer, which was developed for Tesco. Our turnover growth is mainly from our high strength RTDs and spirit blends. GT – Do you do those as private label? Yes, we do private label, exclusive label and our own branded products for grocery retailers, including a full range of 17% and 21% ABV liqueurs, as well as 4% and 5% RTD products. We are a low cost producer that can supply quality products at the right price and can launch new flavours very quickly and effectively. GT - Who owns InterContinental Brands? Itπs a private company, owned by the directors. GT - What's it like working for ICB, rather than the UK arm of one of the bigger drinks suppliers? Itπs very exciting. Life can be stressful at times, but it's also very rewarding. Many of our ideas are brainstormed at work. We also have brainwaves in the car, or even while weπre asleep, and can put them into action very quickly. GT - How long does it take to bring out new products? It varies, but we've developed and launched new products in just four weeks. One of the biggest factors in lead times is getting product artwork approved by the customer – if thatπs done quickly, you can achieve a lot in a short time. GT - In thirty seconds, what does ICB offer consumers and retailers that the larger UK drinks suppliers don't?! We offer innovative brands with exciting flavours and attractive packaging. They are all great value for money products, which taste as good as the brand leaders. We are able to achieve this because we donπt have an enormous cost base like the big drinks companies. We've won and maintained contracts with all the major supermarkets, so weπre clearly doing a satisfactory job. GT - What proportion of your off trade turnover is RTDs? RTDs are 35% of our business and growing, driven by the products that are 15% ABV and above. GT - The RTD market is said to be in long-term decline, but your brands are growing. What are you doing thatπs different? We offer distinctive products that appeal to today's consumers, with higher ABVs, and differentiated flavours. GT - Who buys RTDs in the off trade – is it more women than men? The gender issue is particularly appropriate when it comes to off trade purchase. In the vast majority of households the daily and weekly shop is done by women, and we expect them to respond very positively to seeing something as eye-catching as Cactus Jack's on their supermarket and independent store shelves. GT - Are RTDs likely to be affected by any impending UK Government legislation on binge drinking etc? I guess the Government and any sensible individual would like to discourage people from binge drinking whatever they choose to binge on, and this could just as easily be beer, lager, shorts and wine as RTDs. GT - Have you benefited in any way from certain supermarkets de-listing alcopops, as recently reported? To be honest, our RTD volumes have remained fairly constant. We've tendered for, and won, sizeable contracts because of our cost-effective manufacturing base and well-packaged brands with great tastes at reasonable prices. GT - The top UK spirit brands' RTD extensions have mega-buck advertising budgets, but even so they're said to be drifting, partly due to the fact they've been around for a long time and consumers are getting bored of them. In your view, what is the maximum lifecycle of a successful RTD brand? Thereπs no such thing as a 'maximum lifecycle' – brands like Smirnoff Ice have had long lifecycles because of their successful advertising, and yet Bacardi Breezer, which has also been heavily advertised, is not growing. I suppose five years would probably be the average lifecycle for most big RTD brands, though with skilful marketing some can buck the trend and stay around longer. Our new spirit blends like Cactus Jackπs and VODKAT have longer projected lifecycles, so thatπs why we moved into this sector. GT - When did you launch Cactus Jackπs in the off-trade? We launched it in May this year. GT - Who created the CJ brand? It was a joint effort by the ICB directors and On-Line Bottlersπ development team. GT - How do you develop new products? We work with food chemists, flavour houses and design houses, but over the years theyπve become more like friends. Weπve worked with the same flavour house since we started. Our business is still small enough to be hands on. Samples come in, we fine-tune them and feed them back. It's a very fast process. GT - How do you sum up the Cactus Jackπs Schnapps Shotz brand proposition? CJ's are high proof, flavoured schnapps, designed to pour over ice or straight from the fridge. They taste best as straight shots in 25ml glasses. Incidentally, as a responsible company we consulted the Portman Group before using the word åslamπ on pack. They said it was okay. GT - How big is CJπs in the on-trade, in sales terms? What about in the off-trade? CJ's retail sales are already multi million pounds, split evenly between the on and off trade. GT - For the record, is there any cactus in CJ's? Sorry, no! Cactus Jackπs Schnapps Shotz is a registered brand name, owned by ICB. GT - What about schnapps? Schnapps is a generic term for a broad range of neutral alcoholic drinks. We create and manufacture our own drinks, using traditional methods. GT - What are the different flavours in the Cactus Jack's range? Who are they aimed at? Cheeky and Candy are aimed at women, and are fruit and candy flavoured respectively. Black Zam is blackcurrant and Zambucca flavour, aimed at men. Blue Chilli and Sticky Toffee are generic, appealing to people of either sex who like exotic tastes. GT - What percentage alcohol is CJ's? Cactus Jack's is 20% ABV. GT - Why have you pitched it at that percentage level? The duty at 20% is lower compared to, say, 40%, so the retail price is lower. We wanted to offer drinks at an affordable £5.99 price point that appealed to both men and women, who could enjoy Cactus Jackπs all the way through an evening and could sample two or three different flavours without the risk of getting quickly intoxicated. GT - 50cl sounds like a big bottle for this kind of drink. Any plans for smaller sizes for both on and off trade? No, we haven't. We emphasise on the pack that each 50cl bottle contains 20 x 25ml shots. We also state clearly on all CJ's back labels that itπs a high proof drink and should be drunk in moderation. GT - How long does CJπs keep for after being opened? It can keep for months after opening if kept in a fridge or freezer. GT – Is there a story behind the bottle shape? It's a bespoke bottle sourced from Eastern Europe. Cactus Jack's is partly inspired by tasting flavoured Schnapps and Grappa in Italy. Hence weπve put Cactus Jackπs in a proper Schnapps bottle shape, which confirms its authenticity. GT - Which multiple retailers is CJ's sold in? It's in J. Sainsbury's Convenience, Bargain Booze, NISA and Spar. Weπve been focusing on the independent sector so far, but weπre happy to talk to the major multiples too. We already supply them with various RTD products. GT – Speaking of which, how do you serve the supermarkets, Co-ops and c-store chains? Do you have your own supply chain operation? We supply direct to depot, using Palletline and other carriers. GT - How much do you spend on advertising and promotion for Cactus Jack's? We do a lot of below the line activity, including posters, PR, trade and consumer advertising, trade and consumer shows, tailor-made promotions and in-store sampling. We're now developing bespoke display stands to position the brand in shops and cash 'n' carries. GT - What other RTD brands do you market? Which retailers are they sold in? Cococabana and Savanna liqueurs (21% ABV) are on sale in Tesco, as is TVX (4% ABV RTD.) Red Russian is in Sainsbury's; Vodka Buzz and Bahama Buzz are in Bargain Booze; and VIB is in Iceland. Red Star Plus and Red Shot are in Asda, Londis and other outlets. These are all 4% ABV RTDs. We also sell a full range of liqueurs in Iceland. GT - Where do you make your liqueurs and RTDs? Theyπre made at our bottling plant in Middlesbrough, where we are making a huge investment in upgrading and expanding. Weπve recently installed two new filling lines and other capital equipment, plus new warehousing and fermenting vessels. GT - What else is new from ICB for Christmas 2005? Our main launches are some new 22% blends, 'VODKAT' vodka blend, 'G&N' Gin Blend and 'SCOTCHED' whisky blend. They're all selling very well. GT - What space allocation should RTDs have in a supermarket drinks fixture? What about in a C-store? From observation, in most outlets RTDs tend to be allocated up to 20% of the spirits and 'fortified' fixture, but it depends on the individual account and individual store. GT - What other merchandising advice do you give to retailers to maximise the Christmas sales opportunity on your brands? Put them at eye level – display them in the fridge and by the counter. Stay in stock; use our POS material effectively. We're all set to keep the supply chain full over Christmas and the New Year, notwithstanding any extraordinary sales booms over and above whatπs been anticipated. GT - Finally, where do you see Cactus Jack's and your other RTDs going from here? I see us going from strength to strength, particularly our brands that are over 15% and our new spirit blends. Itπs an exciting business to be involved with, and itπs likely to stay that way. InterContinental Brands Tel: 01423 872747