When people find out I am a wine and spirits agent, I always get asked a ton of questions and quickly learn how little people understand about how new products get on the shelf in Ontario and how they are sold. All liquor in Ontario is regulated by the government agency called the Liquor Control Board of Ontario (LCBO). This means all liquor is regulated and controlled by this monopoly, so having to deal with this organization has its benefits and its challenges.
There are 618 LCBO stores in the province of Ontario and 125 stores have over 2500 brands on their shelves (http://www.lcbo.com/aboutlcbo/media_centre/quick_facts.shtml). How does a new brand compete with such a large number of products, the strict quota system, and the well established brands in every category at the LCBO? This strict quota system at the LCBO stipulates that every new product must meet its minimum annual sales target in the first year to remain on the shelf. How do you develop a brand in 1 year among the myriad of other new brands released daily at the LCBO? More importantly how do you do this within your Advertising and Promotions budget (A&P)? The big agencies have large budgets and staff to accomplish this in the first year, but these large companies are not just interested in attaining the minimum quota, they are set on establishing a new brand and taking away market share from a rival or a competitor brand. What about smaller agencies with limited staff and budgets with suppliers with very little money. The larger agencies would probably pass on brands with limited market appeal and virtually no budget, but they could miss out on a brand like Fuzion which rocketed to selling a million bottles in Ontario in 6 months (For the background read Gord Stimmell’s article published in the Star on Sat Jan 24, 2009: http://www.thestar.com/living/article/574283). But every new brand is not another Fuzion so how does a regular listing work to get notice at the LCBO? When a new brand gets launched there a variety of promotions that can be applied for at the LCBO. Some of these promotions you may have noticed in the past consist of:
· Air Miles
· Limited time offer (means $1 off etc…)
· Neck tags
o Information about the product, cocktail recipes, recent awards etc…
o Sample give-aways include:
§ Scented tea lights
§ Sun glasses
§ Hand sanitizer
§ Wine accessories (opener, pouring discs)
§ Small alcohol samples (50 ml)
§ Hand moisturizer
§ Beef jerky
Let’s not even talk about strategic shelf placement in the first year at the LCBO for a new product. In addition to all the promotional signage, there are many other signs listing everything from new products to, recipes, to themed promotions, contest, etc… So the average consumer is assaulted with a great deal of information when they walk through the doors of any local LCBO store.
Another form of promotion is the "In Store Public Tastings" (IST). In the 2010-11 fiscal year the LCBO conducted 27,379 in store public tastings (http://www.lcbo.com/aboutlcbo/media_centre/quick_facts.shtml). Out of that number I personally conducted over 50 LCBO store tastings for our products, from London to Barrie to Oshawa. This method of interacting with the public regularly has given me some insight into the buying patterns of people who shop at the LCBO. In addition I routinely monitor all the sales data from our brands including the promotions we run, so I can quickly assess the health our products and effectiveness of our promotions.
First of all let me describe the average person who walks into an LCBO store compared with people who visit other tasting venues such as a drinks trade show. The trade show consumer is mostly made up of that segment of the population that is interested in wine, beer and spirits as a cultural experience and continuing their education. They walk up to you with glass in hand and are there for the sole purpose of sampling something new, something unique, or expensive, or just sampling their favourite product. At an LCBO tasting booth you get the entire cross section of the alcohol buying consumer; everyone from the beer drinker, the spirits drinker, the cooler drinker, wine connoisseur and occasional wine drinker. This is the best random sample to select from.
The first challenge is to get them to stop, and most of the time people are rushing in and out of an LCBO store as fast as they can and don’t have time to waste. Most people who enter an LCBO know exactly what they want and this group of people are very difficult to stop to sample anything. Those people who do stop do it out of a sense of curiosity, interest and also if they have the time.
The appearance of a group around the tasting booth has a very powerful effect on others. People can almost be described as herding animals. This is not meant as an insult, but this best describes the effect of a crowd on people’s curiosity. When more than 3 people are at my booth, this definitely attracts a lot more attention and other people who cannot even see my booth (due to the crowd) or what I am sampling, come over out of curiosity. People are attracted to what others are doing and want to participate and join the group.
The first question people ask is “where is the wine from?” the other common question I get asked is if I like it. Too often tasting booths at the LCBO are operated by people from tasting companies and are not very experienced with the product and in some cases don’t like it themselves. I on the other hand as the agent (and Brand Manager) clearly believe in the brand and speak of it confidently and glowingly, this personal connection with the brand really impresses people.
While offering the sample I describe the product and then wait to hear the reaction if people like it or not. When there are more than 3 people at the booth and one person likes the wine, the effect of a stranger telling another stranger a wine tastes good is the best endorsement and a much stronger recommendation than coming from me. When this happens, I always sell 2-3 bottles just from people’s endorsements.
I have always wanted to “plant” a crowd at my booth with people who work with me and see if this drives more sales. I am not that devious to manipulate consumers in that way and in truth I don’t think it would work. The reason why I don’t think it would work is that people can also sense sincerity. A sincere and honest endorsement is far more powerful than a staged one. Even if the planted person truly likes the wine, I think people can sense the difference and it is this sincerity that what motivates people.
The survey I conduct of people who participate in the tasting is very rudimentary, and it is from this regular survey data I use to formulate upcoming promotions. Over the course of 50 tastings I have sampled approximately 3500-4000 people so I get a lot of feedback from people on all aspects of our products from the labels, to the name, grape varieties and many more aspects.
One thing that I am always fascinated by with these tasting is the power of the impulse buy. I am not an impulsive person and as a market researcher, the one thing I hate the most is the impulse buy! I have had people walk up to me and say “I came in for wine, so I’ll try this one”. Many times they don’t even taste the wine but they simply pick it up and take it to the cash. The reason I dislike the impulse buy is because I can't get any feedback from the consumer. I don’t know if my sales pitched swayed them, was the price point spot on, did the well-crafted label and display motivate the sale or if they even liked the taste? Through the course of these tastings I’m not only trying to sell a product, I’m doing research on what people are looking for in a product and the impulse purchase, tells me nothing. These tastings account for less than 4% of monthly sales and are not designed to move product, therefore every bottle sold this way is almost a waste.
Two of the wines I taste regularly are well priced at $11.95 and according to the LCBO (CATMAN Period 13-2010) is in the range of the highest increase in wine sales (11.2%) over the previous year. Another interesting pattern that’s emerged from tasting these two wines is the difference in red to white sales compared with regular sales. More people prefer red wine and taste the red more often which leads to greater sales, while the white wine outsells the red consistently. The overall wine sales breakdown is 54% white and 46% red consistently over the course of 1 year. While the tasting sales breakdown over the same period and 84 tasting events is 51% red and 49% white, this is a reversal of the regular sales breakdown with a difference of 3%. Possible reasons for this are; even though the white wine is very popular, the taste of the red is appreciated. Also the red is medium bodied and similar to merlot which could also suggest a tasting preference of the average red wine drinker.
The in store public tasting program is an interesting and informative promotional method to engage the consumer and see how they respond to different products. I treat this regular interaction with the consumer as an informal focus group, and an ongoing qualitative research project where I constantly gather data on our brands performance in the marketplace. It’s also a great way to observe people’s everyday buying habits at the LCBO.
