#21interviews: Our products need to make a difference to society
Natasha Maharaj, marketing director at Distell, says brands have to have a purpose and make an authentic contribution to society.Friday, 18 Dec 2020
Natasha Maharaj, marketing director, Distell, says brands have to have a purpose and make an authentic contribution to society. In the case of the alcohol industry, that means more self-regulation to promote safer consumption habits. Distell and Diageo SA collaborated after subsequent bans on alcohol sales had a hugely negative impact on the industry, which directly generated R137 billion (3%) of SA’s GDP in 2019, which is more than the contribution of the entire agriculture and food processing sectors. During 2020, the marketing of alcohol brands has had to adapt to a significantly changed and regulated environment, with brands catering to the growing trend of moderation and healthier lifestyles; safer consumption of alcohol; as well as the impact the alcohol industry has on employment and economic growth in South Africa.
1. Where is your market status now, in terms of recovery and volume?
In May, the IWSR warned that it will take five years for the global alcohol industry to recover and rebound given the shutdown and then reduction of trading hours in retail, and similarly, the on con (on consumption) at bars and restaurants. Although there has been an uptick, it is not nearly enough to recover to prior Covid levels. In South Africa, about 4.3 billion litres were lost as compared to 2019; about R30 billion by way of GDP between the two bans (on the sale of alcohol under lockdown); about R20 billion lost in taxation; and more than R20 billion in lost revenue. In terms of Distell, our group revenue is down 14,6% on 22,5% lower volumes; and domestic revenue is down 18,2%, alongside non-alcoholic growth and innovations during restrictions. Our headline earnings (in line with guidance) were reported down 63,9%. We are still in a state of recovery and will be in the coming years as we recover earnings back to the levels of previous years. We have seen some surge buying post lockdown given uncertainty and anxiety in the system, however, we are seeing a normalisation of sorts. We will continue to look for growth opportunities by way of portfolio choices, innovation, consumer trends and investment linked to the portfolio gaps/opportunities.
2. What have you noticed about changed consumer behaviour?
Globally and locally, we have noticed consumers shifting towards brands with purpose and things consumers care about. On the back of Covid, this has become more prolific, such as initiatives such as the Amarula Elephant conservation drive through WildlifeDirect; or the Drostdy-Hof and Pinotage Youth Academy for the sustainable development of youth in the wine industry; or Savanna creating a virtual comedy bar – providing comic relief during a tough time when South Africa needed it – but also helping comedians sustain some income during Covid. A rise in ecommerce, even in South Africa, and a shift to online buying and convenience, which, while still smaller than global, is an exciting acceleration by way of new ways of targeting consumers and business models. Consumers are also prioritising value, given the tough state of the macro conditions and consumers’ disposable income being under pressure. Conscious consumption is definitely on the rise, especially no lo (no or low alcohol brands). People are more aware of moderation and looking for adult beverages with lower ABV (alcohol by volume), understanding that alcohol is part of a balanced lifestyle. We have seen a growth in our non-alcoholic (non-alc) portfolio and will expect to see this trend continue in the coming years. We have seen this across our Savanna and Hunters non-alc range; and we have just launched a lower ABV Viceroy Spirits Aperitif at 23% ABV.
3. What does your market segment need to do to recover?
We need to consolidate and make portfolio and brand choices to ensure a sustainable business model; understand consumer changes and shifts; and move with the consumer by way of innovation, portfolio choices, consumer needs, i.e., we have seen a shift to bigger packs as consumers consume more in home – therefore how do we make this experience better for the end consumer; and conscious consumption. We need to engage in open and inclusive discussions with government, industry and society, with regards to alcohol policy and regulations – which wasn’t the case earlier this year. The road to recovery requires constant and open dialogue and discussion for inclusive decision-making, that looks at livelihoods holistically and the economic multiplier this industry has by way of jobs, revenue, income for the government. We need to continue to drive responsibility messaging and behaviour shifts around alcohol and moderation; and accelerate support around harm reduction initiatives such as drinking and driving to assist in making a tangible change to behaviours now and in the future. And we need to offer value – not just by price, but through experience, benefits, and purpose, while always remaining authentic; and we need to drive local and South African-made products from a pride standpoint, while ensuring local employment.
4. As a marketing leader, what has challenged you the most over the past months of crisis management?
Creating certainty in a world of uncertainty and how to give people stability despite the volatile state we are in. To manage this, I have been communicating frequently across the teams to ensure everyone has a view of what’s going on, and in the process, creating some certainty and inclusivity; as well as giving them structure and some sort of roadmap to focus on. We needed to ‘find the truth’ – not versions of a truth, but the best view of one picture of the truth. Alcohol stats have been thrown around, and what has been a big reflection point for me, has been how to get the ‘most true data’ to show a real view of the state of the nation. Vision and optimism excites people, so, how, despite the anxiety and uncertainty, do you find honest optimism and create a new positive narrative for the teams? We needed to listen to our people and understand where people are truly at, emotionally, during this time with continued check-ins. Virtual meetings have created access, however, it’s important to create real connection and bonding, so people feel part of something still, and not alone. Human connection is still key to engagements.
5. What is your prediction for the marketing and retailing industry for 2021?
Specifically, for the alcohol industry I can see a continued growth in online purchasing/ecommerce and new business models that arise out of direct to consumer and data insights. No lo will grow, i.e., no and lower ABV content, as conscious consumption grows and people are more aware of their health and moderation. Brands with purpose will become even more important in the future. Advertising and marketing self-regulation will become more important and the promotion of responsible messaging and behaviour accelerated, as well as alcohol harm reduction programs.
For more insights from retail and brand leaders in the #21interviews series publishing 1-21 December 2020, ahead of 2021:
#21interviews LAUNCH: 2021 comes with a disclaimer, by Louise Burgers, Publisher & Editor, RetailingAfrica.com.
#21interviews: Brands need to get brave, says Bozoma Saint John, Global Chief Marketing Officer, Netflix.
#21interviews: The power of being purpose-led will drive brand value, by Karin Du Chenne, Chief Growth Officer Africa and the Middle East, Kantar.
#21interviews: Plan for growth in 2021, says Herman Botha, Group General Manager, PNA Group.
#21interviews: Next year will be all about authentic visual immersion, by Craig Bellingham, Founder & CEO, Studio[K]irmack.
#21interviews: Covid has created a brand vulnerability, says Elouise Brink, Senior Marketing Manager, Country Road, Woolworths Holdings.
#21interviews: Reimagining a better world without the inequality of ‘normal’, with Economist and Author of the post-pandemic book, FutureNEXT, Dr Iraj Abedian, talking to Retailing Africa Publisher & Editor, Louise Burgers.
#21interviews: Embrace technology at all levels, says Thabani Maluleka, Business Development Director for Rogerwilco.
#21interviews: It will not be business as usual, by Dave Nemeth, Trend Forecaster & Founder of at Trend Forward.
#21interviews: Lessons from an unprecedented year in retail, by Jonathan Hurvitz, CEO, Teljoy.
#21interviews: Beware ‘Covid fatigue’, by Guy Yehiav, General Manager, Zebra Analytics, part of Zebra Technologies.
#21interviews: Be deliberate in listening, says Zizwe Vundla, Marketing Director of Diageo South Africa, talking to Retailing Africa Publisher & Editor, Louise Burgers.
#21interviews: Critical factors for retail growth, by Enver Groenewald, Group CEO, Ogilvy South Africa.
#21interviews: The future of micro-commerce in Africa, with Vahid Monadjem, CEO and Founder of Nomanini, talking to Retailing Africa Publisher and Editor, Louise Burgers.
#21interviews: Plan for a ballet of black swans, by Rachel Irvine, Founder & CEO, Irvine Partners.
#21interviews: Consumers are investing to connect, says Shani Naidoo, Group Director, TFG (The Foschini Group).
#21interviews: Data is key to the future of shopping, by Nompumelelo Mokou is the intelligent customer experience executive at Dimension Data.
#21interviews: Direct to consumer is the future for some brands, says Will Battersby, CEO, BOS Brands, talking to Retailing Africa Publisher and Editor, Louise Burgers.
#21interviews: Community support will win loyal customers, says Sanjeev Raghubir, Sustainability Manager, Shoprite Group, talking to Retailing Africa Publisher and Editor, Louise Burgers.
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