Q&A – Bryony Pemberton, GSK

Ralph Patel: In a competitive market there is likely to be more price-marked drinks products, this is fine for retailers as long as they get a reasonable margin. What plans has GSK got for price-marking?

Bryony Pemberton: The benefits of price-marked packs to retailers are huge. As a shopper I understand that when something is price-marked, it’s offering me better value.
Historically, independent stores were renowned for selling things at a slightly greater price than multiples – but that’s OK, because they offered convenience. Now, in these financial times, shoppers are looking for better value.

We’ve increased the range of price-marked packs that we offer, but we make sure that we offer both price-marked and non price-marked variants, because they might not work for every retailer. I’d definitely advise independent retailers to stock the price-marked variants where they can, though.

We’ve worked hard to communicate our price-marking message right through the line, and have altered the design of our cases to make sure it’s clear in depot.

GSK understands the importance of price–marked packs, particularly in the impulse environment where research suggests over 70 per cent of customers are more likely to purchase a product with a price-marked pack^*. GSK offer price-marked packs on both Lucozade Energy Orange and Lucozade Energy Original, Lucozade Sport Orange & Lucozade Sport Raspberry, Ribena Blackcurrant 500ml & 288ml and Ribena Strawberry 500ml & 288ml in recognition of this need within the channel.
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Ralph Patel: We used to receive some helpful visits from GSK reps but this seems to be drying up. Does GSK still believe in sending out reps and if so, what sort of advice and promotions will they be offering retailers?

Bryony Pemberton: We have a rep force that is in the hundreds that has dedicated callage across independent, convenience, grocery and travel stores as well as and wholesale and foodservice outlets. At the end of 2010 the call file for independents was increased from circa 20,000 to 36,000.

Our reps work with retailers to grow soft drinks sales and are able to share soft drinks category information as well as new products and promotions/events.
We upped the amount of calls they make at the end of last year and relaunched the communication materials that they use. To change these we sought feedback from retailers about what they wanted from their reps, and introduced different materials that our reps can leave behind if, for example, the shop owner or manager isn’t in at the time of the rep call. Improving our ‘leave behind’ materials is key.

Steve Denham: Soft drinks are targeted at a younger market. It would be good if GSK could provide us with an understanding of how they see these markets segmented demographically?

Bryony Pemberton: Soft drinks tend to be focussed at a younger audience due to the younger demographic of buyers into this category. This is particularly noticeable in convenience stores where the average shopper is aged between 35 and 44 but for soft drinks it is under 24.

Of convenience store shoppers 16 per cent are under 24 yet 33 per cent of soft drinks shoppers are under 24. This is markedly different even from other impulse categories which have older buyer profiles with only 22 per cent of confectionary shoppers being under 24 and 24 per cent of crisps and snacks shoppers.

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Steve Denham: It would be good to get an understanding of how the soft drinks market works seasonally. We all know summer is a peak time, but are there other times in the calendar when retailers should be reconsidering their soft drink category?

Bryony Pemberton: Soft drinks sales in impulse/convenience locations tend to fluctuate with temperature but also with the number of people out and about. In summer when temperatures are higher more people are looking for refreshment due to the climate and we see on average a 3.5 per cent increase in sales for each one degree rise in temperature. However, there also tend to be more people out and about in summer thus purchasing from these types of outlet, this makes for a marked difference in sales throughout the summer months. At other times of year when people are out and about more you also see rises in soft drinks sales. For example, with the increase in at home entertaining across the Christmas period a sales rise is seen in larger format, Take Home soft drinks. It is also important for stores to understand when local events may mean higher numbers of people are likely to call for example, store near to major sporting events, festivals etc. This is a time when stores can really capitalise on the extra footfall in their local area.

When thinking about changing your range to suit the season, be aware that 60 per cent of soft drink sales come from the 10 biggest brands. So firstly you need to make sure that they have enough space, but there may be room to rotate some slower sellers to suit the weather.

Logistically it’s very difficult to keep rotating your range, but if you do you need to make sure that the core is never off sale.

_{AC Nielsen, GSK Research 2008-09}

Harry Goraya: There seems to be a lot of activity getting behind Energy Drinks, but what about health drinks.

Bryony Pemberton: Sports and Energy drinks are the fastest growing segment in FMCG and the largest soft drinks segment in Impulse. As a result there is a lot of activity in this segment where performance is driven by innovation and NPD; for example Lucozade Sport Lite. Healthy drinks, for example, juices and smoothies are experiencing a much tougher time with segment performance of -15.9 per cent MAT YOY^*

With difficulties in chilled transportation and the premium nature of this segment it is one which has proved less successful in independents/impulse. This Premium category has been particularly hit through the recession where consumers are looking for value. With more functional drinks available consumers are able to find a wider variety of offerings to suit their particular health requirement.

Health can mean different things to different people – some see ‘diet’ variants as healthy, some don’t. But the traditional health sectors of juices and smoothies play less of a role in independent stores.
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Harry Goraya: We only see our rep about twice a year, whereas the Coca Cola rep visits monthly. It would be helpful to get another view on our soft drink category. Is there any way you could help us on this?

Bryony Pemberton: GSK increased callage to independents towards the end of 2010 and our reps are equipped with a number of tools to help inform the retailers on the soft drinks category. We are also raising the availability of category information for retailers through working directly with wholesalers, retail clubs, trade press publications and online.

Reps often turn up without an appointment and wind up talking to managers who don’t have the same insight into the business as the owner, it could be a good idea to have a newsletter offering category advice and contact information.

Bryony Pemberton: GSK reps (and many other manufacturers) are equipped with leave behinds to be left with stores for exactly the purpose requested. At GSK these are produced for a variety of topics including general category information and trends, new products and events and category insights. I would encourage retailers and their staff to request this type of information from their reps and take time to look at the key headlines. At GSK we have refreshed our field leave behinds and trade ads with help from retailers to make them easy to read, understand and action in-store.