This article was initially published in the March issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
Beverage alcohol brand owners often ask when they should look to launch their brand in global travel retail. The answer depends on a number of factors, such as the growth of the brand’s category, how many competitor brands there are and how unique the brand is.
Given the complexity of the channel, I’ve put together a five-point checklist to help brand owners think about whether to launch in GTR and when the timing is right for them.
International expansion plan
Does the brand have an international plan and presence? GTR can help support a domestic market strategy and vice versa.
GTR is a channel that can help support the growth of a brand in domestic markets, but is not the place to launch a new brand. A brand should be present in a number of markets before entering GTR. If a traveller sees a brand in a GTR outlet, it’s important that they also have the opportunity to purchase it in their home market. GTR should therefore not be considered in isolation to a domestic market plan but in synergy with it.
It’s also important that the brand has the desire to expand and grow internationally and has a long-term international market expansion plan in place. Brand owners can learn from their experience in GTR and how different nationalities are responding to their brand; this can help inform future market expansion opportunities.
A GTR strategy
Does the brand have a clear GTR strategy in place or a plan to develop one? Rather than rush head first into GTR, develop an understanding of the channel, set clear objectives and establish an action plan to achieve them. One of the first questions to consider is what role GTR will play in the development of the brand and which regions, countries and sales channels to focus on. The following points should form part of the plan and are of significant importance to think about when deciding whether to enter GTR.
Clear shopper and consumer target & reason to buy
Is there a defined shopper and consumer target for the brand? An important starting point is to be clear on which nationalities and traveller profiles to target as this will help determine which locations to focus on. The nationality focus will more than likely be informed by the international market plan. In GTR, as in domestic markets, the person making the purchase may well not be the end consumer. Therefore, it’s important to know the main reasons why someone would want to purchase your brand – for example: for gifting, home bar stocking, drinking while on holiday – and have a plan in place to satisfy these purchase missions.
Knowing this will also help to inform the locations to focus on.
Route-to-market and logistics
GTR can be complex due to its global nature and different subchannels. Does the brand owner have product in bonded warehouses in hubs around the world to be able to supply travel retail customers? This also involves choosing the right distribution and logistic partners to work with.
Investment
Is the brand prepared to invest in GTR? There are four key investment areas for brands to consider: pricing, portfolio, marketing and people.
Pricing – From a pricing perspective, brands need to ensure they’re at a stage in their life cycle to support the margin requirements that GTR retailers have, along with the retail price savings required. There is no doubt that many GTR locations offer a shop window to the world and a wonderful awareness-building opportunity, but being present in the channel also needs to make sense commercially. Given the fact that GTR offers a selling and brand-building opportunity, the balance between both needs to be thought about carefully.
Portfolio – Does the brand have the right portfolio for GTR? This includes deciding whether a 1-litre bottle is required or any special packaging and channel-exclusive versions. This is another investment area that needs to be considered.
Marketing – GTR offers brands a wonderful opportunity to generate visibility and awareness with large numbers of travellers and, as mentioned above, can play an important brand-building role. There are a number of marketing investment options to consider: display, promotion, advertising (in and out of store) and sales support via promoters and ambassadors. Consideration should be given both to what happens in the store and on retailers’ e-commerce sites.
People – Investment in how a brand is ‘taken to market’ also needs to be considered. How will the brand get to retailers and distribution points? This involves investment in people, whether internal or external to the brand’s organisation.
Deciding how to approach GTR and when to launch a brand takes a great deal of thought as well as a solid plan. Expert help and advice is recommended to create a channel-specific strategy that can be turned into action.
Following this checklist will hopefully help and provide a good starting point for brands thinking about whether to expand their business into this challenging – yet lucrative – channel.
This article was initially published in the March issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
