“Advertising pays, but it’s difficult to determine what methods to use,” says Dennis Henderson at Millstream Brewing. “Everyone says their venue is best–but you never know.”
The following article discusses media usage and effectiveness, product focus, population target segments, and the role of celebrities in advertising among four types of beverage manufacturers–soft drink, juice, water, and alcohol-related products.
The agency edge
At 8 percent of revenue, soft drink manufacturers lead the pack in dollars set aside for advertising. Moreover, at 74 percent, soft drink manufacturers are more likely than any other type of facility to use an advertising agency.
Results show that one in three manufacturers plan to increase their advertising budget in 2000. “I find that when commercials have a catchy jingle or a funny theme it seems to attract more attention and brings us more sales,” says Marie Caserman at Sparkletts.
Almost half the beverage manufacturers in the West and Northeast are increasing their advertising budgets. “[We] see spikes in volume when we’re being aggressive with our advertising. When we slack off, the sales go down,” says Bill Garty at Veryfine Products. On the other hand, 86 percent of manufacturers in the Midwest are sticking to their 1999 budgets.
At less than 5 percent of revenue, the advertising budget at bear/wine-makers is lower than the budgets reported at other types of facilities. “A large part of our advertising is done through the Wine Growers Association,” says Judy Masters at Retzlaff Winery.
New product advertising
As Beverage Industry’s R&D Survey demonstrated and this survey confirms, new products are key among soft drink and juice manufacturers. Juice manufacturers invest $0.27 of each advertising dollar for new product launches and soft drink manufacturers invest $0.21.
Existing products consume $0.70 of each advertising dollar at bottled water and beer/wine facilities.
Calling all young
Two-thirds of soft drink, juice, and beer/wine manufacturers target their beverage products to specific population segments. At bottled water facilities, however, a target audience is generally less important. Soft drink manufacturers typically target young men and women, teens through 35 years old, in advertising. On the other hand, juice processors target diverse segments. Although young men and women are important, families, mothers and health-oriented consumers have caught the eye of 40 percent of juice processors.
“Advertising [has impact] if it’s geared to the target audience,” says Steve Kovack at McCain Citrus. One manufacturer explains that the target audience may not be the focus of advertising: “Children are our biggest market but advertising is geared to parents.”
Most beer/wine makers target men and women aged 21 to 35 years old. However, this survey shows a high interest among wine/beer manufactures in targeting both sports-oriented individuals and upper income earners. Surprisingly, 10 percent target men exclusively.
Advertising media varies
Use of Advertising media varies by type of facility. Soft drink manufacturers consider POP display the most effective advertising medium. Juice manufacturers prefer printed media. On the other hand, two-thirds of bottled water manufacturers are banking on event sponsorship. Unlike other manufacturers, beer/wine-makers demonstrate a high web investment.
Marty Zirofsky, Northeast division vice president at South Beach Beverages, says “You can’t see the results [of advertising] immediately–but the end results are what’s important: we have seen a big increase in brand awareness.”
Maximize the impulse purchase
POP display is more likely to be used by soft drink manufacturers than any other type of manufacturer. “The biggest thing is getting the message to the in-store customer by advertising in the stores,” says John Gilbert at Pepsi-Cola Bottling. Reflecting the impulse nature of soft drink purchases, three out of four manufacturers use POP display/trucks/store signage for advertising, which they rate very highly in terms of effectiveness. POP display commands $0.22 of each advertising dollar at soft drink manufacturers.
Although soft drink manufacturers rate TV very highly effective at “3.6” (where “5” is highest and “1” is lowest), few can afford to use this medium. In fact, this study shows that larger manufacturers find TV more effective than smaller ones. For example, multinational companies rate TV effectiveness “4” whereas smaller manufacturers give it a “2.8.” However, if TV is in the budget, “the benefits of national advertising are subliminal,” says Thomas Geocaris at Pepsi-Cola.
Radio and event sponsorship advertising are considered effective by two-thirds of soft drink manufacturers and command $0.10 of the advertising dollar. Web advertising, used by 55 percent of soft drink manufacturers, received an average rating for effectiveness.
Financially speaking, the Web seems a good investment for soft drink manufacturers. It consumes $0.04 of the soft drink advertising dollar and achieves an above average rating for effectiveness. On the other hand, it is possible that traditional media are being employed to advertise Web sites and that this survey, therefore, has not truly captured the cost of Web advertising.
Printed media, used by most soft drink manufacturers, received a low rating for effectiveness. However, other types of manufacturers find print most suitable. Juice manufacturers, for example, rate print 3.7 out of 5 and this compares to 2.8 out of 5 for soft drink manufactures.
“Advertising stimulates our sales by 15 to 20 percent without doing anything else to promote our business,” says Patrick Stungill, sales manager, Tri City Beverage Corp.
Juice favors print media
In which medium should juice manufacturers advertise? Print media — magazines, publications, or newspapers — seems to be the answer. Print media commands $0.41 of the advertising dollar from juice manufacturers. Also, compared to other types of facilities, juice manufacturers rate print media very high in effectiveness.
Generally speaking, juice manufacturers find all advertising media pretty effective. “Advertising has a direct relationship to sales–we can see sales double after an ad,” says Steve Moore, co-owner, RD Mountain Bottling.
Like soft drink manufacturers, juice processors consider POP display a most effective medium setting aside $0.23 of their advertising dollar for this medium. “In-store displays are the most effective advertising because you have your product and consumers together,” explains Holly Newberry, marketing director, at Florida Bottling.
Event sponsorship/trade shows and billboards are rated highly by juice processors for effectiveness and account for $0.14 of the advertising dollar. Radio, used by 44 percent of juice received an above average rating and command $0.13 of the advertising dollar. The Internet, however, is considered least effective for juice manufacturers.
Water bottlers like event marketing
Two-thirds, the highest percent usage among all types of facilities, of water bottlers use event sponsorship / trade shows for advertising. For effectiveness, bottlers rate it 3.6 out of 5 and allocate $0.14, the highest amount among all types of facilities, of their advertising dollar toward event sponsorship.
Gary McNeil, general manager, at D’Angelo Natural Spring Water, points out a very important advertising strategy: “Our business is built on word-of-mouth and satisfaction from our customers. Our satisfied customers fill out referral cards and are rewarded with two free bottles of water and that generates sales.”
POP display was rated extremely high, 4.3 out of 5, for effectiveness by water bottlers. Also, water bottlers allocate $0.23 of their advertising dollar to POP display. Another priority is printed media, which commands $0.27 of the advertising dollar.
Although most water bottling facilities, 57 percent, have a Web site, Web advertising received the lowest rating of all in terms of effectiveness. On the other hand, radio advertising, employed by 55 percent, received an above average rating for effectiveness.
Double duty corks
“Putting our Web address on our cork increases our exposure to the public and awareness of our winery,” says Judy Masters at Retzlaff Winery. Two-thirds of beer/wine-makers are advertising on the Internet, which commands $0.13 of their advertising dollar–the highest allocation for the Internet in the industry. “With, so many new opportunities out there for advertising, such, as Web sites, this is a very exciting time,” says Jean DeLuca, director of public relations, at Merryvale Vineyards.
In fact, POP display, the darling advertising medium among other manufacturers, receives less of the advertising dollar than the Internet at beer/wine facilities. However, like juice manufacturers, print advertising sips $0.50 of the advertising dollar at beer/wine facilities.
Radio and event sponsorship are used by about 45 percent of beer/wine makers and command $0.21 of their advertising dollar. Expensive TV advertising, though rated high for effectiveness, is rarely used. Billboards and flyers are used by about 20 percent of beer/wine-makers and are considered the least effective media.
On seasons and sports
Summer, especially June and July, is the most important advertising time for soft drinks, juices, and waters. December, however, is the most important advertising month for beer and wine. Moreover, except for the first three months of the year, all months are good for advertising alcohol-related products.
Multinationals are more likely than smaller manufacturers to use celebrities in advertising and their preference is for sports personalities.
Nevertheless, all manufacturers were asked to name the celebrity they would choose to represent their company in advertising — regardless of cost. Mirroring reality, sports personalities appeared at the top of the wish list; namely Michael Jordan, Tiger Woods, and Arnold Palmer. One in four manufacturers wished for a movie star, specifically Julia Roberts, Arnold Schwartzenegger, Harrison Ford and Sophia Loren. Just less than 20 percent wished for TV celebrities, Oprah Winfrey being at the top of that list.