Shaken, not stirred

After the increase in excise duty and VAT, spirit distributors spent most of 2009 with rethinking their price strategies. Although the number of spirit buyers is declining, the average price of spirits started to grow this year. According to László Nemes, Bacardi Martini Kft.’s marketing director quality spirit producers did not increase prices significantly in past years. However, this year’s excise duty and VAT increase forced producers to raise prices. Nevertheless, this price increase is differentiated: each distributor tries to please consumers with constant promotions focusing on a certain brand. Nielsen’s data indicate a growing importance of large floor space retail channels – in these modern stores all the POS tools are present at the same time and they have better opportunities in brand communication as well. Miklós Juhász, marketing director of Zsindelyes Pálinkafőzde Kft. is of the opinion that garage shops that specialise in selling commercial spirits are losing their customers, probably because people are economising due to the crisis. Pálinka festivals are becoming fashionable, proving that Hungarians are attached to their pálinka and the culture around it. It would be of great help if hyper- and supermarkets would organise pálinka weeks, where they would promote and popularise both their standard assortment and special pálinka products, adds Mr Juhász. Elemér Farkas of Féda tells us that buyers do not have adequate knowledge to choose the best products. He also thinks that pálinka should be communicated as much as wine is. Pálinka should be presented in stores in a way that consumers would feel they buy something special. Those who look for quality seem to prefer medium-quality pálinka on fruit bed, with honey. As for the end of the year market, Zsindelyes will emphasise promotions and gift packagings (glasses, chocolate, dried fruits, etc.) with an added value. Price promotions will also be used as they can be communicated well in hypermarkets’ leaflets. Research data reveal that the spirits market is rather stable in character, only bitters and vodkas managed to expand slightly in the past 12 months. László Nemes says that the driving force behind this was the aggressive price strategies of strong brands. He also spoke about growing rum sales (thanks to flavoured white rums) and his expectations of consumption shifting towards lighter spirits and long drinks. Their novelties, Bacardi Martini and Bacardi Mojito are in line with this; despite the economic crisis, Bacardi is unwilling to start a price competition, instead they focus on building their premium brands. Miklós Juhász is happy that the market share of pálinka grew. Zsindelyes keeps innovating in both technology and image. At the beginning of 2010, their new and elegant packaging design will make Zsindelyes even more appealing to buyers. Their new product will hit the shops this year: Pócsi Bazilita Keserű is an apple pálinka matured on 33 herbs and flavoured with honey.