Climbing the ladder

With so many drinks brands vying for space on the bar, it's hard to know which way to turn. Adam Withrington asks Myles Doran how Barracuda makes sense of it all.

Myles Doran, marketing manager at Barracuda Group, is getting animated. We are sitting in one of Barracuda's prime Smith & Jones outlets - the Prodigal, in Central London - planning to talk about the company's attitude to drinks brands and retail. But having asked Myles about the relationship between retailers such as Barracuda and drinks brand owners I quickly realise I have touched a raw nerve.

"We are constantly meeting people from drinks companies who are showing us their new product and saying this new multi-million pound brand will be the biggest thing there has ever been on the high street," he says. "All I can think is I wish I had £5m to spend on a new brand. Because more often than not, what they are showing me is rubbish. They have wasted a fortune on these products. Half the time I feel like a Hollywood director constantly having to turn down something touted as 'the next big thing'."

Strong stuff you may think, particularly if you are a drinks brand owner, but if you could see the frustration etched on his face then you might start to sympathise.

He believes that the relationship between the two is not as well-developed as it should be: "Communication between a drinks company and the retailer is the most important thing in this business - there has to be a good relationship. I just don't think that exists. Drinks companies don't consult us when they are developing new products. They often just show up with the finished article. It is a fait accompli and we are just supposed to go ahead and accept it - it really frustrates me. I just think 'why don't you just talk to us before developing new products?'"

Myles does, however, believe that the drinks producers should be congratulated for their work in other areas of the business. "It is refreshing that brand owners work on mixability opportunities," he says. "The success of RTDs has given acceptability to sweetness on the palette and this is now having a knock-on effect on sweet long drinks. We are also seeing a lot of pitcher sales for real 1990s brands like Malibu and Southern Comfort. Malibu and cranberry, for example, is doing really well."

He argues that brand owners need to follow the example of Global Brands Ltd's shooter Corky's and realise that you can have commercial success with lower ABV products.

"Pitchers and shooters have been a major factor behind our growth," he explains. "The big shooter brand across our estate is Corky's and I think the main reason behind its success is that it is 20 per cent ABV. We actually suppressed shooters like sambuca and pushed brands like Corky's a lot more because of the ABV difference. We don't want to throw fuel on the fire."

Myles feels this is an important message to get across to consumers and as such is something heavily promoted in Barracuda venues. "We try to take the high ground and drive a high margin model," he explains. "Some people have the attitude that the cheapest will survive. That is not what we are about. We make sure that responsible drinking messages are on all our literature and we try to be responsible in everything we sell."

How Barracuda treats different drinks categories across its estate:​

• Wine and spirits​ "We treat wine in the same manner across all four of our retail brands. There has been a migration away from RTDs back to wine and long drinks. So we are running programmes on the perfect serve of vodka, gin and Jack Daniel's," Myles says.

"On wine we work directly with Matthew Clark. We make a point on our wine list that the first thing the customer sees is the grape variety. I think that people do choose their wine by the grape and as a result Matthew Clark has trained our staff on grape varieties."

Indeed, the bottle clips on their back bar displays have taste descriptions on them as well as possible food matching suggestions.

"Since our new wine menu launch we have had try-before-you-buy nights at our pubs - it allows our staff to network with customers and talk through the new menu. I think this builds up customer loyalty. Plus it helps engender us to a female market - it gives them a safe place to have a drink with some good food. In 2003 wine sales went up by 20 per cent year on year. In 2004 they went up by 42 per cent," Myles explains.

Beer​ "We have agreements with Interbew for our premium lager, although we do also stock Kronenbourg to keep the category competitive. With standard lager 40 per cent distribution is with Carling and 60 per cent is with Fosters," says Myles.

"It is important to have variety because there are regional differences - in London Fosters is king but in the Midlands Carling is the favourite. Plus Carling is very tightly linked in with sport - in fact they own that occasion. In our pubs where we show sport we have table service and sell pitchers of Carling.

"Real ale is a bit different. We can't force it on people and if we have a manager who hasn't worked with real ale before then I think putting it in would be a bad idea. But we do encourage it if it will work - we have one licensee who offers 12 ales on a rolling basis - and we would want at least three ales on at one time. Real ale is something that is part of a quality pub experience."

RTDs​ "When the whole RTD explosion started we had 22 different brands across our estate," says Myles. "Now we only have 11 - the most popular of which is Vodka Kick. Smirnoff Ice has been a victim of its own success really. Because people have been introduced to the idea of a branded vodka mixed with a soft drink through Smirnoff Ice a lot of people are now migrating to long vodka drinks."

Best-selling brands​

• Beer:​ Foster's, Stella Artois
• Wine:​ Kumala
• Spirits:​ Vladivar, Jack Daniel's
• Shooters:​ Corky's
• RTDs:​ Vodka Kick

Barracuda's success in retail​

• Varsity​
  
  "Our biggest success story has been Varsity, which we see as an All Bar One for students. Our turnover increased by 11 per cent year on year and one of the big drivers behind that has been the Varsity "V" loyalty card. When Wolverhampton & Dudley Breweries owned Varsity it gave the card away and aligned it very closely with NUS. If you give the card away then people feel is has no value and that maybe there's a catch in there. So we charge people for it and make it more widely available. It has much more credibility now.

"The first year we took it over we sold 180,000 cards, 280,000 last year and this year we are looking to sell 350,000. There is a really nice atmosphere between students and locals in Varsity outlets. Often that cannot work as students get huge discounts over a customer who has been a regular for years."

Smith & Jones​

"This concept was introduced because we felt that the pub market was being neglected as more and more people were going to late-night bars. We wanted S&J to be a contemporary pub offer. So we embarked on a campaign to change all the Ambitious pubs that we bought and some of Gerry Martin's Old Monk pubs into S&J pubs. Then we tinkered with the model and started buying our own pubs for that model as we needed more in smaller towns.