Alexsandro BX Pinto, former vice-president, marketing, AB InBev South Korea, points out how domestic brands witnessed a rise in the year of the pandemic. Going forward, he expects premiumisation to return in a big way, but he also believes that a brand has to be fully leveraged on data and digital media in order to entertain and solve consumer problems. Pinto speaks to WARC’s Gabey Goh for the Marketer’s Toolkit 2021.
- Digital investment was doubled in 2020 because it could adjust the message for the right consumer at the right time.
- Domestic vs international: During the pandemic, more Koreans turned to familiar and value-for-money brands.
- Premiumisation, and health and wellness, are likely to be big trends in South Korea in 2021.
How have you and your team changed and innovated to navigate through the challenges raised by COVID-19?
South Korea is a market that is very connected, in terms of internet access and high usage of e-commerce services in general. What COVID did here is just accelerate what was already big. For our industry, the South Korean market is a very sophisticated and complex market.
In South Korea, drinking with friends in restaurants is very important. What is happening now is people are trying to indulge themselves more, they are trying to have more solo occasions, where they are drinking alone, drinking with books, enjoying a beer rather than other beverages for relaxation – that is a huge change in behaviour.
The pandemic changed everything for us, whether it is packaging, the number of brands, how we invest or how we talk with the consumer. When the first COVID wave hit South Korea last February, we scratched our entire annual plan. We had to revisit everything. We got our sales team, marketing team and in-house agents to think together. We had to revamp our plan for this new situation. With COVID happening first in China, we could see what could happen in South Korea and prepare ourselves for that.
We implemented a system in our work we called the “phase approach”. We got an idea of the consumer sentiment and spend every single day. We noted if the sentiment is more negative, are people getting frustrated or stressed, what they are talking about, what the tone of the conversation is, if they are going out and spending. Based on that, we adjusted our message.
Phase zero, for us was when everyone was stressed. What could be the right tone for a brand then? Should we keep talking about going out when people are afraid to get sick or should we stop and try to help? So, in phase zero, our approach was basically to stop doing what we were doing and try to listen to the consumer and help as much as we could.
We are market leaders in the country and we have a responsibility to help. We stopped advertising investment, we stopped promotions, and decided to help people with what they needed. We donated lots of hand sanitisers and masks, and supported NGOs. We talked as little as possible about ourselves. It was all about the consumer and giving them some comfort.
Then, phase one was about getting back to normal, and that normal is not exactly the real normal; it is a new normal. It’s quite cliched now but we defined it way back in March 2020.
We did a campaign with Budweiser where we said: “Guys, you can have fun at home. It’s tough. You need to be creative, but you can have fun at home. Enjoy music, cook, play DJ at home.” We offered some stress relief.
In phase two, when more people were getting back to normal, we launched a campaign with Stella Artois a couple of weeks ago, when we created a “one-table restaurant”, a place with just one table for your closest friends. We designed an exclusive Christmas-themed experience. It went for one or two weeks and we were totally sold out and booked until December 31.
Then, of course, there is phase three, when COVID was over. Unfortunately, we never got to that in 2020 but, we adjusted our plan based on this approach.
Fortunately, South Korea is one of the most stable countries in the world in terms of the COVID impact. We had some ups and downs, of course. But it is a very prolonged situation and it’s still tough, but some restaurants are open. Yes, there are some restrictions on the number of people, the time and service but it is not as tragic as the Americas or Europe.
What was the biggest change in the way you and your team worked to adapt to the COVID situation?
The pandemic changed the way we listen to our consumer and try to solve their problems. We were faced with questions like should we spend, should we look for more optimisation. This plays a huge role in our investment.
We more than doubled our investment in digital in 2020. Because it is the channel where we can adjust the message for the right consumer at the right time. We have tried to be very focused on ROI to keep the business flowing.
And I think we got rid of a lot of bureaucracy in the process. We started to do a one-page brief or a one-sentence brief and established a routine. What is the job we need to do for our consumers? What are the problems they are trying to solve?
Secondly, we didn’t change any trend internally, we were only accelerating what we had identified before. The big trends are exploding now, like e-commerce and personalisation of content at scale. If your brand is not fully leveraged on data and digital media to entertain and solve consumer problems, you are doing it wrong.
Of course, there is some small change in terms of direction. For example, before COVID, South Korea was seeing big growth in premiumisation. A lot of premium brands were growing at double and triple digits. With the pandemic, people are looking more and more for familiar and value-for-money brands. The premiumisation is still happening, but there are more craft brands and specialties. For home consumption and self-indulgence, South Korean consumers are looking for more familiar brands, big brands, comfort brands, brands that are closer to them. So, domestic brands and brands with a long track record in the market have started to grow big time again.
Alexsandro B. X. Pinto, former vice-president, Marketing, AB InBev Korea
This huge growth in demand for domestic brands versus international, how are you managing this trend with your product portfolio?
Fortunately, we have both leading international and local brands, but this doesn’t mean we should not push for further innovations to fulfil new consumer needs.
When the pandemic hit, people became more concerned about their economic future. They became more focused on themselves and their close family members, and more rational towards daily consumer goods. In that sense, the domestic brands have a huge advantage because they are more competitive in terms of assortment and guarantee quality at a good price. For example, one of our biggest growth brands in our portfolio last year was a value brand, Fillgood.
How has the interpretation of health and wellness manifested itself in South Korea’s alcoholic beverage sector?
Health consciousness is probably the biggest trend in South Korea. We launched our first zero-alcohol beer brand in Korea in December. It’s the first of its kind in marketing, where we produce a beer with a process we are calling “smart dealcoholisation”, which extracts all the alcohol but keeps the flavour. This is for people who want to enjoy the taste and refreshment but not necessarily the alcohol every day.
Another big trend is well-being. People are looking increasingly to be in tune with themselves and to be more relaxed. We have in our portfolio, for example, Hoegaarden, our wheat beer made with natural ingredients. You will see a lot of initiatives in that direction where we try to teach consumers how to relax a little bit more with our content and innovations.
We launched a new flavour of Hoegaarden Green Grape a couple of months ago. Through social listening studies, we figured out that certain flavours connote relaxation and green grape was one of the top flavours. Hence, we launched that variant.
Even before the pandemic, there were a big trend in Korea where people vacation at home. You may not be able to travel but you can you relax and enjoy a different flavour at home. This was the whole idea around Hoegaarden Green Grape. It was a big hit.
In China, we saw brands innovate and try to deliver at-home experiences with virtual promotions and activations. Have you been doing a lot of that in South Korea?
Unfortunately, we are not allowed to sell alcohol directly to consumers through e-commerce. But food delivery is huge in South Korea and very developed. So, we started a partnership with one of the biggest food delivery companies in Korea. Our commitment together is how we can do this guaranteeing an age-check. It is a major concern for the government and us too. We are taking the right steps.
We are also trying to offer entertainment to people at home. One of the biggest electronic music festivals in South Korea and the most important branded one is the CASS Blue Playground. It has been going on for five years. This year, of course, there was no way for a massive festival to be conducted, so we did an online festival.
We saw a lot of live streaming around the world. Some of them weren’t top-notch in terms of production. We thought, what if we did it with very high-quality production and leverage augmented reality? We did a festival for four hours for almost 900,000 people online. The total interaction before, during and after the event was almost 14 million people.
Our leading brand Cass was a global trending topic for the first time. It was an amazing return on investment and providing entertainment to people was a lot of fun.
People are now at home and bored. So if you can really elevate the experience for them, people will come back to you later.
From your vantage point and specific to your category, what’s your outlook for South Korea in 2021?
This is a very dynamic market. Normally, we see some trends around the world taking years to change. It’s amazing how fast things happen here. For our category, we see premiumisation coming back in a near future. We believe consumers are looking for more sophisticated products.
Secondly, health and wellness is probably going to be the biggest trend for the next 5-10 years. South Korea has always been concerned about health, but the pandemic made everyone more sensitive to the issue. This is an aging country. So, this is becoming increasingly relevant for people. For example, we decided to launch our first zero alcohol variant with Vitamin C.
We believe that consumers will look for more functional products. “Can I enjoy beer, but can you add a little more functionality to it?” In China and South Korea, this is very relevant. The health and wellness opportunity can be way beyond lower calories and carbs.
It’s about balance. Doing products with natural ingredients with the appropriate process will be more and more relevant. The number of natural cosmetics in South Korea is amazing. There is concern among people about what they put on their bodies.
Another thing we believe is going to have a big impact is new behaviours. Some think that after the vaccine, people will come back to party again. It could be true, but it will not be in the same way. I like to eat out a lot, but I see the convenience of food being delivered every day, I will never forget that. These new behaviours will stick to us for way longer – enjoying at home more, trying to have fun in smaller groups. Having more groups of friends was never so important.
What are the key opportunities to leverage in 2021?
For me, it is to try and accelerate the trends we already identified. We need to keep pushing and try to leverage the things we learned. Nobody predicted the pandemic would happen, but it did, and now we need to learn from that, so we are.
This year, I think, will be a bit easier when you apply the knowledge and accelerate some trends. We are focused on developing solutions and solving customer problems for this new reality.
What do you think is the single biggest issue that will impact all marketers universally in 2021?
I am going to use another cliched phrase and you will probably hear this a lot – marketing transformation. Many companies are talking about it and we are taking it very seriously.
This pandemic was a shockwave. I think we need to be humble and open our minds. There are a lot of challenges which impact the function of the CMO. The major function of the CMO is to grow the business. It’s important to understand where the business is heading, the concerns that are growing and try to address the pain points.
What we found out during that terrible year in 2020 is that we need to update ourselves better, we need to close our capability gaps as much as we can and accelerate trends.
We need to understand that future needs are different, and what is required of a good marketer in 2021 is different.