Robbie Millar, VP – Global Marketing at brewing giant Carlsberg, speaks to WARC’s Anna Hamill for Marketer’s Toolkit 2022 about why brand fundamentals still matter in e-commerce, transparency on sustainability and building long-term consumer connections.
This interview is part of WARC's Marketer's Toolkit 2022. Read more.
- The health and wellness trend of alcohol free, low alcohol and flavoured beers has been accelerated, hastening Carlsberg’s product innovation pipeline.
- Carlsberg is upping the capability of its marketing teams to connect its brands with sustainability messaging that will nudge consumer behaviours.
- E-commerce success requires similar marketing fundamentals – such as distinctive assets and brand-building – as offline channels.
How have you adjusted to a ‘start-stop’ economy with restrictions on many of your key trade channels over the last 18 months?
We’re operating across 35 countries and have a number of different brands. COVID lockdowns led to a massive channel shift. As bars and restaurants closed, all the business moved into off-trade. We had to adjust from a production point-of view, deal with the channel shifts and also the uncertainty of when things would re-open and how we would get ready for that.
We just asked for as much flexibility within the business as we can. It's actually pulled the teams together – they have probably worked more closely in the last year and a half than they did before. But we've just had to roll with the punches and adjust to it, really.
How have the ways that you engage with your customers and your wider consumer base changed?
The first shift was looking after on-trade customers as best we could. In the off-trade channels, those customers were suddenly dealing with a much bigger demand than they previously had. We tried to meet their increasing needs as best we could by shifting production. We worked nimbly – there were staff [previously] working in the on-trade channels that started working in the off-trade channels.
There was a shift toward e-commerce in countries where there was a complete lockdown...we got as much flexibility into our system as we could to deal with this very sudden and very rapid channel shift. Behind the scenes, certainly in the first few months, this was a weekly conversation. The cycle of planning became much, much shorter. That was our way of handling things from an operational point of view.
How has your thinking around innovation and new product development changed as a result of COVID?
There's a long-standing trend with health and wellness consumers looking for lower alcohol options, lower sugar options and alternatives from sugary soft drinks. We saw that accelerate, so we've brought forward launches of alcohol-free [products] that we were planning.
We’re seeing alcohol-free choices expand into IPAs, hoppier lagers and the flavoured space.
Certainly in our bigger brands, many of our plans remained in place. COVID is a very big incident, but it is an incident and it doesn't change everything forever. So, we're not abandoning brand strategies and completely changing things. We saw some markets return to near-normality after a relatively small number of months.
Some of those trends that you're talking about, they're not necessarily driven by the pandemic, but by wider category changes as well.
I think of COVID-19 as a bit like an earthquake. It has changed things very rapidly, but it doesn't mean that some of these things weren't present before. E-commerce, working at home, healthier choices… it just means that suddenly there was a shift.
We'll probably see that e-commerce is permanently higher, but it won't have as rapid growth in the next few years as maybe as it did in the last 18 months. It will go back to a more normal rise. If anything, I think what we'll see is a shift back from off-trade to on-trade. As on-trade re-opens, we're seeing that it is recovering quite well... it'll maybe be a shift back from people drinking in their garden to having a beer in a pub garden or a bar.
What trends and consumer behaviours from this time do you think will stick around?
Some of the things I've already mentioned will continue such as alcohol-free, the rise of e-commerce and lighter alternatives. There's a premiumization trend which has been going on for years and will continue, maybe with consumers drinking a little bit less volume and a little bit more value in terms of quality. In terms of things that were a flash in the pan, I think you'll see that massive rise in the off-trade channels fall away. I don't think we're suddenly going to be in a position where 80-90% of what is sold is just through stores, in markets where there is a good bar environment.
Can you tell us a few of your sustainable strategic priorities from a marketing perspective?
The Carlsberg group was very early in making some long-term sustainability commitments such as our ‘Together Towards Zero’ platform, which we're making very good progress on. We've just signed up for the World Federation of Advertisers’ ‘Planet Pledge’. We’ve joined the UN’s ‘Race to Zero’.
We've also committed that we will up the capability of our marketing teams to connect their brands with sustainability and messaging that will actually nudge consumer behaviour. We'll put money behind that. We will also avoid greenwashing.
A lot of our brands have already been getting into this space and are recognising that the consumers are expecting us to do more, but maybe we haven’t been talking about what we have been doing as much. We'll be doing more in this space going forward.
What metrics are you using in terms of charting your progress on this?
At the moment, we have not defined hard KPIs. We don't want all of our brands to suddenly jump on and start talking about sustainability, because that really would be inappropriate. There are some brands where that positioning connects – if we understand the consumer of a brand, what resonates with them and what the brand stands for, then we can get to sustainability themes that both make sense for the consumer and also for the brand. We're wanting to encourage more of that.
We’re also working with our internal teams. We’ve worked out how to very effectively connect a brand with a sustainability theme. We are training our teams and let's see where we get to. But we are not at this point putting any hard KPIs beside it.
How do you communicate Carlsberg’s sustainability initiatives in a way that doesn't attract ‘greenwashing’ criticism?
Our sustainability report is published annually. It's very transparent and externally audited. On things that Carlsberg brands might highlight, such as reduction of water use, will be factual. If we're using greener inks, it's factual. If there's less plastic in snap-packs, it's factual. We want to make sure that what our brands get involved with is true.
We’re also using external partners… In the UK, the partner that has their name on our packs in stores right now is the World Wildlife Federation (WWF). They're not comfortable about doing that unless they know that what we're doing and claiming is truthful.
That’s the way we like to go, we like to make sure we can back up what we're saying... That sense of wanting to [do something] positive is in Carlsberg’s DNA and I would certainly not like to see any of our brands out there saying things that either are untrue or imply untruths. We need to be able to back it up and when we have reviews with markets, it’s one of the things we discuss.
How are you evolving your brand strategy for a world where e-commerce and direct to consumer in particular are becoming bigger players?
When we think about our brands and our marketing strategies, all the basics remain in place. Consumers' lives have changed a bit...[but] their lives have not fundamentally changed and nor have our brands. We put a huge amount of effort into making sure that our brands continue to be clear about their role and what they stand for, then they bring that alive very consistently. We see that that works.
There's always new things emerging: there’s e-commerce and digital as a way of communicating with consumers. We adapt, but it’s on top of making sure that everything is solid on the brand is already there. With e-commerce, it doesn't change everything overnight. Our approach has been ‘let's get into this, let's learn as we go’ and assume that we're not going to get it perfectly right first time.
We work with customers on it and some markets ahead of others – China's massively ahead. We've learned a huge amount from China that we then communicate and apply elsewhere.
Source: Carlsberg China
It’s step by step. [E-commerce] is an important part of the business, and it will become an increasing part of the business in the future, but it's still a small part of the business. There may be some service industries out there that had to completely turn their business on its head because everything went digital, but that’s not the case for us. We learn as we go.
How are you thinking about how you're investing in brand building activity versus what you might be investing in performance media channels, outside of e-commerce?
It takes time for our brands to get a consistent meaning in consumers’ minds, so we need to be consistent with the brands. If you look at what we're doing with a lot of our brands that are very successful, they have now been consistent for a number of years. Getting time to establish long term in consumers’ minds is what we're about.
We always have a good proportion of our marketing investment in the brand – probably around 60+% – that is focused on the longer term, then you have your trade marketing money which is going to drive more short term activity – whether that be in off trade, on trade, or the new e-commerce channels. We’ve not massively changed, that's for sure. We're still continuing to invest long term because we see that we have to, and we want to do that with our brands because we know what pays back.