Mar 2008 Financial News

Rebuilding equity in the Appleton brand

Mar 12, 2008

Rummaker goes after premium market in Latin America

Lascelles deMercado & Company Limited has taken a strategic decision to rebuild Appleton as a premium rum brand overseas, by going after a market whose purchasing decisions rest on quality over price.

Managing director William McConnell says the strategy is already paying off.

MConnell, who made the announcement to shareholders last week, said the company was forced to act after Appleton's sales income had fallen in its Latin American market where it holds pole position as the number one imported brand.

The reason, he said, was heavy discounting by distributors to boost sales.

"What we said last year is that we were trying to convert our business from a business based on quantity to a business based on quality, because what has happened is that we had reached a point where we were enjoying big sales, which was not very profitable," he said.

"Our importer there had reason to try and (push) the sale figures and was giving large discounts."

That practice, he said, has served to tarnish Appleton's brand equity.

He said, "In order to correct this, we are prepared to take a reduction in sales volume in order to build the quality."

In targeting the premium market, Lascelles - whose flagship liquor, rums, wines and sugar segment generated 50 per cent of the $2.6 billion in profits made last year - said the company was now making more money in Mexico.

"What I can say is that we are showing growth in Mexico and although we are selling 70 per cent of what we did at the height, profit wise, we are making more money now," McConnell stated. "In addition to that, we are sure that the growth we are enjoying there is based upon an acceptance of the equity in our brand by the consumer and not people buying on price."

In an apparent move to invigorate the brand, J. Wray and Nephew - the rum manufacturing subsidiary of Lascelles which owns Appleton - has redesigned the logo and label for the brand across all markets.

David McConnell, the managing director of global marketing for Appleton, was quoted by the website just-drinks.com explaining that the original bottle design had been retained, but a new logo and label for the brand had been designed with the designations 'Special' and 'White' removed to improve readability.

Both David and William McConnell were unavailable for comment yesterday as they were said to be off the island.

The Lascelles MD had said he would have been flying to Mexico this week to monitor the progress of the brand.


Source:
John Myers Jr., Business Reporter john.myers@gleanerjm.com
Jamaica Gleaner
Wednesday March 12, 2008

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