A Dog's life
Two Dogs, the Australian alcoholic lemonade, took the UK by storm in the mid 1990s and arguably started the whole Ready-To-Drink fad but in recent years the brand has undergone a radical overhaul.
Two Dogs was the original "alcopop" and it create a storm of controversy as British newspapers decided this alcoholic soft drink would inevitably encourage kids to become hopeless alcoholics.
The fuss prompted parliament to introduce new regulations and the brand went from being huge to all but disappearing.
Two Dogs was invented by Duncan Macgillivray, in the early 1990s, as a naturally fermented lemon drink. The company was run out of the back of a pub in South Australia and the massive success took everyone by surprise. But the backlash was even more surprising to the laid back Australians. And Two Dogs, under new owners Pernod Ricard, effectively had to start all over again.
"If we had not had all that hullabaloo things could have turned out very different but we've had a very satisfying time here and we run a very profitable company," says a philosophical Macgillivray - still chairman and managing director of the company.
The drink was reworked for Europe and North America to allow it to fall into the beer category and gradually the whole "alcopop" debate has died. Two Dogs expects to sell a million cases in Europe this year - the first time since 1996 it has crossed the magic million barrier.
But rather than the UK being the growth driver, Germany and France are emerging as the hot markets for Two Dogs. Growth in Germany is running at 100% a year and the company is about to open a new manufacturing facility in Brittany to supply its Northern European market with Two Dogs beer.
So far the union with Pernod Ricard has not extended as far as significant distribution arrangements or other synergies largely because Two Dogs is too different (or "unique" as Macgillivray says) to Pernod's existing range. But in its domestic market in Australia Two Dogs is seeing some benefits from being part of the Pernod stable.
Directors from Pernod and Orlando Wyndham (also a Pernod company) provide Two Dogs with a wealth of drinks experience. Orlando Wyndham has also taken over as the distributor for Two Dogs in Australia and Macgillivray says it is already seeing an improvement in sales volumes.
In Asia Two Dogs remains the fermented lemon drink that made it famous. It is classified as an alcoholic fruit cocktail and is taking Japan by storm - the largest imported single brand in the entire drinks sector. It is selling 24 million bottles a year and has found a lucrative market selling to young professionals in Tokyo, Osaka and Nagoya who like the natural and fresh qualities of the drink.
Two Dogs will also this week start producing a new product for Japan. Called Cassis Brew it is a blackcurrant fermented drink and will join Two Dog's Orange and Apple brews.
Two Dogs itself is only a marketing shell company and outsources all its manufacturing and distribution with Kirin covering Japan. This is proving a useful tie as Kirin is helping Two Dogs with introductions through its Asian subsidiaries.
While Two Dogs has been steadily spreading itself globally it is still only making about 3.5m cases a year and is a long way behind the RTDs, which collectively sell tens of millions of cases. But Two Dogs was one of the first brands to wet the appetite for these types of drink.
"We have not gone and joined the RTDs because we decided Two Dogs was unique and we wanted to keep the naturally fermented feel of the original concept," says Macgillivray. "The big spirit companies are making the likes of Bacardi Breezers and so on to attract young consumers to their brands and they are using their huge marketing spends to do so. We don't have that sort of marketing budget and are happy doing what we're doing and sticking with the original idea."
Given the humble beginnings of Two Dogs it is hard to believe the roller coaster the brand has been on over just seven years. The rest of the drinks industry has shot ahead of Two Dogs with their faddish RTDs but Two Dogs has learnt from the "alcopop" saga and is planning to keep things simple - and survive.
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