Pernod Ricards Absolut brand collaborated with Perfect Company earlier this year to release an Absolut Classics recipe pack

Pernod Ricard's Absolut brand collaborated with Perfect Company earlier this year to release an Absolut Classics recipe pack

Rapid and constant connection to the Internet has already transformed how consumers interact with the market, but the digital revolution is by its very nature a continuing phenomenon. In this month's Consumer Trends, Ben Cooper investigates the link between a recent multi-billion-pound tech deal and the Moscow Mule.

Last month, Japanese technology firm Softbank paid around GBP24bn (US$32bn) for UK chip designer ARM Holdings. Even the well-informed were at a loss to know why a company few had even heard of could command such an exorbitant sum.

The explanation can be found in three words – Internet of Things.

The broad application of ARM's low-power chip designs in smartphones, tablets and other devices already makes the company a significant player in the tech world but it is the potential offered by the Internet of Things (IoT) that attracted Softbank to swoop. As more and more household devices are connected to the Internet, the market for the types of chips ARM designs is going to expand massively.

So, what does a savvy move for a very savvy technology firm have to do with the drinks market?

History has shown how the digital revolution, from the advent of the personal computer to broadband in the home to smartphone ownership, has transformed consumer behaviour, reaching all consumer markets including the drinks sector.

The Internet of Things will be no exception, and this further expansion in digital connectivity may prove the greatest transformative influence of all.

The drinks market provides rather a telling illustration, underlining the scope of the transformation the IoT offers. Linking to the central heating or a Smart TV seem fairly logical extensions of the Internet's reach, but would even visionaries like Alan Turing or Sir Tim Berners-Lee have foreseen the implications of the digital age for at-home cocktail making?

Gadgets now being connected through the Internet of Things include smart kitchen appliances such as slow cookers, blenders and naturally, as the perfect culinary experience would hardly be complete without a meticulously crafted aperitif, cocktail makers.

Perfect Drink, which comprises a Smart Scale and Interactive Recipe App, is one of three connected culinary appliance/platform concepts developed by Perfect Company. From a consumer marketing point of view, Perfect Company is not doing anything radically different from what Mrs Isabella Beeton did in 1861, offering people the opportunity to produce consistently pleasing results in the kitchen.

In other respects, however, things have definitely moved on.

The publication last month of a report by POC Metrics, a wholly owned subsidiary of Perfect Company, illustrates once again that the information super highway is a two-way street. Compiled from usage data from the Perfect Drink platform – some 500,000 cocktails made by 100,000 repeat users – the report represents the first external publication of any of Perfect Company's data, and was available to download free of charge. POC Metrics claims it offers "the missing link in truly understanding consumer beverage alcohol behaviour – precise quantification of at-home consumption".

That claim may, presumably unlike a Pisco Sour made using Perfect Drink, be a little over-egged, but the level of detail is nothing if not impressive.

According to the report, in the first half of 2016 the Moscow Mule was in "a near dead-heat" with the Margarita as the most popular at-home cocktail in the US. The Moscow Mule has seen its at-home consumption share grow from 3.1% in the second quarter of 2014 to 8.4% in the corresponding quarter of 2016. Over the same period, the Margarita lost share of all drinks made at home, dropping from a peak of 10% in Q2 2014 to 8.9% in Q2 2016.

Vodka is the number one at-home spirit base, accounting for a 31.3% consumption share in the second quarter of 2016. The Moscow Mule has now replaced the Cosmopolitan as the leading vodka-based cocktail. In addition, the report includes detailed analysis by region, city and breaks down consumption by day of the week and even time of day.

If one wanted the embodiment of what the Internet of Things means for consumer research in the spirits sector or any consumer market, look no further, as Dan Short of POC Metrics explains.

"IoT is going to present some amazing opportunities and some significant stresses to the drinks business," Short tells just-drinks. With the "level and velocity of consumer insights available growing every day", companies that are able to "take that kind of insight and rapidly apply it to drive more effective, localised and targeted marketing and merchandising will have a profound competitive advantage".

Short continues: "I do think that this will fundamentally disrupt the drinks market research industry. The speed, accuracy and granularity of this data is completely unprecedented."

Perfect Company was founded in 2013 and the fact that it grew out of a specialist toy-making business called Pure Imagination is perhaps in itself illuminating.

The company is backed by venture capital group Oregon Angel Fund (OAF) which clearly saw value both in the new toys Perfect Company was offering to consumers and in the information it could offer companies.

"At the beginning of our work together, Perfect Company had seen some success, and had a strong plan for selling more products," OAF explains on its website. "They knew how to collect incredibly unique data on consumers' kitchen behaviours, but weren't sure how to turn that data into a more scalable business proposition."

Perfect Company appears to have progressed someway on that journey since then, but is still evaluating how to "monetise" the information it is gathering. "We've spent the past year in stealth mode working out the technical side of our data collection," Short says. "We now have a great deal of data and it continues to accumulate every day. We are weighing a number of different monetisation options, but we also want to create a dialogue with different segments of the industry – brands, retailers, distributors – around how this data can be most powerful and releasing free data is a fantastic way to advance that dialogue."

Short says the company does not yet have any signed agreements with drinks companies nor has it received investment from any drinks firms but is "engaged in conversations about the data with a number of the largest drinks companies in the world".

Of course, Perfect Company will not be alone. The Internet of Things will offer an ever-expanding number of connected gadgets, all generating data which can provide potential consumer insights of value to companies.

Perfect Company now has data from some 131 different countries, though around 75% of the information it currently holds is from the US, with the UK, Canada and Australia making up the bulk of the rest. "We will look at international trends but we do currently have the most depth in the US," Short adds. "Future reports will focus on performance across different spirit types and specific flavour profiles by geography."

For many years, the cocktails arena has represented a crucial study for spirits marketers. It appears this is as true in the Internet age as it ever was. But, as always seems the case with digital innovation, the opportunities are immeasurably expanded.

It is interesting to note in closing that the Moscow Mule was created, using analog equipment only, by spirits distributor John Martin and Jack Morgan, owner of the Cock 'n Bull restaurant on the Sunset Strip in Los Angeles, in 1941, coincidentally at about the same time that Alan Turing was revolutionising computer science in a hut in Buckinghamshire.