When spirits companies cut their marketing budgets, why not increase yours? - Comment

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Spirits commentator Richard Woodard will have been relieved to see the back of The Winter Olympics last weekend. He now has the time to ponder companies' marketing spends... and to run his rule over Pernod Ricard's latest - somewhat risqué - activation for Absolut.

Like many others, I struggled to maintain work attention during The Winter Olympics earlier this month. The feel-good story that gripped me during the tournament was about Britain's two-woman bobsleigh crew, who had to resort to crowdfunding when their money was taken away. They reached a new high of eighth place - and should now secure funding from UK Sport leading up to Beijing 2022.

More than GBP28m (US$39m) was invested by UK Sport during the Winter Olympic cycle, including GBP5.6m for curling, and GBP6.5m for skeleton (the one where you hurl yourself down an icy track on a tray). The system rewards and aims to perpetuate success. Win medals and your funding increases; under-achieve and you risk losing it altogether.

There's a clear parallel here with the way business is done in the international spirits industry. Brands and markets that fail to live up to expectations tend to get less investment as a result, while the overachievers reap the rewards.

Money pursues success.

Nowhere is this more evident than with the big, multinational corporations, with shareholders, investment funds and analysts to keep happy.

Consider Pernod Ricard. Chivas Regal sales falling off a cliff in China? Then, switch some of the funding to Martell. Absolut still losing ground in the US? Give the cash to Jameson instead - or divert it to markets where vodka has more potential.

There's an undeniable logic to this. I've lost count of the number of times we've discussed Absolut's Stateside woes in this column and, despite a succession of false dawns, sales are still falling away. The fact that the challenges permeate the whole category (bar Tito's Handmade Vodka) is only going to make Pernod less keen to throw good money after bad.

"The issue is finding the right level of investment for our brands," Pernod CEO Alex Ricard said earlier this month. "Right now, we're investing behind Absolut in line with what a brand that is flat deserves. Meanwhile, we're over-investing behind the likes of Jameson."

As I say, that's entirely logical, but the concept of rewarding success and punishing failure is also disconcertingly simplistic - and I've always been wary of any philosophy that involves making binary choices.

If more money can help perpetuate success, less money can do the same thing for failure, creating a vicious circle in the process. And, if you're operating in a sector where (almost) everyone is suffering, and therefore cutting down on their investment, isn't there another way to go?

Assuming you still believe in your brand – and, given that Absolut is responsible for more than 20% of volumes of Pernod's 'international strategic brands', the company can hardly afford to do otherwise – why not hold your nerve? If other vodka brands cut their marketing spend by 20%, cut yours by only 10% - or not at all - and, in category terms, your money will go further.

Whether you buy into this theory or not, how you spend the money is every bit as important as the size of your budget. There's no doubt that Absolut fell out of step with broader consumer trends in the US spirits category, and was a little late in seeing the potential benefits of communicating provenance and authenticity.

That's perhaps understandable: Talking about your Swedish distillery, where your wheat comes from and how green you are is more likely to prompt yawns than extra sales, unless it's done in an engaging fashion.

All of which makes Absolut's latest online ad – The Vodka With Nothing to Hide – a stroke of genius.

I can't imagine what the initial reaction was to the original pitch ("Let's make a film with 28 naked Absolut employees!"), but the result is a triumph.

Yes, it ticks the boxes in terms of "highlighting the brand's provenance and environmental credentials", but that's almost incidental. The key is how Absolut achieves this - by not taking itself too seriously and by humanising what might otherwise be a dry, soulless image.

More than anything, it's funny. It's self-effacing, but also self-confident. It makes you smile. Even if, like me, you're a very occasional vodka drinker, it makes you more likely to buy the product.

Which, when you strip away (sorry) the arguments about marketing budgets and levels of brand investment, about rewarding success and punishing failure, is pretty much the whole point.

Pernod Ricard performance trends 2013-17 - results data

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