Consumers might be used to seeing neon green, pre-mixed margaritas on the shelves of liquor stores, grocery stores, or their neighborhood bar. But Pernod Ricard, the $11 billion Paris-based wine and spirits company, recently decided to serve up a more natural-looking option: the Altos Margarita.
Kate Pomeroy, Head of Innovation, North America at Pernod Ricard, said her team helped create that product and get it on shelves — all because it identified an unmet need among consumers.
“[Altos] is a ready-to-serve margarita that we’ve created around looking for those unmet needs. We realized that much of what was out there in the market was full of chemicals, so we created this margarita that is only made with four ingredients: premium tequila, triple sec, natural lime flavor, and agave syrup.”
The company also owns Jameson, Absolut, Malibu, Jefferson’s Ocean, and dozens of other brands.
New Product Development in a Changing Industry
Pomeroy said consumers’ tastes and preferences have changed significantly over time, but particularly since the onset of the COVID-19 pandemic.
Since consumers couldn’t go out to their favorite restaurants and bars for a period of time, creating moments at home became more of a trend — one that hasn’t subsided, despite the fact that most businesses have been fully reopened for some time now, Pomeroy said.
That triggered the need for bar-quality liquors, spirits, and cocktails from the comfort of a consumer’s own home.
“The pandemic … was a time when consumers’ behaviors, in some respects, solidified and sometimes shifted. What we saw was actually a shift to off-premise, and entertaining at home. What went along with that was a lot of [demand for] convenience-type products.”
In response, Pernod Ricard has launched Altos ready-to-drink margarita, as well as a few pre-mixed cocktails in cans, like Jameson Ginger & Lime and Absolut vodka cranberry, in partnership with Ocean Spray.
But consumers are looking beyond mere convenience, causing a demand for bar-quality liquor to serve at home, Pomeroy said.
“Consumers, they want that quality — they’ve experienced the quality of drinks they can experience in a bar. They also want well-established, trusted brands, and new emerging ones to explore,” she said. “We particularly have seen some strong growth in the premium part of our portfolio.”
In considering the premiumization of liquor, Pomeroy said consumers have also become more interested in the stories behind — and origins of — the products they purchase.
“What we’re learning is that consumers really value the production process, understanding the stories, understanding how a brand was created, so that then they can impress their friends with those stories,” she said. “Jefferson’s Ocean, for example — the fact that it’s aged at sea is a sound byte, a story that consumers can pass on.” (Jefferson’s Ocean is aged in barrels carried by ships that travel globally; the motion of the boat helps churn the whiskey, allowing for more interaction with the wood barrels.)
Moving Quickly
Pomeroy said some of the team’s most recent innovations have been turned around in a year or less; the Altos Margarita took 12 months to develop, for instance.
She said that the creation of several innovation hubs has helped bolster the teams’ speed in creating new products.
“Two and a half years ago, we formed these three regional hubs [in North America, Asia, and Europe]. And we meet weekly with the other hubs to cross-fertilize ideas, try to drive scale for the whole business, and drive efficiency across the business. We also have a global team that we work with,” Pomeroy said.
I think the other [important strategy] is, look at how your systems and structure are getting in your own way and how you can alleviate some of that to drive speed of decision making.
To drive speed, Pomeroy suggests working backward.
“[Innovators should] really understand the critical path and work back from key milestones. So we work back from when are the key milestones of selling to our chains’ customers? And then, what is the critical path backwards from there?” she said. “I think the other [important strategy] is, look at how your systems and structure are getting in your own way and how you can alleviate some of that to drive speed of decision making.”
Sometimes, lack of leadership buy-in can negatively affect speed to market — and scale. But Pomeroy said Pernod Ricard has developed a process that gives decision-making privileges to specific people inside the organization at certain times during the stage gate process.
“One thing that we have done is interrogate our stagegate process, [and] build a new stagegate process, with real clarity of decision making — who has the decision rights at what stagegate? [We] built a stagegate machine,” she said. “We have all the key stakeholders in one room and build clarity on who has the ultimate decision/approval rights, who is just a contributor, and who is simply being informed. We drive timelines … and templatize all key information, so that stakeholders can review ahead of time to come [to meetings] prepared to drive decision making.”
While speed can be a positive asset inside a large organization working to develop new products and get them to market, Pomeroy said she’s learned over the years that speed isn’t the only factor to successful innovation.
“I think speed shows our agility. It shows what you can do as a team when you all are headed in the same direction and all driven by shared goals to get there,” Pomeroy said. “I think we’ve learned some lessons on the way, like maybe I think sometimes maybe it’s better to wait [and ask], ‘Are we ahead of our time?’ Sometimes we may be right. And we might — instead of just getting it to market as quickly as we can — need to wait for the right time.”
