Close-Up: Live Issue - Is the alcopop bubble about to burst?

After initially targeting 18- to 24-year-olds, RTDs now need adult appeal, Rachel Gardner writes. When Diageo launched Smirnoff Ice in 1999, the alcopop boom that had begun at the beginning of that decade was still at its peak. Less than six years later, the brand is in danger of losing its cool as the fashion for the alcoholic ready-to-drink variants continue to wane.

In the same way the lager brands Harp and Double Diamond defined the 70s, so alcopops such as Hooch, Two Dogs and Smirnoff Ice did for the 90s. They launched as crucial brand extensions for drinks companies as a means of growth to satisfy shareholders.

But evidence that the £1.3 billion RTD sector was under pressure became apparent when Diageo withdrew Gordon's Edge, its gin-based alcopop, from shelves in 2003. Sales of Archers Aqua are down 31 per cent year on year, according to AC Nielsen, but perhaps most noteworthly, last year, Coors Brewers pulled the plug on Hooch, the iconic drink that kick-started the whole phenomena.

Diageo has desperately tried to inject new life into its market-leading Smirnoff Ice brand in a bid to woo drinkers back. Like many others in the sector, it has undergone a packaging revamp, as well as repeated changes in its ad campaigns, from "how clear is your conscience" to "lyriquid perfection", which included a cringeworthy television spot starring the former EastEnders actor Dean Gaffney.

Despite a £6 million ad budget for the brand, sales figures reveal a 12 per cent drop in volume sales for Smirnoff Ice in the UK alone.

Last week, in a further development, Bartle Bogle Hegarty was handed the £20 million global ad account for all Smirnoff-branded RTD products.

But what hope has it got of reviving Smirnoff Ice's flagging fortunes in what looks worryingly like a moribund sector?

A possible solution could be a change in strategy. The advertising for RTDs has, in the past, walked a thin line in complying with alcohol advertising regulations, which forbid the promotion of alcohol to the under-18s, but is arguably essential in appealing to the fickle young market that finds the sweet strong beverages appealing.

Unfortunately, the original generation of 18-year-olds (and younger) who adopted RTDs as their drink of choice are now in their 20s and have shifted their drinking allegiance. RTDs, by positioning themselves as young and trendy, have perhaps been hoist with their own petard as their target market grew up. BBH will need either to chase this lapsed market or find a way of targeting the new generation of young drinkers.

Perhaps a possible solution comes in a reiteration of Smirnoff Ice's link with its best-selling parent vodka brand, while steering it away from its now rather dated, laddish image, in favour of a more sophisticated approach.

Certainly, drinks manufacturers need to fire drinkers' imaginations once more in the face of lagging sales and increased government pressure, which saw the chancellor, Gordon Brown, increase the duty on RTDs by 11 pence per bottle in his 2002 budget.

The decline in the RTDs market is not yet a disaster, but BBH will need to find a creative solution that capitalises on Smirnoff Ice's maturity in a relatively young market if it is to replicate the drink's initial success and capture the imagination of mature drinkers. Diageo, meanwhile, must display the same innovation it showed in launching Smirnoff Ice to drive growth again.

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THE MARKETER - Jane Sutcliffe, marketing manager, Smirnoff Ice

"Our aim with the global review on Smirnoff Ice was to deliver the best creative in each market, rather than simply to recruit a global agency. However, when we tested the creative idea that BBH developed in various markets around the globe, the results were consistently outstanding.

"We're committed to continuing to invest heavily behind Smirnoff Ice and we're excited about the new campaign that breaks here in April and will run across all media.

"It's easy to forget that RTDs are the number-one drinks category for 18- to 24-year-olds in the UK. Smirnoff Ice is the only RTD brand with more male than female consumers, and it continues to outperform the sector."

THE DRINKS EXPERT - Malcolm Gluck, wine expert and author

"I think these drinks are so pernicious; they encourage young people to drink to get pissed. The drinks are passed off as being almost harmless, fun and trendy.

"I would like to see people not being corralled or seduced by such products. But unfortunately in this country we are not very good at bringing up children with alcohol, compared with the rest of Europe.

"One of the interesting things about alcohol is that it comes in fads. One generation will turn against the drinks of another generation. Youngsters will move away from what the previous group, and what their parents, drank. And I think you will see this with the ready-to-drink market, as it is just another fad."

THE EDITOR - Graham Holter, editor, Off Licence News

"Smirnoff Ice is aimed at the most fickle and transient consumers in the alcoholic drinks market. It is at constant risk of becoming uncool. The trade sees it as the RTD standard bearer, but it's leading a category down 7 per cent in the past year in the off-trade.

"Advertising needs to be incredibly subtle, and not just because of the increased scrutiny from the government: 18- to 24-year-olds want to discover these drinks for themselves, not see them in the commercial break of Emmerdale.

"Diageo has been quite clever with the way it's built the brand, but the RTD market is a bucket with a hole in it."

THE AGENCY HEAD - Jeremy Bowles, managing partner, WCRS

"I think the ready-to-drink market will be gone in ten years. Initially, the drinks are great - they're easy to drink - but essentially they are an innovation drink which people eventually work out are very expensive.

"Although it's still a huge market and there's lots to play for financially, I think it will come to the point where it can't be taken any further.

"Smirnoff Ice might be one of the couple that survives and extends its life if it can change its positioning and leverage the mother brand, but I think the general market will collapse."