When brandy overtook rum across the Philippines, Tanduay — holder of a 99% share of the Philippine rum category — had to reverse a decline that Acumen's research traced largely to the brand's alcohol strength. Rather than change the product, Acumen recommended repositioning Tanduay for drinkers who still value a strong drinking experience, supported by a portfolio of brands. The engagement delivered a business turnaround in both revenue and market share.
Why heritage brands and market leaders lose market share
Heritage brands and long-time market leaders are always prone to losing share to competitors or new brands in their category, for three reasons:
- They have been number 1 for so long that they lose the urgency to move with the times and keep up with what is happening in the competitive landscape.
- They have grown accustomed to what has been working, and have not changed their message or how they reach consumers.
- As market leaders, they hold the biggest share of the pie — and so stand to lose the most to aggressive newcomers.
The environment is also becoming more competitive. As the democratization of so many things multiplies the options facing consumers, it has become hard for any brand to own a large part of the market and to sustain leadership for a long time.
Losing valuable customers is painful for any company. This case study looks at how our client Tanduay regained lost customers and returned to growth: the steps it took and the results it achieved.
Client profile: Tanduay, a national icon with a 99% share of Philippine rum
Tanduay Distillers, Inc. is the oldest subsidiary of the Lucio Tan Group. It is one of the biggest rum brands and holds a 99% share of the Philippine rum category. Tanduay produces a wide range of rum products and a variety of distilled spirits, and is known for its high quality and competitive prices.
Tanduay is more than just rum. It is a national icon that represents the best of what Filipinos stand for: honor, bravery, resilience, dedication and, most importantly, respect for elders and family values. These characteristics have made Tanduay what it is today. Not only is it the choice drink for any celebration; it has also become part of who we are as a people.
The challenge: reversing a decline and returning Tanduay to growth
When Tanduay engaged Acumen, the company needed to regain lost business. The challenge was to turn around the decline; the goal was to return Tanduay to growth.
We devised a plan to achieve this. We began with market research to understand the current landscape, then created a marketing campaign to raise awareness of the brand and generate interest, and finally implemented a sales strategy to help increase revenue.
Our approach: a three-phase brand turnaround plan
Our game plan had three phases: situational analysis (Phase 1); brand positioning and packaging development (Phase 2a) and marketing plan development (Phase 2b); and implementation (Phase 3).
In each phase, we helped the client ask the right questions — and answer them. Acumen's role was to conduct a Comprehensive Business Review that surfaced the key issues and opportunities. We designed, supervised and analyzed comprehensive need-states research, product tests, and a series of qualitative studies on product, packaging and advertising. The result was a Comprehensive Relaunch Plan aimed at (1) stronger brand positioning and advertising and (2) a cohesive portfolio strategy to maximize growth and cover white spaces.
For Tanduay to regain its business, it needed to strengthen its value proposition — not by changing the product to target the dominant brand's users, but by building a distinct and relevant positioning for a chosen target market that continued to value a strong drinking experience, and by using a portfolio approach (i.e., several brands) to compete against the newer brand. We also reviewed the products in Tanduay's existing portfolio and the role of each Tanduay variant.
What the research revealed: why drinkers shifted from rum to brandy
Drinkers shifted to brandy because the brand that came to dominate redefined value for them, and because Tanduay's alcohol strength made its drinking experience less than ideal.
Our focus group discussions showed that drinking is an indispensable part of the Filipino social weave. Filipinos drink to relax, to bond with friends and to share fun moments together.
We also found a major market shift in recent years: gin and rum lost share, and brandy became the dominant choice across all regions. The dominant brand succeeded by tapping latent consumer needs, changing consumer expectations of what a strong value proposition is. It redefined value as the right price, the right hit, the most acceptable taste, minimal to no hangover, and an enjoyable bonding experience. It had very high product appeal, delivered an ideal drinking experience, and was priced just right.
Tanduay's value proposition, by contrast, was a slightly cheaper price, a strong taste and a strong hit. Its alcohol strength was the main reason drinkers shifted: the drinking experience was less than ideal, and the hangover even more so.
Our recommendations: relaunching Tanduay around its strengths
Tanduay's weakness was also its opportunity: the strength that pushed some drinkers toward brandy was the same quality its chosen target market valued. Acumen recommended relaunching Tanduay with:
- A clear target market focus and a long-term brand vision and identity.
- A media strategy that properly supports the brand identity, with the right split between thematic and activation support.
- Strong, differentiated brand-building advertising.
The core brand identity and proposition had to be relevant and unique, capitalizing on the brand's strengths. The extended identity had to include the assets Tanduay had built through the years.
The outcome: a business turnaround in revenue and market share
The consulting engagement resulted in a business turnaround, with growth in both revenue and market share. As retained consultants, Acumen was tasked with (1) assisting in the launch of a new brand to cover white space and (2) building the capabilities of Tanduay's marketing team
Acumen continued to work with Tanduay as its trusted consultant, helping the company navigate the ever-changing landscape of the alcoholic beverage industry. Through its partnership with Acumen, Tanduay is on track to reach its long-term business goals.
Tanduay is already Number 1 worldwide in the rum category. We would like to thank and acknowledge Acumen for being part of this success. — Paul Lim, Marketing Assistant Vice President, Tanduay
As a Philippine market expert, Acumen builds Commercial Strategy roadmaps that are customized, designed using data and comprehensive insights, and developed through a rigorous and holistic process. Contact us today for more information.
Frequently asked questions
Why do heritage brands and market leaders lose market share?
Heritage brands and market leaders lose share for three main reasons: they lose the urgency to keep up with the competitive landscape, they keep relying on the messages and channels that have always worked, and as the biggest players they have the most to lose to aggressive newcomers. The growing number of options facing consumers also makes it harder for any brand to sustain leadership for long.
How did Tanduay recover market share?
Tanduay recovered market share by strengthening its value proposition rather than changing the product to target the users of the brand that had come to dominate the market. Acumen recommended a relaunch built on a distinct positioning for a chosen target market that still values a strong drinking experience, supported by a portfolio of brands, a media strategy balancing thematic and activation support, and differentiated brand-building advertising. The engagement resulted in a business turnaround in both revenue and market share.
Why did drinkers in the Philippines shift from rum to brandy?
Acumen's research found that brandy became the dominant choice across all regions because the brand that came to dominate redefined value: the right price, the right hit, the most acceptable taste, minimal to no hangover, and an enjoyable bonding experience. Tanduay offered a slightly cheaper price with a strong taste and strong hit, and its alcohol strength was the main reason drinkers shifted.
What did Acumen's engagement with Tanduay involve?
Acumen ran a three-phase engagement covering situational analysis, brand positioning, packaging and marketing plan development, and implementation. The work included a Comprehensive Business Review, need-states research, product tests and qualitative research on product, packaging and advertising, which led to a Comprehensive Relaunch Plan. As retained consultants, Acumen was also tasked with assisting in the launch of a new brand to cover white space and building the capabilities of Tanduay's marketing team.
← Back to Insights