In March 2017, Baileys Irish Cream launched a brand extension, Baileys Iced Coffee. With this innovation, the drinks company wishes to tap into the growing popularity of iced coffee. The new product is available in two flavours: Latte and Mocha, and is packaged in a 200ml can. At the time of launch, Baileys Iced Coffee was only available in the United Kingdom.
Baileys’ new Iced Coffee enables the brand to expand its product portfolio and to play in a new category. And although this brand extension offers many opportunities for Baileys, it also presents various challenges to overcome and risks to eliminate if the innovation is to succeed in the marketplace and in consumers’ minds and hearts.
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Table of Contents
1. The parent brand: Baileys Irish Cream
Baileys is an indulgent drink for special occasions.
Baileys Irish Cream is a unique whiskey and cream based liqueur. The drink is available in different flavours, from original to coffee or orange. Baileys can be enjoyed neat, on the rocks, in a cocktail or in a beverage. The product is consumed at home, with friends, to relax and on special occasions.
Baileys plays in the liqueur category, and targets confident and spirited young women. The brand is perceived as an indulgent drink for special occasions and is associated with values such as original, iconic, Irish, indulgent, sophisticated, warm, festive, and occasional.
Baileys’ key challenge is seasonality.
Given Baileys is a rich and heavy-tasting liqueur, consumers enjoy the drink only occasionally, especially during the end of year festivities and the winter. The brand suffers from this seasonality and struggles to persuade its consumers to enjoy the unique liqueur more often and throughout the year.
2. The brand extension: Baileys Iced Coffee
Baileys Iced Coffee is a product and format innovation.
In March 2017, Baileys Irish Cream launched a brand extension, Baileys Iced Coffee. The new product is available in two flavours: Latte and Mocha, and is packaged in a 200ml can. The innovation includes Arabica and Robusta coffee, milk, cocoa and Baileys liqueur, and contains 4% alcohol. At launch, the brand extension was positioned at retail in the iced coffee aisle.
Baileys Iced Coffee is a product innovation, and also a format innovation. For the first time in its history, the drinks company launched a chilled blended beverage as well as a single-serving can. Up to now, the brand only launched flavored liqueurs and liter bottles. With the brand extension, Baileys now offers a new and innovative product as well as a single-serving format.
With Baileys Iced Coffee, the drinks company created the chilled alcoholic beverage category.
In addition to being a product and format innovation, Baileys Iced Coffee is also a category innovation. With the brand extension, the drinks company now plays in the iced coffee market and offers the first alcoholic option available in this segment. As an alcoholic beverage, the new product answers different needs to the typical iced coffee, and fulfills quirky refreshment cravings. Baileys thus created a new category altogether: the chilled alcoholic beverage category. With the innovation, the brand is competing against iced coffees, chilled juices and sodas, as well as single-serving alcoholic drinks, such as beer cans and small wine bottles.
3. Opportunities Baileys Iced Coffee offers the parent brand
Baileys Iced Coffee fits the drink brand and strengthens its identity.
Baileys Irish Cream and coffee marry well with one another and are very popular together. In addition, coffee, like the unique liqueur, is associated with warmth, and the pairing resonates well in consumers’ minds. As a result, Baileys Iced Coffee fits the parent brand. With the new product, the drinks company aims to target Baileys consumers as well as coffee lovers.
Baileys Iced Coffee’s identity flows from the liqueur’s key associations of indulgence, sophistication, warmth, and originality, and is in line with Baileys. The risk of the new product damaging the parent brand is thus low. Furthermore, if the innovation is successful in the marketplace, Baileys Iced Coffee will strengthen the drink’s primary associations and reinforce its brand identity.
The brand extension offers new drinking occasions and tackles the liqueur’s seasonality challenge.
Baileys Iced Coffee enables the brand to offer its consumers new drinking occasions and new opportunities to experience the liqueur. Baileys can now be enjoyed during the day and in the summer with the new iced coffee blend, as well as on-the-go with the new format. The drinks company aims to entice consumers to enjoy the liqueur more often, throughout the year and on different occasions. With the brand extension, Baileys wishes to break from its occasional and festive associations and position itself as an indulgent drink for all occasions.
If the new product is successful, Baileys Iced Coffee will acquire associations from the iced coffee category and will be associated with freshness. This will rub off onto the parent brand and translate into the drink being consumed throughout the year and its seasonality being unlocked further. In addition, the new beverage will be placed in the popular iced coffee aisle. This will ensure better brand visibility and top of mind of awareness, especially during the summer. The new product will serve as a reminder to consumers that the liqueur can be enjoyed all year round. Consequently this will boost Baileys’ appeal and sales.
4. Challenges Baileys Iced Coffee needs to overcome
The brand extension will also suffer from seasonality.
As a refreshing chilled beverage, iced coffee is skewed towards the summer, and Baileys Iced Coffee will also suffer from this seasonality. The brand extension will struggle to sell in the winter and have to remind consumers of the product every summer.
Baileys needs to create demand for its new category.
With the brand extension, Baileys created a new category. And like all new segments, the drinks company will need to create market relevance and demand. The new beverage’s success will also largely depend on whether the market is ready for this innovation. Baileys should clearly communicate the brand extension’s identity and purpose to build market relevance, as well as heavily advertise the innovation to develop the product and category awareness.
Baileys is associated with warmth and this association does not fit the refreshing chilled beverage category, which the brand newly plays in. As a result, the drink company will probably not attract new consumers, but only existing and loyal Baileys consumers to trial the new product. Marketing and advertising efforts should be targeted towards this audience.
Baileys Iced Coffee must attract consumers to its stand-alone retail position.
At launch, Baileys Iced Coffee was placed in the iced coffee aisle, a different retail position from the liqueur. The brand extension will need to live on its own at retail and attract consumers to the iced coffee aisle. In addition, the new product will not benefit as much from the Baileys aura. The drinks company should thus regularly remind consumers, especially brand loyalists, of the new beverage and its location in stores.
Baileys Iced Coffee offers two different drinking occasions: a quirky iced coffee and an indulgent alcoholic drink. The new product will attract both iced coffee and single-serving alcohol consumers. The beverage should thus be placed in two different store locations to cater to these two different needs: in the iced coffee aisle and in the chilled alcoholic drink aisle.
5. Risks emanating from Baileys Iced Coffee the brand needs to eliminate
Baileys could suffer from contradictory brand values, damaging its identity.
Baileys Iced Coffee is available in an on-the-go can and is positioned at retail in the on-the-go iced coffee aisle. The on-the-go format is associated with solitude, and this could rub off onto the new product. However, this association contradicts the liqueur’s identity as a social and occasion brand. If the new beverage acquires on-the-go and solitary associations, this will damage Baileys’ identity. The drinks company should thus minimise the innovation’s association with the on-the-go format and be very careful how it positions the brand extension in consumers’ minds, the marketplace and the retail landscape.
What’s the bottom line?
Baileys Iced Coffee fits the parent brand, and thus reinforces its identity. In addition, the new product tackles Baileys’ seasonality challenge by offering new drinking occasions and encouraging consumers to enjoy the liqueur more often and throughout the year. The innovation also increases the brand’s visibility, awareness and appeal.
However, Baileys will need to create market relevance for the new category, as well as attract consumers to its new product in the iced coffee aisle. The success of the brand extension will also largely depend on whether the market is ready for this category innovation. In addition, Baileys should not underestimate the risk of suffering from contradictory brand values with the new beverage. This would damage the brand’s identity.
Baileys should revise its branding strategy to maximise the new product’s opportunities and minimise its challenges and risks. The drinks company should focus on targeting brand loyalists, and positioning the new beverage to be relevant and valuable to its target consumers as well as in line with the parent brand. Baileys should also heavily advertise the innovation to grow the product and category awareness, as well as clearly communicate its stand-alone retail position.
*Featured Image: New Baileys Iced Coffee Cans (LifestyleLinked)
What a great response to their struggles with seasonality! They built on their existent association with coffee to create a drink that would be appealing in the summer, and created a new category in the process. I am interested to see if this turns out to be a successful brand extension for them.
I am really enjoying your case studies – it is interesting to think about some of the behind-the-scenes decisions companies make that lead to what we see and interact with as consumers.
Great analysis of the opportunities as well as the existing associations that Baileys has in terms of their market relevance! Would be really interesting to see a follow up article about this product to see if their new product venture has been a successful one.