Innovation may be the lifeblood of the alcohol industry, but as the number of craft distillers and SKUs continue to soar, the path to success for new brands is starting to look like a Tough Mudder competition. For instance, as one of the top distributors in the country, Breakthru Beverage gets about 3,000 requests every year for new products, said Breakthru coo Lloyd Sobel.
At the annual WSD Summit last month, we asked a group of panelists, all of whom have experience building brands from scratch, to give their best advice on which strategies will make a product stand out.
IDENTIFYING A NEED. Being in touch with consumers' wants and needs is key when launching a new product. "I think it's much more important to step back and critically ask yourself why do people need this product? What problem am I solving?" said Nick Papanicolaou, vp business development for Pernod Ricard USA's New Brand Ventures, adding that "usually it's the brands that have taken a contrary or outside perspective that can really resonate" with consumers.
START SMALL. Steve Luttman, creator of Leblon Cachaca, and managing director of Tortoise & Volt Marketing & Ventures, echoed that sentiment, adding that "all the money in the world is not going to solve the problem of a bad idea." But it doesn't end at having a good concept. "You have to execute [it], and I'm a big believer in starting small and learning where and how to execute," he said.
PACKAGING IS CRITICAL. Elwyn Gladstone, former Proximo Spirits marketing head and founder of Biggar & Leith, emphasized the importance of packaging. It's a "critical" component because packaging is 80%-90% of the spirits game. "A lot of new brands don't invest enough there."
MEASURING SUCCESS: Success is measured differently by every company, but our panelists provided a few of their chosen metrics. Lloyd cautioned that case sales are the "worst metric for a new brand."
"I don't think there's anything more important than the reorder rate," said Steve.
Elwyn suggested looking to social media as a way to gauge success. "I think Instagram is a great tool not only for getting your message out, but also for seeing if you are resonating with consumers," said Elwyn. Things like how often people are uploading pictures of the product/brand, and measuring how often consumers are engaging with the product.
"I don't think there's a clear, common theme except for sheer luck half the time," said Lloyd," but you have to get the story right. You have to have enough resources to be patient because it takes time." He noted that even though big companies should have the competitive advantage given their capital and resources "that's not necessarily the case."
CALIFORNIA WINE GRAPE HARVEST FLAT FOR 2017
The 2017 wine grape harvest was almost flat for the year at 4.007 million tons, according to the California Grape Crush Report. The 2016 harvest was just a hair more at 4.032 million tons.
Despite the small decrease in tonnage last year, the long-term grape crush trends are up significantly. 20 years ago, the wine grape harvest was 2.89 million tons. Tonnage for both red and white wine varieties have increased over the last ten years, but up until 1997 California was harvesting more white wine. Beginning in 1997--the first time red wine grape tonnage surpassed white at 1.46 million to 1.42 million--red wine grape varieties shot passed white wine.
The price per ton on all varieties was $797, up from $565 in 2007, however, the price increases for red wine grapes have far outpaced white wine increases. In 2017, red wine grapes retailed at $962 per ton, up from $919 per ton last year and just $627 per ton in 2007.
Meanwhile, white grape varieties brought in an average of $587 per ton for 2017, which was down from $598 in 2016, but did represent an increase from $482 in 2007.
Grapes produced in Napa County received the highest average price of $5,205 per ton, up 11%. Sonoma and Marin counties received the second highest return of $2,800, up 8%.
SCOTCH WHISKY EXPORTS UP 7.7% TO US MARKET. Scotch exports to the US were up 7.7% in value last year, reaching approximately $1.27 billion, and 7.4% by volume, reaching 10.6 million cases, per the Scotch Whisky Association. The US remains the largest scotch export market by value, and second largest by volume. Globally, scotch exports were up 1.6% in volume and nearly 9% in value. Single malt Scotch exports were the driving force, up 14.2% in value. "We have undoubtedly benefited from the recent falls in the value of the pound, as have other exporters. But this short-term boost will not distract the industry from working hard to secure the conditions for long-term growth," says SWA ceo Karen Betts.
CASTLE BRANDS NET SALES UP 32% IN Q3 ended December 31 to about $24 million. In the first nine months of fiscal 2018, net sales were up 20.4% to $65.8 million. Whiskey sales were up nearly 30% for the nine months, thanks to Jefferson's and the Irish whiskies as well as the addition of the Arran scotch whisky portfolio, per a release. To continue to support Jefferson's, the company also purchased an addition 1,500 barrels of aged bourbon in the third quarter. As a result, we can expect more from the wine finishes program in the coming months and Castle Brands is also releasing Cask Strength and "Wheated" Ocean as part of Jefferson's Ocean Aged at Sea bourbon series. Moving forward, the company expects to benefit from the recently lowered federal excise tax and "expect[s] these trends of increasing sales and improving financial performance to continue over the balance of the fiscal year and beyond," says chief Richard Lampen.
PALM BAY INTERNATIONAL ADDS MCGUIGAN WINES TO PORTFOLIO. Australia-based McGuigan Wines has joined the Palm Bay International portfolio. Palm Bay will bring a new line from the winemaker called The Plan, which includes a chardonnay, cabernet sauvignon, shiraz and red blend all priced around $12 a 750 ml. The McGuigan portfolio also includes Hand Made Shiraz (srp $40) and The Philosophy (srp $125). The entire portfolio is currently rolling out nationwide.
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