Smaller Brands will Need to Find a “New Way of Operating” to Stay Relevant
The pandemic is taking its toll on everyone, but smaller bev alc brands are among those hit especially hard.
Indeed, industry veteran and president and founder of BevStrat recently told WSD the company is “busier than ever” as smaller brands struggle. BevStrat, a sales and marketing company, specifically caters to brands selling less than 100,000 9L cases annually.
In the current environment, consumers are seeking ‘comfort brands.’ They want to know what they’re getting rather than experiment thanks to COVID-19, says Brian, adding “right now, they need something they know.” As a result, “the craft brands, the specialty brands, the smaller brands are going to be left in the lurch.”
A NEW WAY OF OPERATING. “We, as a sales company that operates all over the country, we need and have to have suppliers understand a new of operating and a new way of working together” when it comes to share of wallet and share of mind “because the old way will be a long time coming back for sure, if it comes back at all,” Brian tells WSD.
So, we asked what can brands do right now to stay relevant and stay top of mind with consumers? BevStrat recommends a couple things like creating mixology programs that support the brand off-premise, staying in constant contact with on and off-premise accounts, and really leaning into social media use. You’ve likely seen the increasing number of brands turn to hosting virtual tastings and happy hours.
“This is a time when good, creative people can reinvent how they go to market,” says Brian.
Brian goes on to say that when things are back up and running, distributors “will be under so much pressure from multinational commodity brands” to hit their 2020 sales numbers. “The small guy–under 100,000 cases– is going to be left to do it for himself or herself,” he says.
“If you don’t adjust now and start thinking like that, when the lights go back on, you’re still going to be in the dark.”
HEADING FOR A SHAKE OUT? Brian believes this could all lead to a craft shake out.
“The real impact of this is not April. The real impact of two months of no buying, two months of shutdown, two months of closed tasting room is going to be [in] May, June, July,” he says. “The problem with that is that winter sales are made in the summer. OND sales are made on summer placements.”
That means “there are deals to be had out there with people that need either expertise or equity or debt financing,” says Brian.
CONTROL STATE TRENDS “HIGHEST OF ALL TIME” IN MARCH
Control state trends were way up in March, thanks to a soft comp as well as pantry loading due to the current pandemic. Spirits volumes and sales were both up around 17%, according to recent NABCA data. NABCA notes that’s the “highest volume and value monthly growth rates reported in decades and are likely the highest of all time.”
Note, NABCA data covers all channel data, meaning the surge in off-premise more than compensated for the impact on on-premise in control states.
Pennsylvania was the only state to grow below its 12-month trends, with volumes down 0.3% and sales up just 0.7% for the month due to the state shutting down its brick-and-mortar locations as well as online sales in mid-March. Limited online sales resumed April 1.
Price/mix was 0.3% in March, which suggests consumers were buying down while stocking up, according to NABCA. Bernstein analyst Trevor Stirling writes “this is consistent with other evidence that pantry loading has favored big brands over niche brands and large formats,” per a recent note.
Cocktails was the fastest growing spirits segment by far, up 41.3% for the month. Domestic whiskey was up 25.3%, vodka was up 19.2%, brandy/Cognac was up nearly 16%, Canadian whiskey grew 15%, rum was up 14.6%, Scotch grew 14.3% and gin was up 13.6%.
On the less impressive side, cordials were up just 0.3% and Irish whisky was only up about 2%.
Interestingly, tequila–which has been one of the fastest growing segments in recent years–fell short of its 12-month trend (11.4%), up 10% in March.
Meanwhile, wine volumes were up nearly 23% for the month, with a rolling 12-month trend of 0.4%.
WINE DISTRIBUTORS SUE PENNSYLVANIA LIQUOR CONTROL BOARD
On Thursday, wine distributors MFW Wine Co. and A6 Wine Co. filed suit against the Pennsylvania Liquor Control Board (PLCB) in Commonwealth Court, claiming the agency is violating state law by prohibiting them from shipping special order wine directly to retailers and restaurants, reports the Philadelphia Inquirer.
Under the current system, the special order wines sold by the plaintiffs must first be shipped to a state store, where the retailers must go to pick them up. But with the state-run liquor stores closed, retailers can’t restock special order wines.
The distributors are seeking an emergency order to force the PLCB to “implement a procedure for direct delivery of wine” as required by a law implemented in 2016.
You may recall, Pennsylvania made some big changes to its alcohol system in 2016, including opening up direct-to-consumer wine shipping, and wine sales in grocery, among other things [see WSD 06-08-2016].
The PLCB was also meant to establish a system for the direct shipment of special orders. But in August 2017, the agency said: “At the present time, the PLCB has not opted to implement a procedure to allow for the direct shipment of special orders,” according to the lawsuit.
“Regarding special order, we continue to evaluate and develop plans to support our employees, licensees, suppliers and customers to the best of our abilities in these uncertain times, and we’ll communicate any changes to the current special order restrictions, if and when they are implemented,” according to a PLCB spokesperson.
We’ll have more information as it rolls in.
MEANWHILE, the PLCB announced at the end of last week it has “significantly increased” the number of e-commerce orders it’s taking on a daily basis, now accepting 6,500 orders through the website. That’s an 850% increase over the initial amount accepted when e-commerce sales first went live on April 1.
In addition, Pennsylvanians can start placing orders for curbside pickup at certain locations starting today, per a notice from the agency. Curbside pickup orders will be limited to one order of no more than six bottles; only one order will be accepted per caller, per store, per day; and payments must be made by credit card.
A-B’S DRINKWORKS AND B-F LAUNCH FIRST COLLABORATION POD
Personal drinks machine Drinkworks, the joint venture between Anheuser-Busch and Dr Pepper Keurig, is expanding its portfolio with the first collaboration cocktail with Brown-Forman, Lynchburg Lemonade featuring Jack Daniel’s Tennessee Whiskey.
You may recall, Drinkworks announced a licensing agreement with B-F to create co-branded cocktail pods late last year [see WSD 11-20-2019].
“The Lynchburg Lemonade is the next step in our journey to elevate everyday entertaining experience, released just in time for summer,” says Drinkworks ceo Nathaniel Davis. “We’re thrilled at the opportunity to continue evolving our portfolio to feature brands our consumers love and trust.”
“With the rise of at-home consumption during the current environment at an all-time high, this new collaboration provides a convenient way to enjoy a Lynchburg Lemonade from the comfort of your home…” says Jack Daniel’s global brand director Matt Blevins.
Lynchburg Lemonade is produced by Drinkworks and is available for a limited time on drinkworks.com and through select retailers, per a release. Expect more collaboration cocktails to be released later this year.
7-ELEVEN LAUNCHES DELIVERY APP, INCLUDES BEV ALC
7-Eleven has launched a new delivery app, called 7NOW. Customers in 400 cities can get store items delivered, including beer, wine and spirits, per a release.
“The COVID-19 pandemic has changed our lives in so many ways including the things we used to take for granted, like grabbing Slurpee drinks with the kids after school,” says 7-Eleven vp of digital and head of delivery Raghu Mahadevan. “With the 7NOW delivery app, 7-Eleven can still get Slurpee drinks to the kids and maybe a bottle of wine to moms and dads not entirely accustomed to weeks of work-from-home and homeschooling responsibilities.”
Orders are fulfilled in about 30 minutes, though the company notes demand may impact delivery times.
APPLETON ESTATE RELEASES NEW RESERVE ALONGSIDE REBRAND. Campari’s Appleton Estate will be releasing an 8 Year Old Reserve that aligns with a “brand relaunch” consisting of redesigned bottles, labels, and other packaging, per a release. The 8 Year Old Reserve will be available nationwide for approximately $29 a 750ml.
ROGUE ALES & SPIRITS LAUNCHES CANNED COCKTAILS NATIONWIDE. Rogue Ale & Spirits is adding a Grapefruit Vodka Soda and a variety pack option to their sparkling canned cocktail line as they expand sales nationwide. Grapefruit Vodka Soda joins the lineup alongside Cucumber Lime Gin Fizz, Cranberry Elderflower Vodka Soda and Ginger Lime Vodka Mule. All four flavors are 7.5% ABV and available in 4-packs of 12 oz cans. The variety pack includes eight cans, two of each flavor.
REBEL COAST RELEASES CANNABIS-INFUSED CANNED WINE, SELTZERS. Rebel Coast announced today they are adding five new products to their cannabis-infused beverage line, including two canned wine products and three seltzer flavors. Rebel Coast’s existing Sauvage and Pink Passion will now also be available in sparkling blends and the Rebel Coast portfolio will expand to include three seltzers in Black Cherry, Lemon Lime and Mixed Berry flavors. Each 12 oz. can contains 10 mg of THC. The cans will be available starting May 15 at select dispensaries in California and delivery services through Rebel Coast’s website for a suggested retail price of $8 per can.
“You can learn many things from children. How much patience you have, for instance.” – Franklin P. Jones
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