If you’ve created a high-quality wine or spirits product with an appealing brand proposition, the next step is to determine your route-to-market strategy. This includes the markets you want to sell in, distribution partners you will work with, retail channels you will target, and the budget you will allocate to support the brand growth for the year.
The first stage of building a retail channel strategy is to understand the retail framework in the US. Each state has its own beverage alcohol laws, which can vary greatly. Tax structures are often unique from state to state as well, which means the same product will have a different price point in different states.
Since every individual market is vastly different in terms of buyers, budgets and structure, beverage alcohol suppliers must craft a strategy to fit the markets they are entering. Las Vegas, New York City and Miami, for instance, are all major cities but offer very different retail landscapes. Las Vegas is dominated by major hotel and casino properties, while New York is home to some of the most trendsetting bars in the world, and Miami is a major Latin American hub with demographics unique from anywhere else in the country.
Before launching a brand into any of these markets, a supplier should understand what consumers are ordering, as well as how, where and when they are making these orders.
Once you’ve got a feel for the unique characteristics of the market(s) you want to enter, it’s time to establish a national, regional or local retail account strategy, depending on the size and funding behind your brand.
Until recently, the accepted wisdom was that alcohol brands are “built on-premise and sold off-premise”, meaning bars and restaurants were often the first places consumers were exposed to a new brand. As a result, the bulk of sales and marketing resources were spent getting on the back bar, menu or in the hands of influential bartenders.
However, as channel options proliferated, and social media became commonplace, there have been a growing number of successful brands built by prioritising sales in the off-premise or via e-commerce rather than on-premise.
Events and festivals can also present opportunities for brands to engage with new consumers. Although smaller brands cannot typically afford high sponsorship fees for events, they can still enter venues and events as a concession item, especially if they leverage a unique value proposition as a ‘turn-key’”’ item.
“As long as we break even, we consider [events] a win,” said Michael Glickman, founder of premix cocktail brand LIQS. “We’ve done well over 100 music festivals. Everything from EDC Vegas to Life in Color, events that cost brands typically minimum $50,000 to $250,000 to participate. We’ve never spent more than $5,000 and we’ve always sold hundreds of cases.”
Securing a new retail account
Once a general market and channel plan is in place, the next hurdle is to get your brand on the shelf. There are a handful of ways to go about this, including external sales agency support and distributor incentive programmes.
The first step is to pitch your product to the buyer at your target retail account. Whether off- or on-premise, accounts typically prefer the first meeting to be set up by appointment, rather than showing up unannounced.
Brett Pontoni, specialty spirits buyer at Binny’s Beverage Depot, recommends conducting research both on- and off-premise for the market, even if a brand is only pitching to one channel. This helps brands better understand the trends and selling climate in the area they are entering. From there, Pontoni suggests that brands should zero in on learning more about the specific retailer they are pitching.
“Go into at least two or three of my stores and look at the shelf,” he says. “If you’re going to pitch me a gin, look at three gin sections, look at how I have the gins arranged, look at the price points on the gins, look at what gin is and is not on sale, look at what shelf talkers and neck hangers we have up, and look at what’s on display. All that information is going to be valuable to tell you what we like.”
When pitching to on-premise accounts, bar owners and managers appreciate when you can make a case for how your product fits into the bigger picture of their bar programme. Your sales representative should get a feel for the core demographics, the type of drinks that sell best and the overall mission of the account, and be able to explain how their brand adds additional value to this mission. The ability to communicate why your product is differentiated from the rest of their inventory and what the account stands to gain by taking it on is crucial to winning over an on-premise buyer.
Increasing your sales
Once a product has made it on shelf, the best way to ensure future sales is to provide account support in the form of product education for staff, reliable stock inventory or marketing materials. The modern account is often looking for their beverage alcohol supplier partner to act as a trusted consultant rather than a product pusher.
Jeannine Babcock from Cordially Yours Wine & Spirits in New York suggests “introducing a new product and making that product available in 5cl and not having ‘out-of-stock’ issues out of the gate makes for a happy retailer and even more happy customers”.
A brand’s product positioning and narrative are two aspects of sales that suppliers have the most control over. Crafting a well-structured and engaging brand story will help salespeople to differentiate products from competitors and increase sales.
As beverage consultant Robin Robinson explains, the most successful brand narratives have a beginning, middle and end. The beginning should include a set-up that introduces the brand and gets the listener’s attention. The middle should include a challenge that the founder or brand faced and the end should include a solution that shows how the brand solved the challenge. The challenge and solution should be specific to the brand, highlighting what sets it apart from competitors.
Once a brand has sold to a seller, they must also ensure to continue nurturing that relationship. Brands can ensure they are assisting operators by providing options where possible and, of course, making sure they can purchase products when there is a need.
Growing scale
One way to make sure a product keeps moving is to ensure a strong rate of sale, also known as velocity, according to industry consultant Chris Maffeo. “At the beginning,” he says, “it’s fine to sell one bottle to five bars because you want to test the waters. At the end, you need to double down on those that are buying a case because that’s where the rotation is.”
Selling to a smaller number of bars that are more likely to purchase multiple cases can be more effective than selling to as many bars as possible. Companies should aim to build long-term relationships with bars that have a legitimate interest in their product and focus on understanding why these bars are more likely to buy their product.
From there, suppliers can build out a stronger demographic profile for their brands. This will allow them to focus on the sellers that are more likely to purchase repeatedly, rather than continuing to test the waters with many bars at once. A good rule of thumb is to prioritise the value of gaining access to the right accounts over the sheer volume of accounts secured.
This article was initially published by Park Street.
