Evolving Drinks Brands

Evolving Drinks Brands

Evolving Drinks Brands banner

I recently read and shared an article in Forbes by Patrick Hanlon called, “Why Brands Must Evolve” that is so spot on that it has led to a number of interesting conversations in the past week with some of my clients and partners who own brands in beer, wine and spirits. As one who spends a lot of time thinking about new brands, as well as igniting established brands in new ways, Patrick’s thoughts really resonated with me. I don’t think there is a better industry than beverage to illustrate his points about what is going on with brands. Brand proliferation is happening across the board making “breaking through the clutter” ever more difficult. At the same time, the reason this is happening if fundamentally that there is demand for new brands. As I wrote in “RE: Is Craft Beer In A Bubble”, there is a big and growing market for new brands in beer, but also in wine and spirits. Not everyone will succeed and in fact many new brands will fail. To the big brand manager, the fundamental challenge has also never been so big – how do you keep a loyal following when your following gets gigantic. I think about an Iconic brand like Patron Tequila. I was a distributor for Patron as it passed between different sales companies and was a very difficult sell. Five years from the time it launched, Patron was doing about 55,000 cases. Now that is a nice little brand, but nothing would have screamed, “This brand is on fire!” Then, it did catch on fire and became the very symbol of luxury. Check out Patron case sales for the first 10 years:

Patron sales first 10 years

Patron is an amazing brand and continues to outsell all of the other super premium tequilas (and frankly all other spirits brands at $40/750ml bottle and higher). They have a huge and loyal following. However, as brand manager for Patron today, the things one has to do to market the brand are quite different than in the early years. How does one keep the “cool” factor going when you are the largest brand in your category. There are dozens of new entrants who are going after their market and have the advantage of being smaller (think Avion, Casamigos, Don Julio) and bringing a new “cool” factor to the market. Clearly there are many that succeed at this but being true to your brand and your audience while changing things up can be quite difficult. Absolut Vodka was THE luxury brand of the late 1980s and early 1990s. It was the “it” brand among the “it” crowd.

Andy Warhol Absolut IMG_6541

Pernod Ricard paid over $8 billion to acquire the brand a few years back. How does Pernod now manage a giant brand that was formerly the top luxury vodka in a market with such massive proliferation of brands that the high-end vodka category has experienced. I’m told there are 800 vodkas in the Beverage Media New York book. Pernod recently announced a new bottle. Absolut is one of those brands that defined itself by its bottle.   Changing the bottle is a big move even in subtle ways. Adding the big A is a pretty big move. Large companies don’t usually make big moves, but staying relevant in a crowded market sometimes requires big moves.    Pepsico made an even bigger move a few years back with their Gatorade brand. I thought at the time, it was fairly risky, but it appears to have paid off (does anyone know details?).

gatorade new gatorade old label

Patrick’s article certainly cites a number of great examples of big brands that have managed to evolve over time and keep or even build on their past successes. “…the challenge for brands has evolved from creating awareness to creating meaning.” How do you keep creating meaning at scale like Nike, Apple and Disney have successfully done.  They each connect to their consumers and continually create meaning.

The wine market has evolved so dramatically, that I have to look up many of the brands on the grocery shelf today and I have been involved in selling $100s of millions of wine over the years. Why? New brand proliferation to attract the millennial consumers.

barefoot wine logo Meiomi wine

Take a look at the top 10 domestic “Hot Brands” put out by Marvin Shanken’s Impact Databank:

  1. Barefoot
  2. Black Box
  3. Bota Box
  4. Liberty Creek
  5. Boggle
  6. Apothic
  7. 14 hands
  8. Barefoot Refresh
  9. Gnarly Head
  10. Meiomi

Four of these are Gallo Brands, but none say Gallo. All have interesting, contemporary labels. To succeed in this hyper-competitive market, every brand must have a number of things. Great branding is vital, without it your brand is lost and has no chance. Great liquid that fits the taste of your target market is key, without it they won’t buy a second time. Distribution is essential, a brand cannot become relevant if consumers can’t find it. But how does a brand build a real following of consumers who care? That is, how do we create meaning? That is the question every new brand team needs to answer.

 

To quote Patrick again: “We want the added value of believing in something. The added value of belonging to something: being a part of something that hard-wires us to a larger community of “people like me””

 

Seth Godin in his fantastic book “Tribes” articulates this concept well.

“Seth Godin argues the Internet has ended mass marketing and revived a human social unit from the distant past: tribes. Founded on shared ideas and values, tribes give ordinary people the power to lead and make big change. He urges us to do so.” Brands have to figure out how to reach their tribes and how to engage with them. Notice, I did not say create their tribes. This is an important distinction. I believe tribes are discovered not created. Brands who overtly try to create one typically struggle. If a following is not organic, today’s savvy consumers sense it.   I think brands can make themselves relevant and worthy of a following and then as that following begins to show signs of life can play a role in fostering and accelerating it.

 

I’d love to hear your stories of brands you think are doing this right.

 

Cheers,

 

Smoke

 

Commentary on the US Beer Market 2009 results and 2010 thoughts…

I’d thought I’d share some thoughts on the US beer market based on the 2009 results (starting to be published broadly) and my own insights calling on the distributors and retailers at Pelican Brands representing  Singha Beer.

First, the 2009 beer market was characterized by tough trading conditions overall, consumers trading down from a number of brands while pockets of specialized growth in the craft/better beer segments and certain “newer” imports. Most beer distributors continued to benefit from cost containment (not importantly led by decline in fuel costs from 2008), price increases in 2008 and continued consolidation.

Beverage World published their analysis this week.. it begins:

Craft Beer Sales Skyrocket
Tuesday, 26 January 2010 10:57

ST. LOUIS — Beer sales shot up 36 percent last year at O’Fallon Brewery, a microbrewer located in an industrial park off Interstate 70 in O’Fallon, Mo. And yet, there was disappointment.

“We had hoped it would be a little bit higher,” said Fran Caradonna, who with her husband owns the maker of brews such as 5-Day IPA, Cocoa Cream Stout and Pumpkin Beer.

Caradonna’s reaction might sound surprising. Last year was horrible for U.S. beer sales. Shipments were down 2.2 percent from 2008, the worst single-year decline since the mid-1950s, according to trade publication Beer Marketer’s Insights.

But the pain was not shared equally.

The big boys took the hardest hits. Anheuser-Busch was off 2.1 percent nationwide. MillerCoors was down 1.9 percent. Both companies combined represent almost 80 percent of the U.S. market.

At the same time, craft brewers saw shipments leap almost 9 percent. They added capacity. They tapped new markets. At O’Fallon, for example, brewing was outsourced to increase production, and the company’s beer made its debut in Springfield, Mo. Other brewers mapped out future expansions. Some even hired people — notable in an industry that has been making headlines with layoffs.

And two craft brewers, Boston Beer Co. and Yuengling of Pottsville, Pa., managed to do so well in 2009 that they are now too big to be called craft brewers (defined as producing fewer than 2 million barrels a year).

“The trend is towards flavor, innovation and localness, which craft is playing on,” said Benj Steinman, president of Beer Marketer’s Insights.

Craft brewers — made up of regional brewers, microbrewers and brewpubs — still occupy a small niche, hundreds of brewers who together add up to about 4.7 percent of the U.S. beer market. But the stouts, porters and ales that once found the fancy of just beer snobs have discovered a broader audience in recent years. And 2009 might prove to be the breakout year…”

For complete story click on Beverage World here

So, let’s get this straight… all the major brewer premium brands down (on huge volumes), major shifting to off premise from the on premise (people drinking at home more than at bars) and major growth among key crafts brewers.  In the imported market, Heineken and Corona the two leaders, both suffered significant declines.  That said, brands like Stella (the priority for AB Inbev) and Singha Beer (newly energized by Pelican Brands) showed significant growth.

2010 Expectations…

A continuing tough market for mainstream brands.  Continued fragmentation of consumer interests that drive the “better beer” category – including crafts and imports.  This is a great time to be a beer consumer as the selection and quality of beer has never been as great.  It is a great time to be an entrepreneur in the beer business in spite of consolidation among the big boys.  It I look forward to sharing our experiences in activating the Singha brand along with some other premium import and craft beers we will be adding to the Pelican platform this year.  Stay tuned…

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