by Smoke | Jun 3, 2015 | Blog, Brand Management, Brands & Distribution, New Products - Brands, Taliera

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 Bubbleâ€, 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 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.
 
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?).

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.

Take a look at the top 10 domestic “Hot Brands†put out by Marvin Shanken’s Impact Databank:
- Barefoot
- Black Box
- Bota Box
- Liberty Creek
- Boggle
- Apothic
- 14 hands
- Barefoot Refresh
- Gnarly Head
- 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 meâ€â€
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
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by Smoke | Mar 5, 2015 | Blog, Brand Management, Brands & Distribution, Distributors, Law and Policy, News, Politics
The headlines and press statements around some of the latest beverage alcohol industry channel conflict are extraordinary and gaining attention across the country.
A new craft brewery is opening up every day, adding to the over 3,000 currently operating in the USA (Brewers Association).  There are 100s of new craft distilleries that have opened up over the past few years with many more in the works (American Distilling Institute). There are more than 7,000 wineries as well (Wines & Vines).

All this growth in new entrants is the result of renewed consumer interest in trying new things. The Millennials have driven much of the new growth and vibrancy. It’s an exciting time in the beverage industry. That said, every large-scale established consumer brand across multiple industries is trying to figure out what to do and how to keep their base, grow it and remain relevant.  Anheuser-Busch Inbev was roundly criticized for their “anti-craft†beer advertisement for Budweise
r during the Super Bowl. As I wrote about, this was them playing the hand they hold and making the best for a giant brand in decline.
These issues are a lot more complex than they appear and have interesting and changing industry alliances. I am constantly asked (last night included) why the laws are the way they are, by consumers and business people who are not from the industry. Here is a brief explanation:
The simple answer is the current legal and regulatory framework in the US is the result of two Constitutional Amendments. The first one was to ban all alcohol aka Prohibition (18th Amendment in 1919). The second one was to repeal Prohibition (21st Amendment 1933). To pass a Constitutional Amendment the Congress must pass it with a 2/3 majority vote in both houses and then it goes to the 50 states and must pass ¾ of the statehouses to become ratified.  A very high bar indeed. Prohibition was a national disaster of epic proportions. However, it was created in response to some significant excesses by the industry and public. A lot of the excesses were blamed on what is known as “Tied-Housesâ€, whereby the brewers owned the taverns. The drunken excess of many in the public was attributed to the brewers have a direct interest in selling as much beer as possible and controlling the point of consumption. The saying “There is no such thing as a free lunch†came from this era. The brewers would give away free sandwiches at the taverns they owned. Sounds good, but they would salt these sandwiches excessively so that the patrons would drink more beer.
Whether you agree or not that “tied houses†were the root of all evil, this was the majority view when in 1933 the nation’s failed experiment in Prohibition came to an end. Even though it was clear to most that this government intrusion into industry was a disaster, there were still large numbers of anti-alcohol constituents throughout the land. The compromise to get the 21st Amendment passed was to allow each state the absolute right to regulate the sale and distribution of alcohol within its boarders. The 21st Amendment does not have an opinion on tied houses or any other aspect of how the industry does business. The Federal Alcohol Administration Act did spell out specifics on regulations of the industry to insure the revenue and to protect consumers. It did not however, spell out any specifics regarding a “3 tier systemâ€, but rather defers to the 21st Amendment that in turn defers to the states.

Each state proceeded to set up its own set of laws and regulations.  There are 50 states and 50 sets of laws that while some may resemble each other, none are identical. Layered onto the specific statutes and regulations are the interpretations by alcohol boards or chairmen and the courts.  The most common way in which the states addressed the tied house issue was to legislate a middle tier (wholesaler) to be a buffer between the suppliers and the retailers. This is what is commonly referred to as the 3 tier system. There have always been some states that allowed brewers to own wholesalers, though this was the exception.
In the case of Kentucky’s new law, Anheuser-Busch Inbev has owned distributors there for more than 40 years and had attempted to buy a 3rd. That prompted the wholesalers to attempt to stop them and when other means failed, it ended with this new legislation not only not allowing them to buy the new distributor, but also forcing them to sell their existing businesses. I have no idea of how the courts will view this, but from the sound of it, ABI will not go quietly.
I can’t help but think the latest turn in the 3 tier beverage alcohol industry channel conflict is an example of overreaction that will do nothing but cause further escalation. When one considers all the new brands that have launched and keep launching in beer, spirits and wine and the need for each to find ways to market, it is clear that broad based full line distributors provide a viable route to market for many. All of the main distributors have giant books of brands now, and they serve some very large suppliers and many smaller ones well. In many cases they serve these needs of smaller brands by creating specialty sales divisions. They do not serve every brand well, nor can they. This has created market conditions in most states where a new crop of smaller start up distributors have emerged, primarily handling specialty or craft brands. Where specialty/craft distributors have emerged, they have become a necessary escape valve for small and new brands getting distribution to retail. In markets that allow it, and many states have provisions up to a certain size, craft breweries can self distribute. This is expensive but a necessary option in cases where there are no viable distributors to carry a new brand. Stone Brewery in San Diego and Sun King in Indiana seem to be examples of self-distribution that has been successful. I wonder if this will become more prevalent with spirits as the number of craft distilleries grows.
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The current approach, though ugly at times, has worked to provide a route to market for a thriving craft community.  The pressure to get new brands to market is only going to increase. It is unclear to me where the craft community will end up better off – with strict laws that don’t allow suppliers to own distribution (of any size) or with looser laws that give options. I tend to think most small/new brand will end up supporting a more flexible system, but the bigger brands, that are doing well in the traditional 3 tier system, will support the stricter system.
It may be that there are simply too many competing interests to work out viable solutions to everyone’s satisfaction on these issues. It would certainly be better for the industry if there were agreement as opposed to legal or legislative fights. ABI is a powerful entity as are all the major suppliers. Poking them in the eye with a local legislative win, may end up being a case of winning the battle but losing the war in some ways. It is unclear to me that the KY law actually helps craft brewers or simply hurts ABI or it it even does that. ABI can still control largely the activities of an independent distributor, as they have been able to do, in many other states. What is clear is that this KY battle is not the end to this fight.
It will be interesting to see how this continues to play out. Love to hear your comments or questions. Cheers! Smoke
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Smoke has worked in all 3 tiers of the industry, built beer wine and spirits distributors, owned a craft brewery, a winery, and multiple craft spirits brands. He built the leading technology for pricing between suppliers, distributors and retailers. He also represented the WSWA as Chairman & President and the Brewers Association on the Government Affairs Committee.
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by Smoke | May 1, 2014 | 2014 Event
I’m very pleased to announce the initial keynote lineup at this Summer’s WITS and BITS – please see below and registration is now open for the combined event here – Smoke
  
10th Annual Wine & Beer Industry Technology Symposium to Unite Thought Leaders at Strategic Summit for Wine and Beer Brands
Hot Tech Topics to include Innovation, Breakthrough Marketing,
Keg Supply Chain Evolution, Data Security Breach, Internet Impact
(NAPA, Calif.) — Wine Industry Technology Symposium (WITS) in collaboration with Beer Industry Technology Symposium (BITS) has announced the Keynote Speakers for the 10th annual event set for June 30 – July 1, 2014 in Napa, California. An action packed series of keynotes will cover a wide range of topics affecting the wine and craft beer industries including: mobile e-commerce, data breach and security, breakthrough marketing, supply chain innovation, leading edge hospitality systems, new on-premise kegs and product tracking. Panels of leading restaurant and grocery operators will also provide valuable insight as they discuss their first-hand experience with wine and beer consumers.
“Every year we have worked hard to up the ante in terms of the quality of keynote speakers and breakout sessions. This year, our board has truly taken the program to a new level for the 10th annual WITS event,†said J. Smoke Wallin, founder and co-chairman of WITS and BITS. “Our new high-impact, rapid fire keynote addresses allow us to pack significantly more content into the event with the sole purpose of creating thought-provoking discussions that will deliver immediate take home value to all of our winery and craft brewery attendees.â€
“Upon reflection over the past ten years, and considering the vast evolution of technology in the wine, and now beer, industries, I am very pleased with the dynamic program we have set for 2014. I look forward to welcoming both wine and beer industry leaders, as well as many of today’s leading technology innovators, to our 10th Annual event,†added Lesley Berglund, co-chairman of WITS & BITS and co-founder and chairman of the Wine Industry Sales Education (WISE) Academy.

The Initial Keynote Lineup Includes:
- “Ben Franklin: America’s 1st CMO Would Still Be A Pro in 2014â€
o  Drew Neisser, CEO and Founder of Renegade
- “ROI of Digital Marketing: Myths, Facts & Measurement”
- Karena Breslin, Vice President of Digital Marketing at Constellation Brands Inc.
- “Engaging The Connected Consumers In The Era of Mobile + Digital”
o  Tim Schulz, Google Strategic Partnership Lead
- “Confronting the Inevitable? Data Breach Offense, Defense and Playbook†– Panel
o  John Nicholson, Strategic Negotiator – Strategic Global Sourcing, INFOSYS
o  Gal Shpantzer, Contributing Analyst, Securosis
o  Tom Resau, VP W2 Communications
- “Breakthrough Marketing – Case Studies on Digital Marketingâ€
o  Terry Wheatley, Founder, Canopy Management & Wine Sisterhood
- “Trending Now: Progressive Tech Trends for Enterprising Businessesâ€
o  Sandy Tungare, Founder & CEO Vistaar
- “If Digital Marketing had a Crystal Ballâ€
o  Aliza Sherman, MediaEgg
- “Tech Trends: Predicting Future Technology and ROI by distinguishing between Fads and Trendsâ€
o  Rob Grimes, Founder, CEO and Chairman, Constratech
- “The Internet of Things and the Nexus of Forcesâ€
o  Joseph Farrugia, Domain Lead, Partner, Oracle Enterprise Applications and BI, Gartner Group
- “Applying Technology Innovation to Revolutionize Old School Industriesâ€
o  Steve Hershberger, CEO, SteadyServ Technologies, Brewery Founder, Social Media Founder
- “Grocery And On-Premise Innovators On Technological Transformationsâ€
o  Randall Friedman, Restaurant & Food Group Publisher
o  Eduardo Dingler, Corporate Beverage Director, Morimoto Restaurants
Early bird pricing to attend WITS ends May 30, 2014. Attendees can register at www.wineindustrytechnologysymposium.com and at www.beertechnologysymposium.com beginning May 1.

About WITS:
The Wine Industry Technology Symposium® (WITS) is the focal point for thought leadership in the strategic and tactical use of technology in the global wine industry. WITS was created in 2005 by a group of wine industry and technology professionals to advance innovation and to address the unique information technology and services needs of the wine industry. The 10th annual WITS is June 30 & July 1 in Napa, CA. This year, the newly formed Beer Industry Technology Symposium (BITS) will be held in conjunction with WITS. To learn more, join WITS on Youtube, Twitter, Facebook, and LinkedIn
About BITS:
The Beer Industry Technology Symposium™ (BITS™) was created to address the unique information technology and services needs of the Beer industry. BITS is dedicated to bringing the world’s leading breweries, distributors and retailers together with the leading technology experts to foster learning and discussion. Expert panels and keynotes discuss leading edge case studies involving consumer direct marketing and sales, operations, financial management, trade sales and distribution, brewing and input management. Join BITS on Twitter, Facebook, and LinkedIn
For more information, contact Kathy Archer of the Wine Industry Symposium Group at 707-261-8719 or kathy@winesymposium.com. For sponsorship and registration, contact Waunice Orchid of the Wine Industry Symposium Group at 707-261-8716 or waunice@winesymposium.com.
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by Smoke | Feb 11, 2014 | 2014 Event, Blog
We are in full planning mode for the 10th Annual WITS… hard to believe that a few of us sat around brain storming ideas for a “technology extravaganza for the wine industry” almost 11 years ago. Â Please plan on joining us this year in Napa, CA as we celebrate a decade of WITS, for what promises to be our most exciting and well attended event. Â Here is the link to the press release and posted below as well.

10th Annual Wine Industry Technology Symposium to Unite Wine Business Leaders, Technology Experts on June 30 & July 1, 2014
(NAPA, Calif.)  —The 10th Annual Wine Industry Technology Symposium (WITS)®, the premier event showcasing the strategic use of information technology and services for the wine industry, has been set for June 30 – July 1, 2014 at the Napa Valley Marriott Hotel. www.wineindustrytechnologysymposium.com
Executives from wineries, distributors and retailers gather annually at WITS, the only annual conference designed exclusively to foster education and debate around the application of technology solutions for the wine industry. The 2014 WITS program includes:
- Educational Tracks – Sessions on Technology Leadership, Small Business, Consumer Direct, Trade Sales & Marketing and Vineyard & Winery Operations
- Speed Dating – To celebrate the 10th technology extravaganza, WITS has introduced “speed dating†for winery CIOs and technology companies. This will provide opportunities for quality one-on-one time with key decision makers and thought leaders.
- Plus Beer, with BITS – WITS has united leaders in the craft brewing industry to add the first Beer Industry Technology Symposium (BITS™) that will run concurrent with WITS this year.
“In today’s rapidly changing business environment, where consumers are driving massive change throughout the industry, it is vital to get it right when it comes to your route to market, as well as the strategic and tactical use of enabling technology,†said J. Smoke Wallin, WITS Co-Chair. “WITS is the only place where winery owners and GMs can sit side by side for a day of learning and discussion with CIOs and other technology leaders from across the three tiers,†he added.
The WITS Steering Committee, comprised of technology and business leaders across the wine industry, is currently finalizing panel topics and keynote speakers. Past speakers have included the CEOs, CIOs and leaders from Amazon, Facebook, Groupon, garyvaynerchuk.com, FedEx Office, Nielsen and 1800-Flowers, as well as experts from IBM, Oracle, Cornell University, UC Davis, Sonoma State University and many others.
Attendees and sponsors are encouraged to register early, as space is limited and expected to sell out quickly. Registration will open March 1, 2014. For more information visit www.wineindustrytechnologysymposium.com.
About The Wine Industry Technology Symposium (WITS)
The Wine Industry Technology Symposium (WITS) was created to address the unique information technology and services needs of the wine industry. WITS is dedicated to bringing the world’s leading wineries, distributors and retailers together with the leading technology experts to foster learning and discussion. Expert panels and keynotes discuss leading edge case studies involving consumer direct marketing and sales, operations, financial management, trade sales and distribution, winemaking and vineyard management. www.wineindustrytechnologysymposium.com
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