Particularly in the early brand phase, the reality and expectation should be that the distributor will take orders and deliver product, not generate orders or build brand awareness among consumers. the combined RNDC Breakthru Young’s Empire operation would likely offer below market deals to lure top brand suppliers currently aligned with SGWS to migrate to the newly merged entity. As a result, the newly merged distributor may likely increase its margin demands on small and medium suppliers. For large suppliers, however, both distribution groups, SGWS and a post-merger RNDC et al., would be capable of improved offerings for their supplier partners due to their increased scale both in terms of sheer size and market reach. These offerings include lower distribution costs and the strongest retail account service. These distributors will also likely request the unilateral option to take national distribution in the event they wish to expand a brand beyond its home market or initial limited market roll out. One other advantage is that due to the depth of their sales capabilities, each distributor would have the ability to demonstrate its fair share of market specific craft products within their respective portfolios.
Approach Distributors with Measured Expectations With the challenging backdrop of distributor consolidation, the question becomes how small- and medium-size brands can address distribution options in non-franchise states. (In franchise states, the laws make it difficult for powerhouse distributors to compete as strongly given that supplier leverage is typically absent). A handful of options are worth considering. Strategically speaking, national footprint distributors should typically be explored first, especially if the brand owner has or can access a relationship there. However, small- and medium-size brand owners should approach the major distributors with measured expectations due to the fact that these distributors often pass on small- to medium-size brands knowing that with a test market success, the distributor will often get another opportunity to work with the brand. The other choices for entrepreneurial brands include second tier and alternative distribution options. These are strong alternatives, particularly during a brand’s launch and ramp up phases. Regardless of which distribution option a brand chooses, the supplier will need to supplement the sales resources in order to get traction in the market. Particularly in the early brand phase, the reality and expectation should be that the distributor will take orders and deliver product, not generate orders or build brand awareness among consumers. Part One of this series emphasized the democratization of marketing and validation as key components for emerging innovation brands to compete effectively. The discussion surrounding emerging brands’ abilities to capitalize on the changing media landscape since 1980 and consumers’ interest in discovery and authenticity are significant. Another important component to easing the route to WWW.ARTISANSPIRITMAG.COM
market battle and attracting a brand’s target consumer is through relevant differentiation. Brand owners should ask themselves, “What is my relevant brand differentiation?” or more simply, “What is different or better about my brand, which consumers should care, and why?” Brand owners should think about their target consumers and their attributes. For instance, here do they live? What do they drink today? Where are they drinking it today? Where are they buying it? Who is selling it to them? Often times the answers will lead towards examples of consumer groups that are driving today’s distilled spirits growth or highlight trends ranging from “drink local” to “drink healthy” and “drink hip.” Once this has been established, consider the brand’s value proposition. If it’s a niche product, the number of target consumers who believe in the relevance of the product’s differentiation, and more importantly, are willing to pay for it, will be smaller. Conversely, if the value proposition of the product is one that may be a possible game changer, then there will be an easier route to market with an accretive sale for the distributor salesperson rather than a product serving as a dilutive substitution sale.
Badge Value Badge value is another example that contributes to a brand’s relevant differentiation. A badge is a special or distinctive mark, token, or device worn as a sign of allegiance, membership, authority, achievement, etc. Brands can serve as a badge for people to communicate who they are, who they want to be, and what they value. Brands with highest badge value are the ones with simple messages and a strong, specific point of view. Consider Grey Goose circa 2007 as an example. The Fizz Agency conducted a case study to assess the decibel level of people’s voices when sitting at a bar and ordering Grey Goose vodka compared to other vodkas. Interestingly enough, the study determined that people were significantly more likely to use a louder voice when ordering Grey Goose than when ordering other vodkas. Why is this the case? The research determined that people associated Grey Goose with being “the best” and thereby ordering it communicated to others that they could afford this vodka and surround themselves with excellence. This is a powerful message that proves creating badge value is critical for premium spirits. Badge value does not happen instantaneously; rather, it is a byproduct of relevant differentiation
Brands with highest badge value are the ones with simple messages and a strong, specific point of view. 127
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