U.S. Drinks Conference 2008 An Outstanding Success

This was the second year that we’ve put on the event in London and this year we had a larger number of delegates from even more countries. The feedback we’ve gotten from attendees was overwhelmingly positive with frequent comments on the level of insight provided and comprehensiveness content.

The roster of speakers this year included some of the top executives in the American Drinks market including Rudy Ruiz, EVP of Southern Wine and Spirits, Vincent O’Brien, Senior Counsel at Nixon Peabody, John McDonnell, COO of Patrón Spirits, Bill Earle, President of the National Association of Beverage Importers, Roy Danis of AV Brands, and conference co-organizer John Beaudette, President of MHW Ltd. The subject matter included case histories and lessons learned by brands that have been successful in the U.S. and a wealth of data on the American market structure. Jeff Grindrod, Managing Partner at Brand Action Team, and Mike Ginley, President of Next Level presented results of “hot off the presses” research on consumer trends and preferences.

Several themes recurred through the conference including the impact of the global financial crisis on the Drinks industry, aligning distributor and supplier expectations, and the shift in marketing strategies toward more online and non-traditional spending.

Impact of Financial Crisis

“The economic crisis we’re going through is certainly having an impact on the business, but the research results clearly demonstrated that the U.S. beverage alcohol industry is recession-resilient,” commented Ginley of Next Level.
Grindrod added that “we see continued growth in volume and revenue, albeit slowing, and a shift in consumption from on premise to off premise. This is very timely data since much of the survey was completed in the two weeks preceding the conference.
Perhaps the most interesting thing we found is that for those folks going out to restaurants, the last thing they tend to cut out is the cocktail, wine or beer part of the meal,” he noted.

Aligning Expectations

Ruiz of Southern Wine and Spirits gave some well received advice to suppliers looking to export their brands to the U.S. “The key to a successful relationship between supplier and distributor is in aligning expectations,” he stressed. “When presenting new brands to Southern, expect to come in with a three year plan including a detailed one year operating plan with realistic expectations on case volume. It is more worthwhile to consider launching in smaller markets, proving your success with programming that demonstrates it’s repeatable.” According to Ruiz, the best demonstration of brand traction is when they see bars and retailers calling Southern and asking for the brand.

Evolution of Internet as Strategic Tool

Steve Raye of Brand Action Team brought home the importance of new online tools such as blogs and social media marketing for brand building. “It’s a noble goal to get visitors to your brand website, but at the end of the day, it’s more important to get your content out to where prospective customers already are spending their time…reading blogs, searching for recipes, reading comments on wines that other consumers have posted. Indeed, research shows that 65% of consumers read reviews online before purchasing a product.”

The US Continues As The Worlds Best Beverage Alcohol Market For New Brands

As John Beaudette summarized at day’s end, imports continue to drive growth across all beverage alcohol categories. “Considering the emergence of Eastern Europe, the Far East, and the rest of the world, we recognize that suppliers have many options in terms of investing behind new or existing brands. We hope we’ve clearly demonstrated that America is still the primary destination you should target”. Sphere: Related Content

Rudy Ruiz' comments at the US Drinks Conference 2008

I'm reprinting an edited version of Rudy Ruiz's extemporaneous presentation at the U.S. Drinks Conference. He's 100% "spot on" with most of his comments.
We highly recommend new brands do not target New York and FL in their initial launch plans. We believe it is better to be a big fish in a small pond where you'll have a much better chance of demonstrating success. Once you've generated a repeatable, scalable program and worked out the bugs, then you can move on to the bigger markets.
And we agree completely with the concept of alignment...retailers both on and off premise are not interested in building your brand. They're interested in building their business. And if your brand gets built in the process...then we all win. But their interest is in three primary things:
-Getting more customers
-Spending more money
-Coming back more often

Effective marketing programs are designed with the recognition of this alignment in goals...help them build their business first and you'll build your brand in the process.

So, here's what Rudy said:

The key to a successful relationship between supplier and distributor lies in ALIGNING EXPECTATIONS.

On the on-sales side, make enough use of the potential benefit from a strong relationship with the bartender. Win over the bar teams and you have on site ambassadors for your brand. The importance of getting your product on the drinks menu should also not be underestimated.

Product displays are more important that securing a good space on the main shelves, since without the brand recognition, consumers won't pick it up.

What SWS expects from brand owners.
I try to make time to see everyone, but I want to see a 3-year plan, including a 1 year operating plan including KPIs etc. It must be clear that the brand is relevant, and this won't happen just through distribution - all the effort of opening new accounts will be wasted if these are then lost by a lack of support from the supplier. It's amazing how often potential suppliers come to see me with very little insight into the type of consumer they wish to target, or research into the market and their category. So many plans are put together in a vacuum, with no reference to the competition.

A new product entering a crowded market needs to be different. I don't have time to work with them to put together a business plan, but in these situations I encourage them to seek professional (marketing) help. It's a question of applying some rigor to setting out the offer and then tightening it.

Testing to prove the concept.
Testing the market place on a smaller scale is a good idea, rather than trying to get into all 50 states at once. If successful, these tests should generate excitement from the GMs, which is more sustainable than having this enforced by HQ.
I generally recommend brands avoid testing in California - although it's a popular strategy, it will be very expensive. It may be more worthwhile to consider launching in a state that is less significant in the beverage alcohol market and building loyalty there before expanding.

The first step should be setting up bar tender focus groups, followed by maybe 20 accounts which will be supported by these bar staff. At this stage price and other parts of the plan can be tweaked according to feedback. I usually advise brands to avoid high end night clubs during the testing period. It's difficult to get a feel for the brand's potential once the exclusive period ends and consumers move on to the next month's promotion.

Hopefully after one year, the brand will be in 2 markets. If the brand has been pitched right with strong research, then demand should spread to other markets from here. We want bars and retailers contacting us to get hold of the brand. The key to achieving this result is the ability to show tremendous marketing discipline.
Sphere: Related Content