craft distillery market & brand packaging for distilled spirits
Post on 21-Oct-2014
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The craft distillery market is extremely competitive. We take a look at the state of the industry, where it's trending, and how that impacts your label and packaging decisions.TRANSCRIPT
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Cra$ Dis)llery Market & Packaging for Dis)lled Spirits
Photo credit: briancolella via Flickr
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Industry Overview: Revenue
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Spirits Are Growing Total revenues from dis1lled spirits were $22.2 billion in 2013, or 34.7% of the total alcohol market revenue. – Total volume produced grew 1.9% to 206 million cases.
– Total revenue grew 4.4% or $928 million.
Source: Dis)lled Spirits Council
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State & Local Revenue The beverage alcohol industry contributed over $21 billion directly to state and local revenues during 2010. – Dis)lled spirits accounted for over $8.8 billion, or 41% of this direct revenue.
Wait… 41% revenue from 34% market share?
Source: Dis)lled Spirits Council
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Spirits Taxes Are Very High Dis1lled spirits are one of the highest taxed consumer products in the U.S. – Federal, state and local taxes account for 54% of the average $14.50, 750ml boXle of 80 proof dis)lled spirits in the U.S.
Source: Dis)lled Spirits Council
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Industry Overview: Profit
Photo credit: Allison V. Smith for The New York Times
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1 year of “Top Shelf” Growth
!2#!1#0#
1#
2#
3#
4#
5#
6#
7#
8#
Value#!1.2%#Premium#1.6%#
High#End#7.2%#Super!Premium#
6.3%#
Value#Growth#
Price#Segment#
Segment#Growth#2012!2013#(percentage)#
Source: Dis)lled Spirits Council
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9 years of “Top Shelf” Growth
0"
0.5"
1"
1.5"
2"
2.5"
3"
3.5"
4"
4.5"
2003"
2012"
Sales&in&Billion
s&
Value&vs.&Super1Premium&Growth&
Value" Super"Premium"Source: Dis)lled Spirits Council
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Volume vs. Revenue
Source: Dis)lled Spirits Council
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Industry Overview: Compe))on
Photo credit: Ashley Landis, Landis Images
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Explosive Growth – Your Compe))on
In the last 6 years in the U.S. there has been a 5-‐fold growth in craP dis1lleries. – The number of new entries into cra$ dis)lling is doubling every 3 years.
– All 50 states now have opera)ng cra$ dis)lleries.
Source: Sonoma County Cra$ Beverage Report 2013; American Dis)lling Ins)tute; Dis)lled Spirits Council
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Over 400 Fully opera)onal small dis)lleries in
the U.S. right now
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Explosive Growth – Your Compe))on
The projected number of craP dis1lleries in the U.S. is expected to grow to over 1000 in the next 7 years.
Source: Michael Kinstlick, Coppersea Dis)lling, LLC
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Explosive Growth in WA There are 80+ craP dis1lleries in Washington State alone. Dozens are awai1ng license approval. – There were ZERO cra$ dis)lleries in Washington State in 2008 prior to deregula)on.
Source: Becky Monk, Puget Sound Business Journal
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Consumers Have Many Choices There were more than 220 flavors of dis)lled spirits in 2012. There were 739 new products brought to market in 2012. – Including 171 vodkas, 22 rye whiskies, 53 Irish whiskies, 163 cordials, 40 tequilas, and 36 gins.
Source: American Dis)lling Ins)tute; Dis)lled Spirits Council
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What’s Being Produced? 52% of craP dis1lleries are producing whiskey. Vodka is not far behind. Most new craP dis1lleries are focused on producing Vodka, Gin, and Rum. 40% of all spirits products in the U.S. have a non-‐tradi)onal flavor.
Source: American Dis)lling Ins)tute; Dis)lled Spirits Council
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Whiskey Was Big in 2013
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Whiskey Was Big in 2013
Source: American Dis)lling Ins)tute; Dis)lled Spirits Council
Whiskey accounted for 80% of industry volume growth. Flavored Whiskeys accounted for 45% of total Whiskey volume growth. Whiskey revenue rose 10% ($634 million) to $7 billion. Tradi)onal Whiskey accounted for 80% of Whiskey revenue growth, but all major Whiskeys grew. 129 New Straight Whiskeys, 53 New Bourbons in 2013.
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Brand Posi)oning
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Brand Posi)oning Brand Posi1oning is the star1ng point for the development of all your marke1ng elements. – Build your marke)ng and sales efforts around a core message: Who are you? What makes you different?
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The Role of Your Brand Your brand defines what you stand for. It’s what makes you compe11ve. – How do you want consumers to view your product, compared to your compe))on?
– What is the single most compelling and persuasive reason to buy your product?
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The Advantage of a Strong Brand Brand posi1oning creates an enduring and sustainable compe11ve advantage based on the percep1on of superiority.
“Safe” “Fresh” “It Runs”
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Brand Consistency is Key Your sales and marke1ng efforts need to be consistent with your brand to reinforce your posi1on and not erode it. – Great brand posi)oning is simple, single-‐minded, consumer focused, and easy to leverage.
– Great brand posi)oning differen)ates you!
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Packaging
Photo credit: John Silva, Advanced Labels NW
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Grab their aXen)on! Consumers are bombarded by 1,500 ads, labels and logos per day. How will your packaging resonate memorably in this sea of visual informa1on? – You have about 8 seconds to catch and keep the aXen)on of today’s busy, distracted shopper.
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Packaging Effect On Consumers Your packaging is the only adver1sing for your product 100% of your customers will see. Strive to make a good first impression and a las)ng impact.
Photo credit: Steven Lane
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Packaging Elements
• Glass
• Closure
• Label(s) Photo credit: lovelypackage.com, thedieline.com, drinkhacker.com, masterofmalt.com, packagingoFheworld.com
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Packaging: Glass What to look for: – Quality of the boXles
• Able to accept closure consistently • Able to be labeled consistently
– Cheap / thin glass can have defects: • Not flat (wavy) • Pronounced seams • Out of round necks
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Packaging: Closure What to look for: – Ease of use
• Func)onal • Reliable • Easy to use (for consumer) • Can be labeled, if desired
– Some odd shapes wont accept a top label, or will distort it
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Packaging: Label What to look for: – Quality
• Won’t peel, curl, or scuff • Legible, sharp prin)ng and clear graphics • Consistent colors across all labels
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Packaging Effect On Consumers Studies show a strong brand and packaging creates expecta1ons in consumers. – One study found that expecta)ons created by packaging and brand were the top two factors in 73% of par)cipants final purchase choice.
Source: University of South Australia’s Ehrenberg-‐Bass Ins)tute for Marke)ng Science
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Packaging Effect On Consumers Studies show label packaging alone can influence 70% or more of consumers response to your product.
Source: University of South Australia’s Ehrenberg-‐Bass Ins)tute for Marke)ng Science
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Packaging Effect On Consumers Labels majer! – A majority of consumers will select a boXle based on the label if they don’t have a recommenda)on from a family member, friend or store employee.
– If you put the same product in two different boXles people will swear one tastes beXer!
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Packaging: Label Design Design considera1ons: – Stand out on the shelf – Be memorable – Representa)ve of price point – TTB compliant
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Packaging: Summary Your label needs to: – Sell – Tell your story – Tie in with everything else you are doing to market and adver)se your products
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Thank You!
Photo credit: Angela Rowlings