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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.
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Cra$ Dis)llery Market & Packaging for Dis)lled Spirits
Photo credit: briancolella via Flickr
Industry Overview: Revenue
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
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
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 $14.50, 750ml boXle of 80 proof dis)lled spirits in the U.S.
Source: Dis)lled Spirits Council
Industry Overview: Profit
Photo credit: Allison V. Smith for The New York Times
1 year of “Top Shelf” Growth
!2#!1#0#
1#
2#
3#
4#
5#
6#
7#
8#
Value#!1.2%#Premium#1.6%#
High#End#7.2%#Super!Premium#
6.3%#
Value#Growth#
Price#Segment#
Segment#Growth#2012!2013#(percentage)#
Source: Dis)lled Spirits Council
9 years of “Top Shelf” Growth
0"
0.5"
1"
1.5"
2"
2.5"
3"
3.5"
4"
4.5"
2003"
2012"
Sales&in&Billion
s&
Value&vs.&Super1Premium&Growth&
Value" Super"Premium"Source: Dis)lled Spirits Council
Volume vs. Revenue
Source: Dis)lled Spirits Council
Industry Overview: Compe))on
Photo credit: Ashley Landis, Landis Images
Explosive Growth – Your Compe))on
In the last 6 years in the U.S. there has been a 5-‐fold growth in craP dis1lleries. – The number of new entries into cra$ 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
Over 400 Fully opera)onal small dis)lleries in
the U.S. right now
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
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
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
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
Whiskey Was Big in 2013
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.
Brand Posi)oning
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?
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?
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”
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!
Packaging
Photo credit: John Silva, Advanced Labels NW
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.
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
Packaging Elements
• Glass
• Closure
• Label(s) Photo credit: lovelypackage.com, thedieline.com, drinkhacker.com, masterofmalt.com, packagingoFheworld.com
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
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
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
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
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
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!
Packaging: Label Design Design considera1ons: – Stand out on the shelf – Be memorable – Representa)ve of price point – TTB compliant
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
Thank You!
Photo credit: Angela Rowlings
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