If you are a start up tequila brand on a tight budget, how can you still be perceived as a player in your field when you don’t have deep pockets?
This Beverage Trade Network article shares several ways to optimize small marketing budgets to support your retailers and build your brand.
You might be implementing a lot of these strategies, already. Yet, when it comes to the most cost-effective way to generate brand awareness, exposure and loyalty–Social Media–chances are, you’re so lost that not even GPS can help you.
Say Hello to My Little Friend
Social Media is your friend–or, at least, it can be. Let me explain.
Social Media (SM) levels the playing field for small, start up brands and craft labels that don’t have the enormous war chests like the Big Boys. But…
The secret to using it effectively is not to be on all the SM platforms. You can’t be–and you know why.
You’re too busy selling, trying to get placements, forging key relationships with distributers and mixologists, putting out fires, and educating your customers.
And what about those that don’t know about you, yet? How do you reach them in a genuine manner without spending hours in front of your Facebook page that you could be using to pitch the next account?
And how do you do damage control when someone has spread misinformation about your brand? Online reputation management (damage control) carries its own unique challenges as we described in Ambhar Tequila–The Recalibrating of A Brand, that not every company is prepared to deal with. Few, like Ambhar, do so successfully. Most need to call in a professional and pay dearly.
Nico Martini is a former professor who taught Digital Marketing Design and Self-Branding Through Social Media and is the founder of Hypeworthy. Hypeworthy manages, among other things, social media, public relations, digital content creation, and online reputation management. We caught up with Nico at the speakeasy, The Last Word, during the San Antonio Cocktail Conference where he was a featured speaker.
Here, Nico gives us the following tips on balancing the score, whether you’re a spirits brand, a budding mixologist, or just trying to launch your own plumbing business.
Not only should you add value to your customers’ lives, but as Nico further recommends, represent yourself and your brand accurately and honestly.
Eso No Me Ayuda
Perhaps you’re just too good at what you do but you feel that word-of-mouth just isn’t traveling fast enough. You have no patience for Pinterest, no tolerance for Twitter, and no stomach for Instagram, so you decide to bite the bullet and hire someone else to deal with your social media headaches.
You’ve just figured out which popular SM platforms you should have a presence on and how to use them when, like the deluge of tequila and mezcal brands lately, another one pops out of nowhere claiming to be the “next big thing.”
Choose one of the myriad of other PR firms who profess to know all there is about social media, but when you look at their own Facebook or Twitter pages, they have less active followers than you do.
On the other hand, you could seek a competent individual with impeccable references like Tequila Aficionado Media’s own Lisa Pietsch, who specializes only in niche marketing of spirits brands, as well as bestselling book authors.
With a keen sense for accurately marketing to, and targeting these segments, Lisa teaches online classes on Social Media geared to these specialties a few times a year.
Unlike most every PR firm, she, like a handful of other social media mavens, practices what she preaches with real followers numbering in the thousands in just about every SM platform that counts.
Who Got Time Fo’ Dat?
Whether you choose to hire a reputable outside service like
Hypeworthy that deals with businesses from a variety of industries, or your cousin’s niece who communicates to her friends on three different platforms at the same time but isn’t old enough to drink, decide who will do the best job of representing your brand and transmitting that image to your customers.
Shop around for the best marketing bang for your buck. You can’t afford to leave your branding–your image–to amateurs or charlatans.
We just inventoried all of the Sipping Off The Cuff episodes we have to broadcast through the end of this year and realized we need to broadcast a new review every Monday, Wednesday and Friday through the end of this year just to show them all before we judge for the final 2014 Brands of Promise Awards!
That means our page views will be off the hook through the holidays!
In sincere gratitude for all the amazing brands we’ve had the pleasure of reviewing this year, we’re offering our ad pricing through the end of the year at special discounted rates. That’s right – Gratitude Rates!
Tequila Brands and Producers Have Already Sailed Into the Sucker Hole
For those new to the expression, a “sucker hole” is a colloquial term referring to a spate of good weather that “suckers” sailors into leaving port just in time for a storm to resume at full force and wreak havoc on the ship and crew.
For both Tequila Brand Owners and producers of a certain size, their ship has already sailed, and the storm is now closing in on them. Some in denial, others looking through rose-colored margarita glasses, still believe they can navigate through to that glimmer of light on the horizon. However, the perfect storm of doom looms just past the horizon of hope, and will soon envelope and destroy most, if not all, in its wake.
Oh, and that’s the good news. The bad news is that only a few of the big and the very nimble will survive.
This is because of a number of factors, primarily that too many of us bought in to the Yankelovich and similar studies that declared premium and above 100% Agave Tequila brands as the next big thing.
While the premises of these market premonitions were undoubtedly true, too many of us jumped headfirst into the juice just before the world economic decline. Six hundred brands have turned into 1200 brands in less than five years. The growth of the market has been dramatic compared with other distilled spirits, yet, it’s still relatively small, ranked only 4th in US volume. It has not grown fast enough to accommodate all of the entries into the field.
Resistance is Futile – Change is at Hand for the Tequila Market
The Gravy Train Wreck Ahead
I’m sure that for many of you, in just reading the title of this article, your blood pressure has escalated, and you may already be misdirecting your anger at the author.
For others who have experienced the many similar economic paths to consolidation in the global beverage industry, you have already accepted that change has to occur, and you will soon better understand and appreciate the math behind what I am about to lay out, and why everything I’m about to outline here will happen in due course.
For those of you who have your personal fortunes riding on the Tequila Train, both prominence and profit may still seem to be so close that you think you can see the light at the end of the tunnel, or beyond the next bend. But, I’m sorry to say that for most of us in the biz, the light at the end of the tunnel is that of an oncoming locomotive. This will be a catastrophic collision, albeit in slow motion, that will drain your resources and your resolve.
What can be learned from the Russians? (Excerpted from JustDrinks.com)
The global economic crisis has had a significant impact on the Russian spirits market, changing market dynamics and briefly halting the much-lauded premiumisation trend, according to current research.
A recently released report from the International Wine and Spirit Research (IWSR) on Russia’s spirits market claims that the downturn has also led to “…disruptions across the supply chain, with many suppliers and distributors going bankrupt or halting production. For healthier companies, however, it has presented an opening to establish their brands and take market share…”
The Silver Tequila Clouds have a very Dark Lining (Excerpted from Global market review of Tequila – forecasts to 2013 www.researchandmarkets.com )
The history of the Tequila industry has been one of boom and bust. Sales rose during the 1940’s only to collapse again in the mid-50’s. Export sales rose steadily from the 1960’s onward, although domestic sales fell sharply in the 1980’s due again to an economic slump, and the severe Mexican economic crisis of the early 1980’s resulted in plummeting sales.
The market was again disrupted by a critical shortage of Agave beginning in the late ’90’s, which served to hold back the category’s international development as brand owners were forced to divert limited supplies to the core US market, and quality perceptions were damaged as some manufacturers moved from 100% to 51% (Mixto) Agave products.
Today, that dynamic is in reverse, and the market is in oversupply. More and more 100% Agave products are coming into the market. This is helping to raise quality perceptions, and in turn, demand is surging not only in core Mexican and US markets but across a number of other countries.
The outlook for the category has rarely been better, and Casa Noble Tequila president and COO David Ravandi commented, “Tequila is entering a stage of consolidation in the world markets. It is no longer a fad. The fact that 100% Agave Tequila exports have increased tremendously over the last two years is extremely positive for the product’s outlook in the years to come.”
US Tequila Importation is a Sucker Bet
“My cousin will make the best Tequila for you Mr. Gringo”
“So, my friend, you want a great Tequila brand? We will make it for you. Just fifty percent cash up front to start the process.”
Unfortunately, far too many have fallen for this old gag. Relying heavily on the forecasting reports of the early 2000’s that suggested that luxury Tequila would be the next big spirits category after vodka.
With dollar signs in their eyes, the believers drank the Tequila Kool-Aid, most of them spending way too much to buy a brand, custom molded bottles, etc. But the worst part was that this left little if any money for marketing. Many did not even understand brand marketing inflation was happening right under their noses.
It had started soon after Patron hit 100,000 cases in volume in 2001, and the cost to market a Tequila brand in the US went from $1 to $10M per year. Today it takes at least $20M per year just to play in the same ballpark as Patron’s $50M plus, Sauza’s $35M plus, and Cuervo’s $30M plus marketing budgets.
Who could have predicted that a “realistic” business plan for the next successful ultra-premium Tequila brand calling for only 10,000 cases in the first year would end in it’s investors taking a bath?
The problem with this equation is three-fold:
1) Pricing: Unlike vodka and white rum, 100% Agave Tequila is just too expensive to produce and bottle in Mexico. Unless, like rum, vodka and mixto Tequila, it is able to be shipped in bulk and bottled near the final consumer, the cost involved with 100% Agave Tequila is always going to be too high to attain critical volume and profit levels.
2) Volume: US mass volumes are best when a spirits category is between $9.99-29.99/750ml. One hundred percent Agave Tequila is currently profitable only at the upper ranges when higher volumes are attained.
3) Distribution: The US “3-Tier” Distribution System is at best an oligopoly, and 19 states run a monopoly. Of the 1200 plus Tequila brands, want to guess how many they want to carry? Well, after the top 20, you are very lucky to be “special order only”. If you are fortunate enough to live in the states of California or Arizona, where one can be both the importer and distributor, you will find yourself driving your precious Tequila brand around to each account in your car.
Without product volumes or market clout, you will be hard pressed to get even an appointment, let alone a vender number with the chain restaurants and grocery stores. These major chain stores like Chili’s, Chevy’s, Costco, Kroger, etc., drive at least 85% of the combined volume in all but the control states. Without access to the chains, your market becomes the handful of privately owned, “Mom & Pop” accounts that usually know that small independent distributors are easy prey for bending the law on consignment, stringing out payments, or not paying at all.
While driving your own brand around certainly makes time for the personal touch and focus, these hand-selling efforts prove to be the most inefficient ways to distribute one Tequila brand. Your glass ceiling to fame and fortune becomes that next level of chain distribution that can only be had by a state-wide delivery system of the large wholesale distributor.
With Tequila segment Pricing, Volume and Distribution all against you, one will need to have a lot more money than the brands of the past in order to simply survive in the US.
Tanks-a-lot for Nothing
Call the tank maker and raise your stocks of liquid now!
Unfortunately, most of the mid-sized Tequila distilleries have bought into the notion that Agave prices will go up in the very near future. They base this notion on the boom and bust cycle of the past, and like Lehman Brothers, believe that they have successfully timed the market.
Greedily, many producers are now mortgaged to the hilt in order to produce all the Tequila that they possibly can afford to store in stainless tanks or wooden barrels. Fear of the impending Agave price increase that has yet to happen (and may not for many, many years) has seemingly forced them all into a squirrel-like stockpiling frenzy.
Are they storing Blanco, like acorns, for the hard winter ahead? These stored nuts of liquid demise are in reality winds conspiring to produce the perfect storm for all but the most financially secure and/or nimble producers.
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