What It Takes To Expand A Distillery’s Market
We’ve posted plenty of videos of us at distilleries. On the bottling line, in the gift shop, thieving from barrels. And, the one question we get asked most often is “is that bottle available in my market?”
We often will check the website and let people know. Or, sometimes if it’s a really popular video we’ll point them in the direction of the website so they can check. And, on occasion, we are met with some level of frustration that they can’t get their hands on a bottle. However, expanding into new markets and territories isn’t as easy as simply shipping bottles to a new location.
We wanted to take this opportunity to describe the steps it takes to enter a new market, a very real struggle that our partners over at Guidance are tackling now. And, let you all know how you can help get those spirits on shelves near you.
Gauging A New Market
When a distillery decides they want to expand, it begins a long analysis process to determine which markets are viable. I could say “I want to sell my product in New York,” but, if you have no brand awareness in the area, you’re competing with bot nationally recognized brands and local brands. It is difficult to compete as a younger brand with brands that your potential customers are familiar with.
This is even more difficult if you’re trying to enter into a state that has a strong craft distillery presence. Many of these people are familiar with the brands within their own state, making it even more difficult to win precious business.
For example, Guidance Whiskey is trying to enter the Florida market.
“It’s never easy looking to a new market,” says Jason, owner of Guidance Whiskey. “First, you have to see if a new market is even receptive to you. Then there’s regulations, distribution, and then relationships to keep going.”
“One of the things you can do,” he said, “is make sure you’re asking your local stores and bars for the brands you’d like to try that aren’t in your area. Asking for products allows stores, and us, to know theres enough interest to start looking at that area because that’s an investment.”
As Jason said, regulations are another big piece of the puzzle, and regulators don’t make it easy.
Each individual state does things differently. There’s not much of a “uniform code” when it comes to the liquor industry. Some make you sign a binding agreement with a distributor. These distributors can swap or relinquish clients amongst one another. When this happens it can throw a wrench in distribution since you have to shift all your accounts to the new distribution company.
And, before you have to worry about a distributor, you have to apply to the state’s liquor control boards.
For example, Guidance, who wants to register in Florida, would have to register and be approved by the Florida Department of State to do business in Florida. Pay for each label and wait for them to be approved, follow Florida-specific laws, regulation, reporting, and compliance procedures (each which vary state-to-state).
Then, after months of filing, payments, and waiting for approval, they are not clear to figure out how and where to sell their spirits. You know, after they find a distributor to pick up their brand and then agree to the distributor’s own list of demands.
Distribution and Branding
There’s a saying in the liquor industry: “you can get any store to buy a label with curb appeal, but you aren’t successful until they order again.”
Essentially, anyone can get a liquor store to take a chance on a case of a well-branded, good price point whiskey. This is because they know, over time, people will eventually buy it because of the marketing. However, there is precious little “extra” space on a liquor store shelf. And, liquor store owners are trying their best to fill those spots with the best-selling products.
Think about it. How many liquor stores have you walked in where there are vast stretches of un-open shelving? Not many, right?
So, your brand is going to be competing with these other brands for a cut of that market and that shelf real estate.
How do you combat that? Branding and building loyalty.
Another expense Guidance would incur, is having to hire brand representatives down here in Florida who do nothing but try and push their brand to new accounts. They’re the people that set up tastings in liquor stores, help develop cocktail programs, and have tables giving away swag at festivals.
“It’s not cheap to expand.” Jason said. “You have all these costs, waiting, logistics, all to get your bottle into someone’s hands. It’s a long process, and not an easy process to get started and be keeping track of all the rules for all the states you’re in. That’s not even including the cost and time promoting and building a community in that state.”
What Can We Do To Help Craft Distillers Enter a New Market?
We can help craft distillers by asking for the products you want to try. That’s the fastest way to help a distillery expand to your area. If they know there’s a demand for it, and you help drive brand awareness by talking about it, that helps make their monolithic job a bit easier.
Next, if you do find a craft brand you enjoy drinking, keep a bottle on your shelf. When it runs low, grab another one. This isn’t just to help with their sales (which is important), but it can also help spread the word. If you have friends over, or need a quick gift for a whiskey fan in your life, use these as opportunities to help spread the name of a brand you enjoy. It’s an easy way to make a big impact.
You can click here to learn more about Guidance Whiskey and their journey. We also did a previous article about Guidance’s community-focused approach you can read by clicking here.
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Greg Sinadinos started his spirits journey writing a whiskey periodical for Fine Tobacco NYC Magazine. He began answering review requests under a social media page he named “Whiskey Culture,” which quickly merged with Greg’s passion for connecting with others and his interest in history.
Today, Greg travels the country not just looking for great whiskey, but also exploring the history and individuals that the whiskey community is founded upon. He has authored “Whiskey History From Around The World” and is the host of “The Rickhouse” web series.