Word of Mouth Marketing

The Key to Brand Building in the Booze Business

If you’ve been following this blog (or read my book) you know that, with some exceptions, I’m not a big fan of paid or mass advertising to build brands. In my view, it’s all about point of sale communications, the role of the ‘gatekeeper’ (bar, server, or store people) and consumer conversations.

Call it face-to-face marketing

In fact, there’s a terrific book on the subject called The Face-to-Face Book: Why Real Relationships Rule in a Digital Marketplace. It was written by a longtime friend of mine, Ed Keller and his partner, Brad Fay when they ran the Keller Fay Group. The company is now part of Engagement Labs and Ed Keller is the CEO.

Ed Keller CEO Engagement Labs

The Keller Fay Group’s mission was to provide market research and consulting services based on consumer conversations. In 2015, the company merged with Engagement Labs and now offers a “total social”​ measurement solutions that integrates offline conversation with social media analytics. They bill themselves as “the world’s first TotalSocial® company.” They track, measure, and advise brands on how to understand and apply the insights they gain from consumer conversations.

Here’s a short YouTube video that will explain more.

Word of mouth and alcohol marketing

I’ve long felt that in this marketing environment, the key to a successful brand can be described as follows:

Discovery→ DISCUSSION→ Discernment→ Dissemination

Actually, before talking about this with Ed Keller, I hadn’t paid as much attention to the discussion aspect, when, in fact, consumer conversations can predict sales and marketers need to understand the dynamics. As Ed put it in a recent article on LinkedIn,

“Every brand needs to learn its unique social architecture to realize its full potential, and measuring and modeling is the best way to identify the drivers that will have the most significant impact on sales and other KPIs (Key Performance Indicators).”

Speaking of drivers, Engagement Labs focuses on four key drivers to create a single brand performance score that combine online social media data and offline conversations into their TotalSocial®.

  1. Volume—How much conversation a brand is building both on and offline.
  2. Sentiment—The extent to which that conversation is positive.
  3. Brand Sharing—How much content is being shared.
  4. Influence—In what way are consumer influencers engaged with the brand

In applying this, Engagement Labs ranked leading alcohol brands and learned, as a whole, the alcohol category is made up of so-called whisper brands, which are performing below average both on and offline. When comparing online to offline, these brands perform slightly better offline, in face-to-face conversations.

According to Keller:

“The alcohol beverage industry as a whole is built around a culture of sharing and encourages its customers to engage with others in a social environment—which presents a clear opportunity for brands to engage with its fans and facilitate more meaningful conversations that result in improved sales and brand recognition.”

Think about the winning spirits brands over the years and the role of influencers and consumer conversations in contributing to their success. Brands like Tito’s, Fireball, Rumchata and others. In his Face-to-Face book, Keller tells the story of Blue Moon Beer, served in a branded glass and garnished with an orange, which is in the product ingredients. The question that followed (“Hey, what is that?”) grabbed attention and sparked conversations. And, by the way, rituals related to a brand have always played an important role in their consumer acceptance.

As I write this I’m reminded of Gaz (Gary) Regan’s story of a consumer “expert” and the pains he took to alert his colleagues to his “discoveries” of single malt whiskies. You’ll find the story here, but I’ll save you the trouble:

It seems that when he was bartending in the 1980s on South Street in NYC, a particular Scottish gentleman would come in for lunch every day, order a hamburger and ask for the “book.” It was a guide to single malt scotches and differences in brands, regions, water, grain and distillation styles. After work, the gentleman would meet with friends and colleagues and hold forth on the verities of various malts. While he sounded like an authority on the subject, the information he provided was less than 5 hours old.

Don’t laugh, it helped to build some brands, The Glenlivet included.

About Ed Keller

I have known and worked with Ed when I was in the market research and consulting business at Yankelovich, Roper, and we were partners in our own venture called ASK Associates—all back in the day. So, I can unequivocally say he is among the top marketing research and communications people I know. He’s been a pioneer in word of mouth; a member of the Word of Mouth Marketing Hall of Fame; a past president of the association; and, a prolific writer on the subject. The Engagement Labs company has recently won two awards from the industry.

Whether you’re working on launching a new brand or looking for increased traction for a current brand, you ought to look into the Engagement Labs and their work. In fact, go to their website and download their material.

Tell Ed I sent you.

“Nothing influences people more than a recommendation from a trusted friend,” Mark Zuckerberg once famously said. “A trusted referral is the Holy Grail of advertising.”  

          
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Well Hung Vineyard

Making a Dream Come True

Late last year a man by the name of Peter Marlin contacted me (not his real name for reasons I’ll explain in a moment). He told me he had read and enjoyed my book—already I like him a lot—and wanted my help in marketing a wine brand called Well Hung Vineyard. Now he really had my attention.

Peter has a full-time job as a business advisor, doing quite nicely, but his dream was always to go into the wine business. So, he bought a brand in Virginia, kept it under the radar, and set out to develop it until such time as he was ready to go at it full time.

It didn’t take very long for him to realize that part-time is no time to build a brand in the booze business.

How the Name Came About

As the story goes… There were three women in Virginia, all close friends, and they loved their late afternoon wine sessions. One of them owned a small farm that was just perfect for cultivating grapes and, over time, the vineyard grew and flourished.

One day, as the three ladies were touring this 2-acre vineyard, one of them grabbed hold of a cluster of grapes, laughed, and remarked, “girls, these grapes sure are well hung.” They had a good laugh. But, after a second or two, they looked at each other and had a eureka moment. A visit to a trademark attorney followed and a brand was born.

These grapes were made into wine at a local winery and sold each weekend at farmer’s markets, wine festivals, small retail outlets, and other venues around the state.

Over time, things began to change. One left for personal reasons and the others grew weary of running all over the state each weekend. It was time for them to move on. What began as a hobby—you might say a labor of love—was becoming difficult to manage.

So, reluctantly they began to investigate a sale of the small vineyard and, especially, the brand name.

Peter and His Dream

Eventually, through a friend of a friend—you know how that goes—Peter heard of the opportunity and negotiations began, were discontinued and back on again—you certainly know how that also goes. Finally, he bought the brand.

Peter, like most entrepreneurs, saw an opportunity for this brand to be bigger than it was and perhaps with a national footprint. His strategy was to continue to sell the wine locally, but also bought wine from producers and marketed them under the Well Hung Vineyard label.

From the website:

Founded in 2008 by three women who recognized the value of a good joke and a great glass of wine, Well Hung® Vineyard has a proud heritage and a bright future. Today, Well Hung® Vineyard is all about growth. Working with winegrowers across the country, we are able to source the best fruit to go into our up and coming wines.

An unexpected dividend cropped up. It turns out that the women who created the brand were savvy enough to also register the brand for clothing, nuts, and other items. And, these were and still are selling well.

Where do I Come in?

The call with Peter was candid. He saw great opportunities for his brand (and dream) but faced many obstacles—not least of which was the time and effort to build a brand and get the best wine available. In addition, despite the “I got to try this wine” attitude of consumers, finding distributors was more than just a challenge (see the previous article on LibDib), it was a major obstacle.

Peter wanted to enlist my aid in making his dream come true. As we talked a few things occurred to me.

First, in a cluttered wine market, name and packaging can cut through and quickly gain awareness in stores and on menus. In a world of Barefoot, Cupcake, Layer Cake, Little Black Dress, we also have provocative labels like Bitch, Fat Bastard, Old Fart, and more. The idea is to buy the first time because of the name/label and buy again because of the wine itself. Of the one billion wine gallons sold in the US, most are sold to non-maven and non-aficionado consumers who enjoy wine, the experience, and, yes, the label.

Come on… compared to the lame names cited above, you have to admit that “Well Hung” is amusing, a double entendre, a play on words, and a fun way to offer someone a glass of wine. A smile and a conversation are bound to follow.

Second, while I liked the idea of helping, this was more than I could handle in my consulting practice, even if I knew more than I do about the wine business. So, I needed a partner.

Enter Rob Warren

Rob and I knew each other well at Seagram and also worked together when he was with Diageo and I was an advisor to Jose Cuervo International, which they distributed at the time. We think alike and have lots of mutual respect. Besides, he has a great sense of humor and in between moments of marketing and brand building excellence, we laugh a lot.

It didn’t take Rob and I long to figure out that without money, resources, and the need for much time, building a wine business was more than just an uphill battle. Think Mount Everest. And so, the idea of licensing the name, Well Hung Vineyard, came readily to mind.

Peter was already selling wine from winegrowers around the country and it’s not a big leap to enter into a business arrangement with a company who initially can produce a red, white, and others. Eventually, varietals and vintage could be added to the mix. In the right hands and with the right wines, this brand could be a winner.

The clothing and other items under the WHV brand would only add to the allure.

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That’s where things stand at the moment—a search for a business partner interested in licensing the name. Stay tuned and I’ll let you know how things develop.

Oh, by the way, Peter also owns the trademark that should help with an Australian wine producer. It’s called Well Hung Down Under.

Disclaimer: While Rob is calling the shots, and taking the lead, I’m along for the ride. Hey, who says I can’t also have a dream or two?

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Liberating the Alcohol Distribution System

LibDib—The Web-Based Distribution Platform

The actual name of the company setting out to address the booze business wholesaler problems is Liberation Distribution (known as LibDib). The Founder/CEO is Cheryl Durzy and I spoke to her at length recently and, let me tell you, her business model could very well be a game changer in how beer, wine, and spirits come to market.

Cheryl has close to 20 years’ experience in the wine industry, managing wholesalers of all sizes, and learned firsthand what a nightmare it is for a small company to get to the shelves of restaurants, bars, and stores. She set out to fix the problem.

I’m very impressed with her web-based platform and think it’s a major positive development for producers (she calls them Makers) and restaurants, bars, and retail shops (RB&R). As Cheryl puts it, “Our goal is to make it easier for small businesses (Makers) to do business with other small businesses (RB&R).

But, as you’re about to learn, it’s much more than that. It’s a boon to the producers, the retailers, the consumer, and, even the current wholesalers.

The Problem

First, the background, as I’m sure nearly all of you know.

The three-tier system of alcohol distribution was set up after Prohibition and consists of producers, distributors, and retailers. Producers can only sell to wholesale distributors who, in turn, can only sell to retailers who sell to consumers.

The system favors wholesalers, especially in view of the consolidation of this tier—which has reduced the number significantly and increased their size. At the same time, it favors the large producers, who have the clout to get attention. Both work closely together for obvious mutual benefit. As I’ve written many times before, “follow the money.” The produce-wholesaler business model is based on volume; the distributor sales rep compensation is based on volume as well. If you were a sales person for a large distributor, which would you focus on—a 3 bottle placement of a craft product or a hand truck of a leading selling brand? Let’s be fair; they are in business to make money,

As a result, small and mid-sized wine, beer, and spirits producers have limited distribution and face many obstacles. Often the large distributors will turn them down or worse, take them on and not pay attention.

Oh, and don’t forget the small RB&R operator who also suffers from the focus on bigness. I follow many bartenders and managers on Facebook and Twitter and there are complaints aplenty about delayed shipments around holidays and long weekends when they can’t get their craft products their customers want. As one prominent Food and Beverage manager told me, “my customers come here for boutique brands that are not mainstream … and getting a timely delivery around the holidays is a nightmare.”

According to Cheryl:

Efforts to change distribution laws have been ineffective, however the market is ripe for disruption. Just as the hotel and transportation industries were disrupted by technology, the alcohol distribution market now has a technology platform that is shaking things up with a new option for small to mid-sized Makers.

The LibDib Solution

If you look at what the platform offers both producers and accounts, I think it’s very impressive. So much so that I have suggested to a number of startup clients of mine that they give this serious consideration.

Currently, LibDib is operating in CA and NY (with more markets on the way) and here’s how it works for producers:

  • A producer enters their information and license online.
  • Product is stored at a producer’s location including their production facility, personal warehouse or third party warehouse, depending on the producer’s choice.
  • It’s delivered by a common carrier, also based on producer’s choice.
  • The charge/fee from LibDib is 15% – 20%, less than what other distributors and wholesalers currently charge.
  • There are no bill backs, no aging inventory, and no buying back product.
  • Producers are free to leave LibDib at will; they will not enforce Franchise Laws. This makes them effective as an “incubator.”
  • They handle the billing, collection, and reporting, which makes them a virtual back office.
  • A producer can invite any account to purchase their product by sending them a link to the LibDib site. (See this video.)
  • And, LibDib is developing a team of platform sales people whose role will be to recruit bars, restaurants and retail stores. These folks can ultimately become brokers and sales people for the brands.

The accounts benefit by being able to buy what they want and when they want it. There are no minimums. There is no middleman, since the accounts can communicate directly with producers through the LibDib platform. Sales materials and POS are current and easily downloadable. Best of all, in my view, an account can provide the experience of unique, local and limited available products, with no hassle.

As a consumer, I’m perfectly happy buying Buffalo Trace or Bulleit Bourbon, but often I want a Koval or Dad’s Hat whiskey and can’t get it. It would be nice to suggest to my retailer or favorite drinking hole, that it’s pretty simple for them to stock less mainstream brands.

Other Potential Winners

When I was at Seagram, new products, no matter the potential, were an annoyance. It meant deflection of assets—people, money, and other resources—that could be applied to mainstream brand growth and, making the annual sales plan. That problem still exists, although companies like Diageo and Pernod Ricard have established venture groups to facilitate traction from a new brand or idea. But, at the same time, wholesalers still have to deflect their resources to address a fledgling brand’s needs. Oh sure, there are dedicated craft and startup resources at the distributor level but not all are equally effective at building brands.

It seems to me that LibDib, with its incubator capability, just might be the answer for the big boys. I know that if I were still at Seagram, I’d definitely give it a shot.

Finally, wholesalers themselves can benefit from LibDib. It’s a way to test market a new product before taking it on. It can augment and amplify the efforts of craft divisions and personnel. And, it can lift the negative feelings and imagery surrounding how and why large wholesalers overlook small, startup brands.

Like I said, LibDib has the potential to be a real game changer.

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