Start Ups

Ever since Sidney Frank sold Grey Goose in 2005 for billions of dollars, the industry has attracted many entrepreneurs with the dream of inventing a brand, building it, flipping it and moving on to the next one.

It’s a good thing. The growth of the industry, any industry, depends on the infusion of new ideas, capabilities and fresh passion. Look at the rising stars, fast track and hot brands of the industry. You’ll find lots of entrepreneurial and start up brands.

And, as I mentioned in previous posts, success comes from hard work and the tenacity of people not large corporations.

But for every winner there are loads of wannabes whose eyes are bigger than their stomachs. An investment banker friend described it this way —

“Almost every week I get a guy coming in, generally in his 30’s, who made some money in some type of entrepreneurial venture, was out drinking with his buddy and the two of them decide they can do this…build a winner. It’s usually a vodka with an over the top package, a half-baked story and they say they’re out every night pushing the brand. Most of the time I think that they use the brand and their ‘ownership’ to impress the ladies.”

There’s an old rule in new product development. A winning idea needs to be unique and relevant. To succeed, a brand needs both.

Also luck, the byproduct of hard work.

Keep your eye on Cachaca, Sake and specialty products.

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It definitely is not the advertising

I found Megan’s article on Constellation Brands in yesterday’s issue of Wine and Spirits Daily to be particularly interesting.

Here’s an excerpt:

Constellation may be one of the world’s largest wine companies, but its spirits brands had a phenomenal year.  Total spirits organic net sales grew 19% for the year, led by a 38% gain for its star Svedka vodka.  Svedka also recently launched it’s first-ever television advertising campaign “which marks an exciting milestone and serves as another example of how Svedka is setting itself apart in its quest to bring future fun to vodka lovers everywhere.”

The quote is from Constellation Chief Rob Sands who, in my opinion, is among the best executives in the business. Smart, knowledgeable and effective. But, obviously not an advertising maven.

Maybe it’s just me that thinks the ad campaign is ridiculous. It features a well-endowed, sexy, female robot (fembot) supposedly symbolizing the brand’s future achievements. If the marketing folks are looking to be more than a price driven brand and want to add image — keep looking.

Oh, and check out the TV campaign. I’m the guy who was there when Seagram and the industry decided to end the voluntary ban on broadcast advertising. This ad makes me think we made a mistake.

Svedka is a great brand built on hard work and smart marketing…excellent imported Vodka with high quality at a very competitive price. I’ve even been known to buy a 1.75L every now and then.

But its growth is not a function of the advertising. Its growth continues in spite of it.

Maybe mainstream advertising is not as important for brand building as it once was.

Just sayin’…

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Tonic or Toxic?

I once heard a historian/anthropologist describe America as having a love-hate relationship with alcohol. He characterized US history as consisting of tonic and toxic periods

He described it this way…

From the birth of the nation to the mid-1800s, alcohol was seen as a tonic. Think about the traveling “doctors” (aka snake oil salesmen) selling their alcohol-laced elixirs? Among other positive perceptions, alcohol was seen as “good for what ails you” and helped you to remain “healthy.”

After the Civil War, and for the next 60 years or so, alcohol was considered toxic culminating in the temperance movement and ultimately Prohibition from 1920 to 1933.

I found this online about our soldiers in WWI –

During WWI, British soldiers were rationed two ounces of rum or a pint of porter daily. Germans received a pint of beer, half a pint of wine and a quarter pint of spirits. Canadians got shipments of Jamaican rum. But U.S. soldiers, under Prohibition laws, observed a “dry” zone around its bases.

By WWII alcohol was widely available to our GIs and the tonic era started to come back.

The tonic period has gotten stronger thanks to 60 Minutes. The segment in 1991 called the “French Paradox,” described the benefits of red wine and has since extended to all alcohol. Many see moderate consumption as beneficial to health.

And no snake oil salesmen.

Oh, by the way, for some interesting historical trends on alcohol, wine and beer consumption check out the most recent information from Gallup

http://www.gallup.com/poll/121277/drinking-habits-steady-amid-recession.aspx

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