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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&Billions&
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	
  
Craft Distillery Market & Brand Packaging for Distilled Spirits
Thank	
  You!	
  
Photo	
  credit:	
  Angela	
  Rowlings	
  
Craft Distillery Market & Brand Packaging for Distilled Spirits

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Craft Distillery Market & Brand Packaging for Distilled Spirits

  • 1. Cra$  Dis)llery  Market   &  Packaging  for  Dis)lled  Spirits   Photo  credit:  briancolella  via  Flickr  
  • 3. 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  
  • 4. 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  
  • 5. 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   $14.50,  750ml  boXle  of  80  proof   dis)lled  spirits  in  the  U.S.   Source:  Dis)lled  Spirits  Council  
  • 6. Industry  Overview:  Profit   Photo  credit:  Allison  V.  Smith  for  The  New  York  Times  
  • 7. 1  year  of  “Top  Shelf”  Growth   !2# !1# 0# 1# 2# 3# 4# 5# 6# 7# 8# Value#!1.2%# Premium#1.6%# High#End#7.2%# Super!Premium# 6.3%# Value#Growth# Price#Segment# Segment#Growth#2012!2013#(percentage)# Source:  Dis)lled  Spirits  Council  
  • 8. 9  years  of  “Top  Shelf”  Growth   0" 0.5" 1" 1.5" 2" 2.5" 3" 3.5" 4" 4.5" 2003" 2012" Sales&in&Billions& Value&vs.&Super1Premium&Growth& Value" Super"Premium" Source:  Dis)lled  Spirits  Council  
  • 9. Volume  vs.  Revenue   Source:  Dis)lled  Spirits  Council  
  • 10. Industry  Overview:  Compe))on   Photo  credit:  Ashley  Landis,  Landis  Images  
  • 11. Explosive  Growth  –  Your  Compe))on   In  the  last  6  years  in  the  U.S.  there  has  been  a   5-­‐fold  growth  in  craP  dis1lleries.   – The  number  of  new  entries  into  cra$  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  
  • 12. Over  400   Fully  opera)onal  small  dis)lleries  in   the  U.S.  right  now  
  • 13. 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  
  • 14. 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  
  • 15. 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  
  • 16. 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  
  • 17. Whiskey  Was  Big  in  2013  
  • 18. 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.  
  • 20. 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?  
  • 21. 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?  
  • 22. 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”  
  • 23. 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!  
  • 24. Packaging   Photo  credit:  John  Silva,  Advanced  Labels  NW  
  • 25. 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.  
  • 26. 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  
  • 27. Packaging  Elements   •  Glass   •  Closure   •  Label(s)   Photo  credit:  lovelypackage.com,  thedieline.com,  drinkhacker.com,  masterofmalt.com,  packagingoFheworld.com  
  • 28. 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  
  • 29. 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  
  • 30. 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  
  • 31. 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  
  • 32. 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  
  • 33. 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!  
  • 34. Packaging:  Label  Design   Design  considera1ons:   – Stand  out  on  the  shelf     – Be  memorable   – Representa)ve  of  price  point   – TTB  compliant  
  • 35. 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  
  • 37. Thank  You!   Photo  credit:  Angela  Rowlings