Your Shout – Hew Dalrymple

Total Package – Hew Dalrymple in Your Shout this month: "It is surprising how often companies fail to take production and distribution into account and are then taken aback when their new wonder product fails abysmally"

If you want to experience the “creativity” of the drinks industry in all its glory, try being a buyer for a drinks wholesaler for a week or two. You would be amazed at the range of samples that arrive on your desk.

At the one end of this spectrum are the all-singing, all-dancing, major brand launches – the result of global drinks companies spending thousands of pounds on consumer research and months on new product development. Size of budget and thickness of the glossy brochure, however, do not guarantee long-term success, even from the market leaders Diageo and Bacardi. What happened to Captain Morgan Spiced Gold, Martini Metz, Bacardi Rigo or Baileys Glide?

At the opposite end of the spectrum are a band of fearless entrepreneurs intent on making a quick buck by emulating the success of Red Bull. Currently, the hot category is premium vodka, so there is an avalanche of ever more niche vodkas coming to the market – some with a lot more authenticity than others. How many of these products will be around in six months? I suspect very few of them but we shouldn’t knock these heroes because, without innovation, our industry would stagnate.

It doesn’t matter that successful, innovative brands can have relatively short lifecycles. Caffrey’s, riding the Irish boom, and Hooch must have made Bass a lot of money in their heyday, and I’m sure Western Wines didn’t have any regrets when the last bottle of Pendulum was delisted (for those with short memories, that was the wine in the silver-coated bottle).

In short, even in more mature drinks categories, there is still plenty of opportunity to develop new brands, particularly if one is prepared to take the longer-term view. In fact, it is essential to take the long-term view as overnight profitable brand success is the exception rather than the rule. Almost anyone can gain instant volume in the off-trade by throwing money at launch promotions but profitable success takes time and requires a very different approach.

What, then, are the key ingredients for brand success? In my experience, there are a number of prerequisites that significantly increase your chances. Interestingly, not all of them concern the design and marketing of the product.

Yes, you have to have a product with a clear and unique selling point that meets a specific consumer or occasion need. The wine trade, in particular, is still guilty of launching far too many brands that are production led rather than based on identifying a market opportunity, backed up by rigorous category analysis and consumer trial.

However, brand success is equally dependent on getting the production and distribution elements right. It is surprising how often companies fail to take these basic issues into account and are then taken aback when their new wonder product fails abysmally.

Product quality and, of course, consistency are obviously essential but the economics of production are also important. Your product has to be price competitive. Why is there less innovation in aged brown spirits than vodka and other white spirits? Because of the inherently higher costs and complexity of producing aged spirits.

Equally, it is a critical factor in the failure of the Old World to take on the branded wines of the New World. Not enough investment and priority has been given to driving down the costs of production to New World levels. The exceptions prove this: a crucial ingredient in the success of JP Chenet is that its owner, Les Grand Chais de France, understands the need for streamlined production and packaging.

Sales and distribution expertise are also crucial for brand success. Gallo appears to be single-handedly reviving French wine consumption in the US with its Red Bicyclette and Pont d’Avignon brands because its distribution strengths and expertise enable these products to get airtime with the buyers. Watch out for similar success in the UK for Gallo with McWilliams and Constellation with Mondavi.

And, if you don’t have that expertise, work with a partner who does. We all know how important on-trade success is for the development of a brand. Allied and Beringer have both been successful in the on-trade with Montana and Wolf Blass because they went into partnership with WaverleyTBS.

Waverley had the on-trade expertise, they had the brands, both sides benefited.

So, what are going to be the brand successes of 2006? Ask the editor as they have probably passed over his desk in the past few months (have just been sent some smart saké and Georgian wine – ed).

But whether he can
spot them in advance is another matter. Fortunately, consumers still have the capacity to surprise us.  db  April 2006
 
Hew Dalrymple is an independent consultant offering drinks companies “strategic and performance solutions”. He can be contacted at cosmic@ blackdykes.freeserve.co.uk