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Here’s How Wine, Spirits Marketing Can Manage a Recession

Successful wine and spirits brands have navigated their marketing and sales through recessions before. What can we learn from them?

This post offers suggestions, and a bit of history, for brand marketing, sales, and budgeting.

We start with a few reminders that may calm your nerves while inflation soars in mid-June 2022, and, just today, the Federal Reserve raised its rate by 75 basis points.

WHAT WE KNOW: WINE & SPIRITS IS A RESILIENT CPG CATEGORY

We are marketers, not economists, but after surviving in this business for several decades, we know a few things about the category:

  • Resiliency: Wine and spirits sales have been shown to be more resilient to economic pressures relative to other categories. A great cocktail or glass of wine is a low-cost treat.
  • Loyalty and Market Share are High Priorities: We operate in a low-growth category. Implication: maintaining availability, share of mind, brand loyalty, and relevancy in the marketplace are key to long-term success. Wine Intelligence wrote an interesting blog post on this.
  • Trading Down May Not Last Long: A study of the Great Recession’s impact on wine sales by price tier showed that trading down drove low-priced wine sales in 2009, but quickly “reversed during the economic recovery in 2010…while both mid- and high-priced wine sales increased substantially.” as reported by WineBusiness.com.
WHAT’S THE SECRET SAUCE? AGILE, INTENTIONAL DECISION-MAKING

You might think a marketing agency like ours would recommend NOT cutting advertising and promotion spend. But our recommendations offer, and history suggests, a more nuanced approach.

  1. Channel Marketing Budgets to What’s Working: During the Great Recession, Delicato Vineyards focused marketing budgets on core brands, brand building, and customer loyalty…and grew by 30%. They used social media to “listen to how consumers are impacted,” according to Chris Indelicato, CEO, to better target messages. There’s an insightful article in Meininger’s Wine Business International that details their success.
  2. Promote Your Full Product Range: Don’t neglect to promote your lower-priced SKUs – you want your loyal fans to stay loyal, even if they’re trading down.
  3. Don’t Try to Compete with Cost Leaders: During the Great Recession, companies who changed strategies to compete with cost leaders lost. Those that doubled down on their differentiators won, according to a study summarized by Harvard Business Review. https://hbr.org/2020/07/avoid-making-this-strategic-mistake-in-a-recession
  4. Mitigate Sales Channel Risk: Yes, DTC sales are higher margin. But don’t make a knee-jerk reaction by neglecting 3-tier sales. Use low-cost, digital advertising to build or maintain PODs and pull-through. Here’s a post we wrote on this topic.
  5. Focus on Moving Inventory, Not Just Cost Reduction: We all know managing inventories is key to financial stability. Some brands reacted to the Great Recession by slashing below the line costs. Other companies took a less draconian approach, deploying temporary price promotions to hit lower price points that drove consumer demand and pull-through. Bottom line: it’s more important to move inventory than attempt to maintain a high shelf price in the face of stiff headwinds.
  6. Think Like Warren Buffet: If other brands are scared and slashing marketing budgets, you know that every dollar you spend on PR, digital marketing, and social media will be, 1) seen in a less crowded, less noisy marketplace; 2) more effective at driving depletions and pull-through; and 3) likely less expensive to purchase than pre-recession as media companies lower prices.
  7. Partner with Vendors to Help Improve Cashflow: As a follow up to the previous recommendation, tap your partners’ expertise – ask them to present some optional budget levels. We’ve time-shifted activations, switched ad optimizations from awareness-building or Page Likes to retail-driving ads, and other actions that seek to maintain cashflow and market share in tough times.
THE SILVER LINING: EXIT THE RECESSION STRONGER

So, what happens when companies effectively manage through a recession?

  • Maintain Cashflow: Temporary price promotions move inventory and can maintain working capital.
  • Grow Market Share: Delicato grew 30%, as mentioned above.
  • Deepen Brand Loyalty: Get your loyal consumers to purchase your whole product range, including the lower price tiers that may not get as much attention from marketing.
  • Build Brand Awareness: More efficient and effective marketing spend.
  • Stay Relevant: A more differentiated brand helps your 2nd and 3rd tier partners.

We end on a more personal note. Less than 2 years after Benson was founded, we had a client that represented 35% of our revenue abruptly cancel our contract one month after 9/11. We quickly doubled down on broadening our service offering to both new and existing clients. Within 6 months we replaced that 35% hit, exiting the experience a much stronger company that set up rapid growth in the ensuing years. (And we’ve never had a client represent such a large share of the business.)

 

Additional Articles:  Here are some sources and articles on this topic we found useful.

https://www.hwy29creative.com/blog/is-your-winery-ready-for-the-next-recession

https://www.nytimes.com/2009/07/29/dining/29pour.html

California Wine Shipments by Year: https://wineinstitute.org/our-industry/statistics/california-wine-shipments/

 

Post Script:

It may sound counterintuitive, but many successful companies started during recessions, and even depressions – to name one: E & J. Gallo (1933).

Mount Langi Ghiran, part of the Rathbone Wine Group

Where the Wild (Consumers) Are

Let’s talk about aligning marketing functions to meet your brand goals.

Agencies like ours tend to couch our language in terms of marketing functions such as PR, social media, digital advertising, and the like.

There are good reasons for this. People have specialized expertise. Organizational charts reflect that expertise. And budgets are often carved out by function.

Prospective clients often take the same function-first approach, e.g., We need an influencer program, or we need more press coverage when what their goals require is a combination of marketing functions.

This isn’t a criticism, but a result of the increasingly complex world of marketing communications, the tools available, and the means of measuring results.

But before we get there, first a little math (sorry).

The Calculus of Brand Awareness

If your goals include raising consumer awareness of your brand, you need to get the right message to the right audience with enough frequency to create interest and desire. To create memory. Simply put, message x frequency = impressions. And the more, and more effective, impressions lead to higher brand awareness.

Applying Theory to Reality

Think about how you, as a consumer, remember brands. It’s a recommendation from a friend. You read a blog post, news story, email, or social post. You watched a compelling video. That is, you probably received brand messages through multiple media sources in different formats.

Now, apply that to your brand. How do you communicate all that is wild and wonderful about your brand in this highly fragmented marketplace? It’s not an easy task.

But here’s a tip: strip away the language of marketing functions and focus on the math of brand awareness.

Focus on impressions — the number of times a consumer sees your brand message. Message x frequency = impressions. Impressions most likely lead to heightened awareness, as previously mentioned. But!

Not All Impressions are Created Equal

If you frame brand marketing in terms of impressions, you will start asking some interesting questions:

  • Which impressions are more or less “sticky” (creating a memory, a click, or are just fleeting?)
  • Why are my Facebook Reels generating so many more impressions than my Instagram Stories?
  • Does the benefit of reaching an influencer’s audience outweigh their fees and your staff’s time, which could instead be channeled into low-cost ads?
  • What impression platforms tend to drive higher page views/session?
  • How can impressions create different calls to action?

With this commonsense approach – how to drive the right impressions to the right audience at the right time through different media channels – we can address some of the key challenges in wine and spirits marketing.

Feeling Lost? Start with Location

Geo-targeted campaigns are increasingly effective for our clients, nearly regardless of budget.

Here are the key steps:

  • Choose Focus Markets: Identify 3-5 cities/markets that are most important to your brand.
  • Social Media Advertising: Concentrate brand awareness ads, and retail-driving ads, in your focus markets (more on this below) for a test phase, then a roll-out phase.
  • Public Relations: Concentrate earned media coverage in those focus markets.
  • Events/In-market Activations: Tastings, restaurant tie-ins, mixology events, and other promotions can be concentrated in your focus markets.

Retail-Driving Advertising

Retail-driving ads are simply Facebook/Instagram ads that include a discrete mention of 2-3 unaffiliated retail licensees where the brand is available, and target consumers interested in your category that reside a few miles from the mentioned licensees. Yes, this is legal in most states – and yes, you need to check first – as long you follow some basic rules. (Pro Tip: The TTB will review your ads for compliance, at no charge, if you email them at market.compliance@ttb.gov.)

Why do these retail-driving ads work? They tend to address several challenges at once:

  • Reach consumers already interested in your category (e.g., whiskey, red wine, etc.)
  • Reach consumers who may already shop at the retailers mentioned
  • Demonstrates support for retail partners by driving local traffic to their stores
  • Provides wholesalers with sales tools (media plans) that demonstrate brand support.

While certainly not “invented here,” we have had success with this integrated approach. Can we tell if ConsumerA saw a Facebook ad and purchased that brand at a retailer? No. But we have seen retailers add SKUs and local wholesale teams get excited about selling our client’s brands. The alternatives can be more costly and less targeted.

Everyone Wins

What do the most successful wine and spirits brands have in common? Everyone in the value chain benefits from them.

Wholesalers want an “easy selling” brand with a campaign that drives buzz. Retailers need store traffic and a differentiated offer, especially from the big box stores and grocery chains. Wine and spirits brands need awareness, ACV, depletions, and advocates. Finally, regulators need compliance; there is no “gray area.”

Combining geo-targeted PR, social media advertising, and other activations can help sales build distribution and pull-through. All the big players do this – with large budgets – but many smaller and medium-sized brands can benefit with this cost-effective, scalable approach.

PC: Mount Langi Ghiran, part of the Rathbone Wine Group portfolio.

Best PR Practices 2021

7 PR Best Practices: Benson’s Holiday Edition!

How do you generate stellar press coverage during the holidays, the most competitive season for wine and spirits sales?

An analysis of our actions and results in OND led us to write this summary of PR best practices: holiday edition!

Like many marketing challenges, there is no one solution. A series of coordinated PR, social media, and digital actions helped raise brand awareness and sales. Here are 7 PR best practices that drove press coverage and sales for our clients:

1. Thanksgiving in June!  Pitching long lead magazines in early summer planted seeds for placements in Country Living and Coveteur, among others.  These were also helped along by a press webinar in May and repeated follow-up.

Holiday PR Best Practices

2. Don’t Forget TV. TV doesn’t provide us wine marketers with engagement like social media, but it provides great reach. And sales teams have a positive, visceral reaction to TV coverage. We retained a chef spokesperson promoting our theme, “Thanksgiving in 90 Minutes” last fall. The action resulted in a coverage on FOX national TV, as well as several regional TV morning shows, giving a huge boost to the brand’s reach and to an energized sales team.

3. Gift Early and Often. Several pitches addressed a wide range of gifting occasions, price points, and interests. Here’s an example from Forbes. Also, think outside the wine or spirits category and link your brand to other interests whose popularity correlates positively. For example, wine drinkers index high for skiing, travel, and tennis.

4. Content is King. Thematic webinars packed a lot of story ideas into 60-minute “BensonLive Presents” sessions this past year. We covered new product intros, varietal styles, bubbles, and more. We can directly link our webinars and pitching on one client to OND results in Town & Country, Forbes, Country Living, Philadelphia Inquirer, and several others. Here’s a link to PR best practices for press webinars.

5. Turn PR Results into Sales Tools. Coverage is half the battle; getting these placements packaged up for sales’ use in trade presentations is key to generating brand excitement. A simple, one-pager PDF with an email detailing the outlet, writer, headline, quotation, and importantly, its relevancy to the brand message drives home the point.

6. Turn Accolades into Digital Ads: Leave room in your Ed Cals to mention accolades and recommendations. Simple enough. But don’t shout out your scores. Use accolades as secondary or tertiary messages that reinforce your brand’s identity. Let your fans know critics also believe they made the right decision.

 

7. Get on Board: Trending Cocktails. The espresso martini craze provided an opportunity to ride this trend with St. George Spirits’ delicious NOLA Coffee Liqueur, resulting in coverage in The Manual, Forbes, The Spruce Eats, Delish, and more.

 

 

 

 

Bonus Item: Dry January.  Feature stories on no and low-alcohol recommendations are written in November and December for January publication. Don’t miss out! We landed placements for no-alcohol wines by Stella Rosa and Veuve du Vernay in outlets like Men’s Journal, SevenFifty Daily, Vanity Fair, and Well and Good.

Sources and Resources:

Balletto Vineyards

Preparing for H2: 4 Marketing Projects to Tackle Now

What can strategic marketers do in the next few months to plan for a successful second half of 2021?

In this post we make some assumptions based on economic data and recommend specific actions for preparing for a successful H2.

Let’s Start with Assumptions

It’s March 16, 2021. As we write this post, we can make some relatively safe assumptions drawing on current economic data and consumer behavior:

  • Massive Economic Stimulus: Stuck at home, America’s retail sales jumped 7.4% in January versus January 2020, even before the latest stimulus checks. America has $1.6 trillion in excess savings during the past year, according to The Economist¹. And unemployment is forecast to drop below 5% by year end. With relatively low inflation, low interest rates, high asset values and pent-up demand, there’ll be a lot of cash sloshing around the U.S. later this year. Who doesn’t want to go on vacation and visit a favorite restaurant?
  • Consumers Reward Convenience: We all know delivery and DTC is the new norm. Winery DTC shipments jumped 27% in 2020². Wine.com’s “StewardShip” program is booming. And investor money is following the trend: Uber is absorbing Drizly and Vivino got a large cash infusion Not to be left out, many states are considering beer and spirits DTC legislation.
  • Competition from Everywhere: Competition for consumer attention is coming from more places, with more brands, with more backing. Robust retailer DTC sales, new delivery channels, third party providers, new e-platforms, suppliers entering new categories, the e-premise, etc.

Approaching Uncertainty

Will COVID vaccinations go faster or slower? Will new COVID variants affect the return to “normal”? Will we enter a period like the “roaring 20s”?

While we can’t predict the future with much precision, it appears likely that consumers will have the willingness and means to spend more this fall.

Maybe more importantly, does anyone believe we will return to the “before times”? Can wineries rely on winery visits to drive all club memberships, or rely on 90-point scores and a $100 Facebook monthly budget to define their marketing mix?

Of course, we need to take our brands to consumers, not wait for them to find us.

We assembled a few practical actions to take now. The list isn’t meant to be exhaustive, or to represent a long-term strategy. It’s meant to be a useful checklist for a solid but agile H2 plan.

  1. Refine Brand Identity: Lean into your values – there’s a market for that. Brand marketing is not about a SKU, a price, and a rating. Plan a 30-day brand identity blitz to document what’s important to your company. Great marketing is about narrowing your message, not comprehensiveness.
  2. Invest in 3-tier Digital: Advertising on Facebook, Google, and other platforms isn’t just for DTC sales. Build brand awareness and support your retailer partners with legal, geo-targeted Facebook/Instagram advertising (mention no less than 3 retailers in a social post to avoid tied-house issues). It’s not expensive –start testing what works at a minimal spend.
  3. Seek out Partnerships: Work with brands or well-vetted influencers in other product/service/interest categories that attract your target demographic: home entertaining, home decor, gardening, skiing, tennis. Test interests that correlate postively with your brand identity, and create bridges to new prospects.
  4. Think 360-degrees: Include your outside agencies and subcontractors in brainstorming so you can integrate and leverage their marketing ideas. Outcome? Better results for the same money.
Balletto Vineyards

Balletto Vineyards

Let’s Calendar That

April – May

  • Refine Your Brand Identity: Hold 2-3 brainstorming meetings with your team to do a quick-and-dirty SWOT analysis, identify key brand benefits and your unique selling proposition. A few standard exercises will better direct marketing and sales.
  • Research Partnerships: Identify and approach a few other brands or influencers for potential holiday partnerships, or for spring and summer 2022.
  • Set Your H2 PR Plan: Define what story angles are pitched to press, when, and how. Consider virtual tastings and events.
  • Engage your Partners: Include any agencies or subcontractors in your brainstorming.
  • Digital Advertising: Identify key holiday promotions and start developing landing pages and creative.
  • Influencer Marketing: Identify a diverse group of influencers and match them with key brand messages; schedule giveaways and IG takeovers through the end of the year.

June – July

  • Test Facebook Advertising: Setup a rapid-fire test of different creative, formats, audiences, etc. Owners and senior managers: dig into the numbers. You don’t have to be a social media expert to learn what’s working and not.
  • Retail Sales: Test some geo-targeted, digital ads to drive impressions and brand awareness in your key retail markets as a precursor to a larger Q4 spend.
  • Campaign Themes: Finalize one promotional theme per month for SOND, if you haven’t already. For example, build a campaign of social posts, ads and PR to support a new wine introduction in September.
  • Instagram: Schedule IG Lives with key team members (winemakers, viticulturalists) to share harvest season updates.

August

  • Finalize SOND Action Plans: Finalize metrics and goals, campaign responsibilities and accountability. Create an internal campaign theme to rally the whole team behind the effort.
  • Finalize Marketing Creative: Finalize digital, social media and PR creative assets such as copy, images, video, infographics, etc.
  • Finalize Digital Ad Spend: Plan to spend more during in November through December.
  • Influencer Marketing: Schedule holiday giveaways with key influencers and schedule practice sessions.
  • Instagram: Stay flexible with IG Live as harvest schedules shift.

Let's Calendar That

September – December

  • Execute starting in September. Don’t wait.
  • Monitor and Adjust: Be flexible. Don’t be afraid to adjust digital ads, PR story pitches and other actions if the actuals don’t match up well with goals.
  • Watch Ad Costs: Digital platforms will likely get pricey as we get into late October and early November as larger advertisers increase auction costs. Consider shifting ad objectives to not overpay.
  • UGC Content: Watch for key pieces of user generated content and share via IG Stories to connect to your audience.
  • PR Blitz: Anticipate an uptick in articles recommending what to buy for holidays and gifting, Ensure you are on the radar of press and can provide them with links to your e-commerce cart  for readers/consumers to use. Review online content and e-store functionality to remove any barriers or old information.

Sources and Resources:
1. The Economist, March 13-19, 2021, Leaders section.
2. SOVOS ShipCompliant/Wines Vines Analytics 2021 Direct Shipping Report.