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Tips for Crafters to Grow Distribution in Pubs and Bars
Looking at the premium Spirit Category where Craft operates, over the past couple of years, even if we account for inflation and excise tax increases, Spirits revenue grew considerably, and is forecast to continue to grow annually. This refers to revenue. Volume on the other hands remains, at best static.
In times past the premium spirits market was dominated by a few big brands, but with the introduction of Craft Spirits, it has now become splintered into a plethora of different brands.
Each Craft Spirit Producer and Distiller needs to have its own strategy and path to market, within which its relationships to hospitality outlets becomes critical. Here we look at tips for growing distribution in the specific sectors of pubs and bars.
Positioning and Uniqueness
Bars and pubs are an intensely competitive business and therefore understanding your position and uniqueness as a supplier is critical in being able to create value.
Bars and pubs are different. There is no strict or absolute definition, however having a clear idea about the difference helps the Crafter in clarifying his or her strategy.
What is a Bar?
A bar is mostly a drinking outlet. This probably indicates it is in an urban location, has a contemporary look and feel, and is most likely to appeal to a 25-40 age range. Whilst it may serve food, the offer will typically be limited maybe as far as just nibbles and snacks. This sector has grown significantly along with urban centers.
What is a Pub?
A pub has a broader ranging appeal of both age and occasion. Many may have started as bars, but in general they have changed their offers to include food and a broader range of drinks beyond a singular focus on beer and spirits. They may be rural, suburban or urban in location and typically have a more traditional feel.
Due to these differences, the approach for the Crafter will be different for each operator.
Tip 1: Use Sales Resources Effectively
There are some standard trends which continue to guide and influence the development of the drinks market. Researching, Observing and Studying these trends – especially overseas - and then aligning your brand strategy accordingly (in other words showing consumers and customers how your product fits into these trends) helps position your products to take advantage of a trend. An additional benefit to the independent Crafter (mostly run by one or two individuals with limited time on their hands, it that it allows you to identify the profile of target outlets thus using your most valuable sales resource – yourself and your time - more effectively, by not wasting it on outlets that do not fit your target profile.
The key consumer trends in the modern drinks market are:
• Reducing alcohol intake – drinking less but better/unique/different
• Experience becomes more important than “getting the job done”
• Provenance – knowing where the product came from and who was involved
• Artisanal or Craft Products – Owner Operated, Small Batch, Hand Made
• Making Drinking an occasion rather than habit
• Presentation – of the product (bottle), the drink, the display, the serve
Tip 2: Develop you Customer Strategy
Firstly, you need to understand the difference between the Customer and the Consumer. The Customer being the Retailer, and the Consumer being the Customer of our Customers. Their needs and wants are different, and as such, our approach to them needs to be different as well.
Because the competition is intense, it is important to know how each sector differs. A difference of emphasis and approach for each type of Customer demonstrates how the Crafter is thinking specifically about that Customers’ Consumers and how your strategy will apply and work for the bar or pub in question. As an example - who owns the pub or bar – is it part of a franchise or is it privately owned? The answer to this question, and others, will determine your approach, and a structured approach will lead to a successful sale.
Tip 3: Approaching Bars
Bars are more likely to be stand alone or owner operated businesses and as such can be easier to identify as opportunities for innovation. Bars are likely to have an extensive list of cocktails, and as such they usually have a much shorter list of spirits, as the same brands get used in all the cocktails, which therefore makes up the volume of the sales.
Researching and inquiring what these cocktails say about the type of consumer that the bar is looking to attract gives the Crafter valuable information which he or she can use to tailor their approach and sales strategy. Some strategies which can work in bars are:
• Propose a new cocktail which inspires, excites and engages their audience – just make sure you correctly identify who their target audience is, and make sure your cocktail can fulfil that consumer group’s needs.
• Run a special on your product to develop a market within the customer base
• Present a tasting event – Meet the Maker or something similar, to engage personally with the customer base
• Align a marketing feature of the Product or Product Range with the target bar – i.e. a Bar which caters of locals would be more likely to support a locally produced product, as would a Bar catering more for tourists and visitors.
• As a Crafter or Local Business, what can I do, in terms of an event, feature or special which could bring new consumers into the bar, or benefit the Bar in some other way – i.e. deposits on bottles which translates to a reduction in price, regular events, discounts on tours and tastings through the use of unique promo codes, etc.
Tip 4: Approaching Pubs
The pub concept has changed on a very basic level. A couple of years ago, most were part of Franchise Groups, but due to intrinsic flaws in the Franchise Model as it applies to the new marketspace – i.e. consumers looking for uniqueness and not standardization – these days more and more Pubs operate independently, very similar to Bars.
Success in franchise outlets requires an ability to network with the right decision maker, while privately owned businesses requires an ability to influence from the ground up. This may come from innovation created in the bar sector, which is then absorbed into the pub culture, as has happened in South Africa time after time.
Successful pub franchises have standardized Cocktail and Bar Lists, so if your Spirit Brands can demonstrate value to their Brand, and get listed, then achieving critical mass becomes almost a foregone conclusion.
Whether a franchise or privately operated business, the Pub business profile requires initiatives which can add value to their business across a broader selection of consumers and engages a wide range of staff.
Typical strategies to be consider include:
• Social Media Campaigns – be involved and targeted, not just for your brand but their brand as well. In other words, punt your stockists and help them sell your product
• Community involvement – be there, on the ground, in the area, in the venues. Focus close to home, where you can spin your best marketing assets – yourself and your location – to get the best results. There is no point being available throughout the country. If you have enough consumers close to you, then focus your attention in your own area.
• Attract new audiences to your stockists. Be able to explain to the decision makers precisely how you intend to achieve this, and then, most importantly, deliver on your promises.
• Arrange and Host Theme Nights based around your Brand(s) that work for the stockist, their consumers, and the staff.
Tip 5: Use Social Media
Using social media to engage with outlets and showing them, almost in real-time, how your products and brand is engaging with consumers is crucial. Internationally Instagram leads the way here, while locally Facebook is still the leader. What both have in common though is having both imagery and commentary, the capability to tag, and a diverse consumer profile. Push for reviews and ratings. Encourage followers to post pictures of themselves – ideally at the stockists. Show actual marketing benefits and exposure.
Tip 6: Logistics Matter
The competitive nature of the industry makes the profitable operation of a pub or bar challenging. Costs are under constant pressure and the requirement to recruit consumers equally important. As a result, typically bars and pubs want fewer suppliers, and thereby less deliveries disrupting their staff’s attention, as they want them to focus on giving excellent customer service, thereby getting repeat business. As a result, they typically do not want one product from one supplier.
Many Crafters will see this as a motivator to use a distribution company, rather than distribute directly. Using a distributor however greatly reduces the Crafter’s profit margin. Although direct delivery requires more effort and investment from the Crafter, it is much more profitable.
Again, focusing on your own locale makes more sense than trying to cover the entire country, as you can actually do your own deliveries instead of relying on a distributor. This also allows you to maintain customer relationships, obtain valuable consumer information directly from the individuals dealing with them, and ensure your products are properly presented and displayed by your stockists.
However, be aware of the Customers’ needs as well – offer them preferential delivery times, payment terms, etc. to overcome their reluctance in dealing with a small supplier.
Tip 7: Provide an Experience
The growth in cocktails symbolizes a bigger market trend for brands that are, or aim to be, more than just another spirit. In order to secure your share of consumer choice, it is also important to secure a share of their minds. The Story is always important. So, how does your brand or product(s) re-tell that story in their presentation. How the image is portrayed and conveyed matters to the consumers. Ensuring that each of your brands has a great back story, with excellent imagery is critical to gaining market positions.
This can and should be expanded further than just how your product looks on the shelf – the serve becomes equally (if not more) important. Not everyone will have the opportunity (or want) to sit at the bar counter. Training the staff of your Customers to properly present and serve your product, either as a cocktail, neat, with garnish or with a mixer, becomes crucial.
Tip 8: Know your Customer
Whilst digital presence for any Crafter is a fundamental requirement of today’s business, nothing replaces the personal touch.
Forging personal relationships with key operators is crucial to do market research, develop marketing strategies, getting products listed, growing those products footprints’, and getting continuous feedback on performance and consumer preferences.
Building and maintaining these relationships (and thereby your own reputation as a supplier who is dedicated and committed to the success of your brand), will allow you to leverage that real-time experience. You will be able to demonstrate that your spirit product(s) works in the target market, and that proof, plus your reputation, will make future sales and listings much easier to obtain.
For the Crafter, knowing the pub and bar market in each territory is critical for success. All that glitters is not gold and some operators flatter to deceive. Others again, may hide their success by flying under the radar. It is critical to understand who is ‘moving and shaking’ in the relevant territory. You need to ensure that the capability of the outlet is not over-estimated, especially when negotiating discounts and additional services. And yet, at the same time, you need to ensure that you capture all available opportunities – especially if you are a locally focused brand. It’s a careful balancing act, but the prize at the end can be huge.