Jump to content
ADI Forums

Leaderboard


Popular Content

Showing content with the highest reputation on 01/31/2017 in all areas

  1. 2 points
    Just saw that today when doing a tasting at a small local store. He commented that he is going to drop all the big name flavored vodka to carry more local spirits. He is seeing a change in his customers. They want local.
  2. 1 point
    It seems to me that we all need to batten down the hatches and pre-pair for the fallout. I feel that the distillery bubble is just about ready to burst. This year (2017) will be by far the biggest year on record of distilleries going out of business. There are many factors why I feel this way bust just to name a few. Two main reasons to always reflect on. The battle for Shelf Space, and Operating Capital. And a couple more. 1. To much bourbon. I believe that this is the year that the larger number of distilleries will for the first time be trying to sell there brown spirits. The problem is not there local area it would be everywhere else they are trying to sell the brown juice. The Distilleries will be battling in a marketing game, and that in it self requires MONEY and TIME, and time cost MONEY. To put up all that bourbon cost Money straight out of the operating capital. When product does not move as quickly thought. The R.O.I. Is much greater and the hit is much harder. 2. I Deal with people from every corner of the world, in every facet of this industry. I deal with people that have big budgets and small budgets. I am aways blown away when someone just wants to make a little booze and thinks they have got to have a $200,000 dollar still, or pay $75,000 for a 50 gallon pot. The reason for item #2 is the spending of MONEY in the most stupid ways possible. People don't stop and think that some of the biggest components of equipment are truly the least important. People think the need the biggest and baddest still but forget about the boiler, chiller, mash cooker, ferm tanks, bottles, labels, and all the small things that nickel and dime a start up. Stop and think "how many bottles do I have to make to pay this off". 3. Sell out, sell off. One of the biggest mistake someone could make is to sell off the larger part of stock in the company to get to the place they need to be or get the equipment they think they need. When you realize that you are not really the owner and your are more a employee that person cares a little less and gives up quicker. When you work the hours we all do at a distillery and think...."I could be making more money flipping burgers".....how much heart do you have really in it. People have medical problems but I am floored by how many distillers are selling out because of it. I get it no one on earth want to admit "I Failed". So don't sell your soul just to crush your dream. 4. This one will be easy. Operating Capital- how many times have you looked around your distillery and saw a piece of equipment that you bought a while back and thought "man, I wish I never bought that" Or "I would like to have the money I spent on that". #4 = Don't buy stupid Crap. THINK. It comes right out of your Operating Capital. 5. Distilleries trying to do something so so different that they Distill there way right out of a business. Think about what you do before you spend the money. I just checked yesterday and let me see, time, grain, water, labels, bottles, and corks still are not cheap. So is it a good idea to have 100 cases of something that won't sell. Please, impress the bank with your massive over stock of junk. 6. This one is kinda like #5. Not listening to your patrons. People that will go out of business are probably bull headed and think "If I make it they will come". Make products that is proven that people like. You don't have to copy, put your own spin. Know what is selling on the markets. 7. Getting out in front of the public. You may be making booze, but you are also selling your self / story. You spent all this money on a shiny piece of copper, where is your advertising money? Distilleries have to get out in front on the public doing tasting, and ect. I see a trend of people not doing that as much as is needed. 8. Part of #7. I was in a very top self liquor store today and there was 250 different types of brown spirits. Which one do I choose? 9. Battle for shelf space. With the gates opening on distilleries all over the us and more imports coming in, the battle for shelf space has begun. All the money you spent making that rum, whiskey, vodka, ect, will be for nothing if you can't get it on the shelf. Enough said. Summary-Rough seas ahead. Tighten your belts. I am all ready seeing lots of used NOS everywhere. It used to be when something was put online it was gone in hours. Now it just sits there... I wish everybody always thoughts. I wish everyone the very best. Let us all be in good SPIRITS in 2017 and the years to follow. Joseph Dehner
  3. 1 point
    I don't agree with this, and it's not because I have a biased or vested opinion as an owner (after all, where you sit is where you stand.) Yeah yeah, easy money is over. Everyone with a first mover advantage that didn't parlay that into growth and investment has lost that opportunity. Are we talking about a small craft producer turning into a national brand? Hell, that's always been a long shot. Are we talking about new business failures and failure to launch? I don't think that's new, I think it's just becoming more visible through places like ADI, etc. Remember, 80% of startups fail on average. This business is no different. Like I said, that first mover advantage that might have lowered this rate to 60% - that's gone, but all that means is it's no different from trying to open up a franchise sandwich shop. First, I don't understand how you define or easily identify brand saturation in a market. From my position, if the market sufficiently fragmented such that smaller players are able to gain or retain enough market share to be viable, what does it matter the aggregate number of brands? How is it that the wine market is not sufficiently brand overloaded? I personally think that the Scotch section is incredibly confusing and cryptic, but it continues to grow. In addition, the bulk of the craft brand growth has been local/regional, with very few being in national distribution. There is no single national "shelf", unless you are a major national player, everything else comes down to the local shelf. And not even all of the local shelves, but the local shelves that matter. A single strong specialty spirits retailer can move more product in a month than dozens of nondescript mom and pop corner liquor shops. Why would you even bother to waste your time with the latter (more on this later). Is it about the ability to respond to market changes? Craft distillers can very rapidly adjust their business models to account for short-term preferential changes in the marketplace. We have the advantage of agility. If tomorrow, anchovy vodka was the next hot thing, most of us could be in the artisan anchovy vodka business relatively quickly. A national producer would not have similar agility. We have the advantage of being significantly more agile in the marketplace, this should not be overlooked. Also, are new entrants able to grow the size of the overall market themselves? You might think the question is a little bit silly, how can new market entrants grow a market that major players have trouble doing whilst spending tens, if not hundreds of millions in aggregate, on advertising? But I I think the answer is that they can, by virtue of being local, and by virtue of being experiential. IMHO, that word, "experiental" is going to be the key, and it's not going away. I think the last piece is the key differentiation that craft brands have over nationals, the ability to be experiential. But what the nationals can't do, is appeal to the experiential buyer at mass-scale. They can only be experiential in so far as their marketing material takes them. I don't think that translates into local market dynamics. Awareness is not experience. How can you ignore the demographic change that is driving this longer-term market shift? A shift which clearly has legs. Every retailer is incredibly focused on this. Every consumer service business is incredibly focused on this. Even the financial services industry is spending millions on this. And hell, who wants to be caught dead in a bank branch? What kind of "experience" is that? There are dozens and dozens and dozens of studies and articles talking about this paradigm shift, there are probably just as many consultancies that state that they have the secret keys to be able to navigate this. But, the fact is, nobody has figured this out yet. It's fair game. I'll just leave a few keywords and concepts here, which I think are really important to think about. This is not your father's Oldsmobile. Experience, not Things Authenticity, Sincerity, No Bullshit. Social (as in Conspicuous) Consumption In Collaboration, actually Listening Environmental and Social Conscience Local and Artisanal Obvious Passion Respect, and Respected Unique and Limited, not Mass Market and Undifferentiated I firmly believe that a new craft distillery entrant in a crowded craft market can absolutely destroy the incumbent players if they master this experience component, and can scale it. Let that be a warning to anyone sitting on their ass. A millennial marketing to a millennial will absolutely beat the pants off you. Are you still hanging onto that trope about your great uncle Cletus' secret recipe? Sorry, they don't give a shit about that. Doing a private spirits pairing at the hot local restaurant, with a custom menu designed by it's hot local chef? Pretty food, pictures plastered all over Instagram, now we're talking. Personally? I don't think this demographic is interested in mass market anything. It's about creative differentiation, limited availability, having a brand image that a demographic wants to be associated with. It's not about being able to spend massive marketing budgets either. It should be the national brands who are shaking in their boots.
  4. 1 point
    While much of what Joseph says is, and always was, true (operating capital management, marketing 101), I don't buy the bubble argument for one second. People have been saying the same thing about craft brewing for 20 years. It's still growing in volume nearly 13% year on year. Spirits are just getting started. Millennials re-wrote the markets for craft beer and wine, and they're about to do the same for spirits. They don't have the age statement bias of their parents. They're not afraid of trying new things (would you or I have ever tried a cinnamon whiskey - bleah!) They also crave experiences. So, putting capital into your location and tasting room may be FAR wiser than into name-brand copper in your stillhouse. There's also the international markets that are clamoring to experience US craft spirits. Know what an ounce of Stranahan's goes for in NL? 25€ The tired old shelf space argument never ceases to crack me up. Do you honestly mean to tell me your local liquor store had 10-12 beer coolers back in the 80s? Liquor stores are in the business of selling booze. If there's a market, THEY'LL MAKE SPACE. There's this absurdly tiny liquor store on my way home from work. Not even 500 sq ft. They are incredibly convenient though. I stopped in looking for my go-to beer (Trumer Pils) about a year ago. Of course they didn't carry it. I just mentioned to the owner that I was looking for Trumer. He said "I'll have it here next Tuesday". Now he didn't know me from Adam, but you know what? He somehow made space. Trumer Pils is always there and I pick up a six every week. 250 types of brown spirits? LOL. Have a look at the wine isle and imagine yourself in THAT market. Oh, and they're thriving. Sure, there will be some craft distillery closures. The days of "if I make it, they will come" are over. For every closure though, there will be 2+ more opening. And some of those will actually have a clue about marketing. FFS, High West just cashed out for $160M, selling whiskey they didn't even make!
×