Apr 30, 2019
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May 20, 2019
For many local wine brands, “going national” is the ultimate mark of success. However, going national doesn’t happen by accident, and it certainly doesn’t happen without putting together a very detailed plan of how you plan to transform a local or regional brand into a national brand. That plan needs to cover every single facet of operating a business – from how you plan to distribute your wine across state lines into other territories, to how you plan to market your wine brand in different parts of the country. With that in mind, here’s a 6-step plan that you can follow for building a national wine or spirits brand.
In order to become a national brand, you really need to have a unique story that you can share with fans, followers, customers, partners and investors. What, exactly, makes you different from every other brand on the shelves of retail wine stores? Consider for a moment that a large retail store might carry hundreds, if not thousands of different bottles of wine. When customers walk into your store, why are they going to choose your bottle of wine over every other?
The reality is that the same brand story that works on a local or regional level might not work on a national level. Stories about being a “second-generation winery” or even a “third-generation winery” are not nearly as unique as you might think, and may not have national appeal.
For example, say that you operate a third-generation winery in the Texas Hill Country and that you’ve drawn rave reviews from the local media. Based on that, you might decide that you have enough of a brand story to attract a national audience. But here’s the thing – part of the reason why you might have attracted such a passionate local customer base is because you were local. Supporting a local, family-owned winery might seem like the right choice to make, especially for young millennials in cities like Austin, Dallas or Houston. But what about potential consumers in Los Angeles or New York City? Are they also going to buy into this story of a Texas winery?
For an example of how to pull off a branding story involving geographic location, consider the example of Locations Wines, founded by master winemaker Dave Phinney. If you look at the portfolio of Location Wines, the first thing that you’ll notice is that the branding is perfect - each bottle of wine is meant to be the perfect expression of a particular wine region. And, in the case of Location Wines, there is a wine for Texas (known as “TX”), as well as wines for Spain (“E”), France (“F”), Italy (“I”), California (“CA”) and Oregon (“OR”). Notably, the TX wine involves a partnership McPherson Cellars, one of the oldest winemaking families in Texas; however, the branding emphasis is on geographic location.
Sooner or later, you will need to start thinking like an entrepreneur as you expand nationally. And just as every entrepreneur prepares a detailed business plan, sketching out tactics and strategy for the next few years, you will also need to come up with a plan for going national. In the best of all worlds, this strategic plan can be a sort of “playbook” that you share with your co-workers and employees. It might sound trite and conventional, but you really do want everyone to be on the same page when it comes time to launch.
That being said, there are certain classic growth strategies that have proven effective:
In this first strategy, the goal is to set your home market as your core and then to build out concentric circles around that core, in order to reach a larger and larger territory. For example, in building out its national brand, Dogfish Head Brewery used concentric circles of 100 miles to keep reaching a larger and larger target audience along the East Coast. In order to move to the next concentric circle, Dogfish Head Brewery first consolidated its gains in each inner circle. This helps to create a strong core.
In the second strategy, the goal is to go regional before going national. Thus, if you’re an Oregon winery looking for national traction, you’d first establish a “West Coast strategy” covering Washington State, Oregon and California. Then, you might branch out into a “Southwest strategy,” covering states like Arizona and Nevada and Colorado. Eventually, as you consolidate each region, you’d have a truly national strategy covering most – if not all – of the states in the continental United States.
The third strategy calls for partnering with national retail superstars like Total Wines or Whole Foods Market and then leveraging their distribution channels to find a wider and wider audience. Or, instead of retail superstars, you might want to partner with national on-premise accounts, such as large restaurant chains with steakhouses scattered across the country.
Unfortunately, too many brands adopt what can best be called a “shotgun approach” to growth. In other words, they take distribution and sales wherever they can get it, all in the hopes of getting big fast. What that strategy ignores, however, are all the economies of scale that result from being dominant in a particular state or region. If you’re a brewery in Colorado, what’s the point of being in one city on the East Coast when all of your core business is on the West Coast? You’re only spreading yourself thin.
Now that you’ve decided on the broad outlines of your expansion strategy, it’s time to put numbers and dates to that strategy. In order to have your product sold across state lines, for example, you have to keep in mind the time lag required for regulatory approvals from bodies like the Tax and Trade Bureau (TTB). You also need time to meet and greet distributors, and plenty of time to react to unseen legal and regulatory hurdles. In fact, you will probably need to hire a legal advisor to help you navigate all the steps of the state-by-state expansion strategy. These legal advisors can help with label approvals and distribution agreements, for example.
Just keep in mind – the general rule is that however long you think an approval process will take, it will take longer. At a minimum, it will take 12 weeks of constant effort in order to get all the necessary approvals to expand outside your home market.
Your brand portfolio of products should be easy to understand and sell. For example, say that you are a winery in Sonoma. You might offer a Pinot Noir, a Cabernet Sauvignon and a Zinfandel. And then, for each of these, you might offer a “Reserve” version priced at a slightly higher price point. That leaves you a relatively simple portfolio of six red wines. Over time, you might add new wines, such as a Chardonnay, in order to appeal to a larger customer base.
When putting together your portfolio, just be aware that you will probably not use the same portfolio for every market you are trying to enter. For example, if you are a craft brewery, and you are trying to enter a market that is saturated with local craft breweries, you are probably going to need something “new” or “exotic” or even “crazy” in order to break through with local drinkers. The same is true if you are a Washington State winery trying to break through in the nearby California market. What can you offer that California wine drinkers can’t already find from local Napa or Sonoma producers?
Also, keep in mind that, over time, you will need to come up with the timing of new products in order to keep everything fresh in the minds of consumers. For example, the traditional timing involves a core portfolio (i.e. your best-selling products), a seasonal portfolio (e.g. a special Oktoberfest offering for the Fall), and a limited release portfolio of rare, exceptionally high-quality or just plain unique offerings.
At the same time, you will need to do a bit of serious thinking about which products have a broader appeal beyond just your core account or customer base. For example, some steakhouse chains might have a real need and demand for big, hearty “steakhouse reds” that can provide a nice alternative to Cabernet Sauvignon. That might be a way in for wineries from non-traditional wine regions. Alternatives to Cabernet Sauvignon, for example, might include Malbec (from Argentina), Nero D’Avola (from Sicily) or Touriga Nacional (from Portugal).
Now that you’ve set up a basis for success, it’s time for the fun part – picking the right distributors and accounts that can help to fulfil your big plan of becoming a truly national brand. One important point to keep in mind is that picking the right distributor is like picking the right marriage partner – the right choice will give you a lifetime of peace of mind. The wrong choice, though, could turn your life upside down.
In order to make sure that you are picking the right distributor, then, take time to find out as much as you can about the various options for a particular region or area. One simple question is to ask them how they view your business five years from now, in terms of distribution reach and volume. This is how you can see whether expectations are aligned, and whether or not this is really the right partner for the future.
Some brands, in fact, even go so far as to give each distributor a one-page survey to fill out. This is all about getting the “right fit,” and the answers to these questions can really help to guide your decision-making process. The process of meeting distributors and picking the right one will not happen overnight. At the very least, you need to be thinking in terms of a 90-day plan for how you plan to line up distribution.
Next, you will need to choose the right accounts. As a rule of thumb, you will want to spend the most resources (both financial and time) on the biggest accounts. The old 80/20 rule is in effect where – you want to spend 80% of your time on the 20% of accounts that will generate the most revenue for you. As part of this process, you will need to come up with objectives and benchmarks for evaluating these accounts. The goal, of course, is to choose the “right” 20% of accounts, not just the ones that you have a “gut feeling” about. Once you put numbers down on paper, you might just be surprised to see that some of the accounts you thought were critical for your future success – such as a classy, “white tablecloth restaurant’” account – might not actually be as important as you once thought.
You can’t rely on distributors and wholesalers to tell your story for you-you also need to take a very active role in ensuring the success of your products. Obviously, this is easier to do on a local scale than on a national scale. For example, it’s easy to keep tabs on how a local wine bar or restaurant is doing with your portfolio of wines, but it’s a lot harder to figure out how a craft brewery located halfway across the country is doing with your beers.
There are a variety of tactics and strategies that you can deploy, however, in order to maximize your chances for success. One of these is simply drilling down on the local media scene in target markets, to make sure that journalists and wine writers have everything they need to tell your story. Another strategy is to ramp up your social media presence on Facebook, Twitter or Instagram. Regularly posting updates and photos can go a long way in introducing customers in new markets to your products. Finally, think about what you can offer at the point of sale. This can range from special promotional displays for shelves or aisles to in-store tastings and wine education classes. Anything you can do to tell your story nationally will help. Otherwise, your bottles will languish on the shelves.
At the end of the day, it is possible to become a truly national brand. But as you can see, the process doesn’t happen overnight. There’s a lot that goes into creating a successful expansion strategy and then executing on it. And, of course, the importance of having the right people to tell your story and advocate for you is impossible to understate. If you have creative, passionate and hard-working people who really believe in you and your brand, then you might just become the next big success story of a local brand that finally hits it big and goes national.