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Rules for Underdogs, Upstarts, and Challenger Brands.
Running With The Big Boys
Martin Pazzani Founder, United Craft Distillers
Reality check.
Basics of competitive
strategy.
The skill set for the next level.
Ideas.
My story: VP Marketing Heublein
“If you know your enemy…”
Underdogs.
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The roots of Diageo: renegade, guerrilla, underdog marketers.
John G. Martin intro’d Smirnoff in the late 1950s. Launched it with the Moscow Mule. Built and dominated the vodka category for 30 years.
Brought Jose Cuervo to the US in the mid 1970s. Built and dominated the tequila category for 30 years.
Invented Prepared Drinks category prior to Prohibition*.
*Survived Prohibition with A1 Steak Sauce.
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How ‘the big dogs’ think:
“When all you have is a hammer….”
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Neglected brands in the 1995 portfolio…
250 50 10 250 50 25 100 25 75
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…would comprise one awesome company today.
Outnumbered & outspent… Many competitors. Clutter. Chaos.
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Reality Check.
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700+ Craft Distilleries.
Reality Check.
Reality Check. • “If you build it they will come” is nonsense.
– However, what’s in the bottle better be excellent.
• No such thing as an overnight success. – Lightning strikes once a year, maybe.
• No one has enough money, resources, people.
• The distributor is not your sales force.
• The distributor doesn’t care about your brand.
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The Two Key Questions You Must Answer
• Who will be your best customer? - The more specific the better. (Hint: it’s someone else’s best customer now)
• What do you want them to do?
– Drink your brand instead of ? (Hint: the more specific the better)
Own this position: “Not for beginners.”
• “We’re #1”: They sell millions of cases to the mass market.
• Craft: “We are for people who can tell the difference between mediocre and special.”
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De-positioning: making their strength into a weakness
• They have a giant factory:
• You have a distillery experience:
De-positioning.
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De-positioning.
• They have a nameless, faceless factory manager:
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• You have a Master Distiller:
There are only two basic business strategies:
Low Price (implies low cost producer)
No one in this room is the low cost producer.
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Craft is not about price.
• Price discounting: the slippery slope to nowhere.
• Better plan: adding value & convincing the right
people you’re worth it. But how?
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Differentiate.
• Be a First Mover. -”Antennae up”
• Get the packaging
exactly right. • Have a unique story.
Differentiate.
Differentiate? Not.
Differentiation, well executed.
Differentiation: Think Beyond These Entry Level Ideas:
Smooth.
# of times distilled.
Where you’re from.
The quality of your water.
“Babes”
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Don’t go here.
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Consistency.
Consistency.
Lack of Consistency = Chaos.
Consistency creates a Brand.
God’s Incredients.
Alaska’s Spirit.
Wasilla’s Soul.
Toby’s Heart.
Consistency + Integration.
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Publicity Trumps Advertising.
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Publicity Trumps Advertising.
Local media
Bloggers & Consumer Groups
Digital media is the great equalizer.
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$3 billion / year
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Digital retailing: another equalizer.
Geography Lesson.
• What is better? 10,000 cases in 1 market or 1000 cases in 10 markets?
• The path of least resistance has a better ROI. – The lure of NYC, LA and Chicago?
• Black Velvet : • #1 whisky New York state; but no NYC • #1 spirit in Iowa • 100k cases in Sacramento, Stockton; 0 in LA or SF
• The Lesson of Tito’s.
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Focus.
• Not too many markets. • Not too many accounts. • Not too many flavors. • Not too many products.
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What you need to get to the next level.
• Staying Power: persistence, survivor skills, $$ • Courage to differentiate • Great Product
• Integrity (relationships and financial) • Willingness to learn and to trust • Patience, to understand the pace • Help
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Craft, not Kraft.
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