How to map your distillery’s Route to Market

Route to market reality check; Even the most delicate bouquet of botanical flavours, the “smoothest” rum or perfectly balanced whisky can go unnoticed if they don’t find their way onto shelves.

We all get into spirits and craft distilling through a love of the liquid. Through a fascination with distillation and the magic of it all. But to succeed, you’ve also got to love the game… Specifically, knowing, honing and executing your route to market strategy.

A clear route to market not only introduces your spirit to the world but does so strategically, ensuring that your creation finds its rightful audience.

Here’s a few of the big talking points you’ll need to consider when mapping out your plan.

Suggested ways to map your route

1. Define your brand and audience: Before plotting your route, you must first understand who you are and whom you’re targeting. Is your brand upscale and sophisticated? Traditional and rustic or innovation driven and iconoclastic? Knowing your brand essence helps you find and connect with the right audience.
2. Local first: Start humble and build upwards and outwards (then stay humble and build upwards and outwards). Start by solidifying your presence in local bars, restaurants, and liquor stores. Participate in local events, offer tastings, and host tours of your distillery. A strong local foundation is always the springboard for broader markets and it’s rare when a producer has a concept that is export only, or not relevant locally.
3. Research distribution laws: Every region has its own set of regulations governing the distribution of spirits. It’s crucial to understand these intricacies before planning any distribution strategy. The US in particular has complex chains that vary state by state and getting it wrong can freeze you out for a significant amount of time.

Building your distribution strategy

1. Direct-to-Consumer (DTC): Although this might not be feasible everywhere due to legal limitations, where it is, DTC provides a direct line to your most devoted fans, and your best chance to maximise profit per bottle. Not only that, it’s entirely down to you to make it happen, which means it can be the very first thing you do. Our advice is simple – get your front of house set up and your cellar door operational as soon as possible.
   • Your most straight forward route to market aside, having the capacity to do tours, tastings, merch and more means that when you go B2B, you can host those interested to learn more as you’re all set up for it. It will help show transparency, build trust and open up other ways of creating PR to generate awareness. The halo effect of open doors and direct sales is much greater than just income… More on that in our article on Distillery Tourism
2. Online presence: An engaging website and active social media presence can create a buzz around your product, building anticipation and demand across all channels. Again, while some places can’t legally retail online – most can. Build your database and your digital sales as they will quickly become high value route to markets (more on that in our article DTC in the Digital Age)
3. Talk to reliable distributors: Whether it’s in your local market when entering new territories, a distributor with a good reputation and solid connections can be invaluable. Talk to a few and get their opinions on the state of the market and where they see a place for you. You may need to do self distribution, but that shouldn’t be your first thought.

Key Elements to Consider in any good route to market strategy

• Volume vs. Exclusivity: Decide whether you want to flood the market or maintain exclusivity. There’s a vast difference between being available at every liquor store and being a sought-after brand in selected outlets. Whichever you chose, as we’ve said time and again on this website – be obsessed at selling through and selling out, not on getting the initial listing.

• Pricing strategy: Understand the competition and your brand’s position. Are you a luxury product, a mid-tier option, or an affordable everyday treat? Understand how your competitors achieve their price position and where the margins are being taken out along the supply chain.
  • Your price should balance production costs and base line profitability, as well as the amount of players involved in the supply chain (who will all take a cut), taxes and what consumers are willing to pay.

• Relationship building: The spirits industry, especially at the craft level, thrives on relationships. Build in ways and processes into your strategy that ensure you regularly re-engage with distributors, bar owners, and customers.
  • Don’t leave it to something to just do as good practice; Literally make it part of the distribution strategy and factor budget and time to do it. How are you staying front of mind with them? How are you support your rate of sale with them? How are you staying up to date with their changing needs?

• Continuous feedback loop: Stay receptive to feedback from all stakeholders. Tastes evolve, and the market shifts, so being adaptable is key.

• Market analysis: Stay updated on market trends, competitor activities, and potential opportunities. Looking ahead saves huge budget spends as it can guide tweaks in your strategy long before changes in category or market dynamics force you into last minute diversions.
  • Broad category data is always too slow to come to light if you are waiting for journalists to report on data from Nielsen, CGA etc. Find ways to stay on the pulse and get anecdotal evidence. That way by the time the results are announced, you know how to interpret them beyond the headline figures.

• Education: Knowledge can transform a casual drinker into a loyal brand advocate. It also creates sales and helps build rate of sale in trade accounts. Factor in the need to do this continuously as the hospitality industry churns through bartenders and front of house staff at an alarming rate. Just because they knew all about you two years ago does not mean the team do today.
  • Most front of house hospitality workers in the on-trade are under the age of 35, and most spend less than a decade in the industry. That means every 3-4 years, you are likely to need to re-introduce your spirit to them. That’s not to say they will not have heard of it, or that they won’t have tasted it – they will just never have heard it from you. Re-ignite relationships, forge new ones and re-centre your brand narratives by being the ones to tell it, not relying on word of mouth and others to educate on your behalf…

How do sales teams and brand reps factor into Route to Market Strategy?

The question of when to incorporate a sales team, agency, or active brand representation into your distillery’s route-to-market strategy is an ongoing debate in the craft spirits industry.

On one hand, early adoption can help a fledgling brand establish its footing in a competitive market, while on the other, waiting might provide clearer direction and reduce costs in the initial stages. Fundamentally, representation might not be an option for most given the cost…

Here are some of the talking points to consider.

In favour of early adoption:

1. Market penetration: Having a dedicated sales team or agency representatives from the outset can significantly boost your brand’s visibility and penetration in the market. They can engage with wholesalers, retailers, and bars more effectively than distillery owners juggling multiple roles.
2. Professional approach: Hiring an agency (or for some markets, a distributor) can ensure a professional and polished presentation of your brand, giving you an edge over other startups that might be taking a more DIY approach.
3. Feedback loop: A dedicated sales team can provide real-time feedback on market reactions, helping you adjust your products, branding, or strategy in the early stages when it’s easier to pivot.
4. Relationship building: Establishing relationships in the spirits industry can be time consuming. Having reps or an agency from the start accelerates this process as most build on already established contacts.

In favour of waiting:

1. Cost consideration: Startups operate on tight budgets. The costs associated with hiring a sales team, pay distributor retainers, or agency can be substantial. Waiting can allow the allocation of resources to other immediate needs like production quality or local marketing.
2. Clear branding: In the early stages, brands might still be defining their messaging, branding, and even product line-up. Waiting ensures that when you do hire a sales team or agency, they have a clear, consistent brand narrative to pitch as opposed to inconsistent inputs and incomplete suit of assets to work from.
3. Direct engagement: Without a dedicated sales team, founders often engage directly with the market. This hands-on approach can provide invaluable insights into the brand’s reception, consumer preferences, and areas of improvement. The best sales person should be the owners and makers themselves!
4. Organic growth: Some proponents believe in allowing a brand to grow organically in its initial stages, relying on word of mouth and local engagement before scaling up with a dedicated sales force. The idea is that you get to see where it’s being adopted and embraced, meaning that once ready you can lean into that direction / audience knowing it’s based off true resonance.

For many start-ups, a balanced approach might be best here. Start locally and organically, building up your own understanding of how it all works. Having the time to further develop your tone of voice and identity based on real-world and first-hand feedback can be extremely valuable.

As the brand solidifies its identity and gains traction, gradually incorporating sales professionals into the strategy is then a logical move.

While it seems like the best way to scale, active agency and distributor models from day zero in your local market does have risks. Even if you had all the budget in the world, there’s good sense to doing the first few yards yourself, in house.

Route to Market strategy – Focused over mass?

The adage “quality over quantity” reigns supreme in spirits. Drink less, drink better is something worth remembering at all of life’s big moments. The same can be said for market strategy, where focused efforts often yield better results than casting a wide net, especially once you are up and running.

Let’s dive into why specificity might be the key ingredient to success and why any route to market strategy should keep it in mind.

1. Deepening market engagement: When you zero in on a specific market or demographic, you have the chance to understand it more intimately. Instead of a shallow presence in multiple places, you establish a deeper relationship with a concentrated group. This familiarity allows for a tailored approach, appealing directly to their preferences, habits, and buying behaviours. From a branding perspective it’s the most obvious move to make to allow for product differentiation.

2. Efficient resource allocation: Especially for startups, resources – whether financial, time, or human – are finite. Spreading too thin can dilute your brand’s impact. By focusing, you can allocate your resources more efficiently, ensuring that every dollar or effort expended yields maximum results.

3. Building a strong brand identity: A focused approach allows you to hone your brand message consistently. Instead of trying to be everything to everyone, you stand for something specific. This can create a more loyal customer base that resonates with your brand’s ethos. If you don’t want to gravitate to a specific type of drinker, focus on the occasion. When are you looking to be the most obvious choice for drinkers. For example, Campari owns the Aperitivo moment, and tries to appeal to all consumers during that occasion. By contrast Hendrick’s tries to connect with outsiders and iconoclasts, the unusual amongst us, but tries to connect with them at any drinking occasion. Different approaches and ways of targeting, same specificity in what they have identified.

4. Easier adaptability: By concentrating on a narrower segment, adapting to changes becomes more manageable. Whether it’s a shift in consumer preferences or seasonal changes, the smaller scope allows for more agility in response.

5. Organic growth and word-of-mouth: When you excel in a focused area, satisfied customers become your brand ambassadors. Word-of-mouth in a concentrated community or market segment can amplify faster, creating organic growth. While not spirits, look at the way you-tubers have launched drinks to their audience. Everyone in that generation talked about them, those over the age of 40 will have never even seen that it existed. You can’t appeal to everyone all the time so don’t try. Appeal to those most likely to become your advocates.

6. Better feedback loop: With a focused approach, feedback is more precise and actionable. It’s easier to iterate, improve, and grow when you understand the specific needs and desires of a well-defined audience.

While the allure of mass appeal can be tempting, there’s undeniable merit in a more precise, focused approach. It’s better for product differentiation, initial conversion and ongoing advocacy.

Consider how you have factored this in your route to market strategy.

Want more specific insight in to the Uk market? Check out our Wholesale and Distribution article for more.