Here are some promising trends for the spirits industry and ways to make this a gangbuster year.
For the spirits industry, 2020 felt like a dumpster fire. Even with relaxed alcohol production and distribution laws, as well as a pivot to hand sanitizer production, when tasting rooms and bars closed during quarantine, producers watched their income plummet. $700 Million in profits and 31% of employees evaporated once the effects of the pandemic hit with full force.
But let’s not focus on the past right now. We’re here to look forward to 2021 and what you can do to manage the damage that 2020 did to your bottom line. There IS good news in all of this, such as a permanent break in excise taxes, a hard-fought victory that will keep many small scale spirits producers from permanently closing. Let’s look at key trends for the spirits industry and ways you can make this a gangbuster year.
The loyalties of your region, state, county, city, or even neighborhood can help you win over your own backyard. This is especially important in areas that aren’t traditionally known for particular alcohol styles, such as Texas and their whiskeys/bourbons. Texas has forged a specific character for their whiskeys and bourbons, unique and distinct from those produced in other areas due to their hotter climate.
The transition to a focus on local pride has also resulted in a shift away from the word “craft” when defining spirits and more to descriptions based on a drink’s origins. One might refer to “Iowa bourbon” or “New York empire rye.” Wine has long been defined by its region, with styles like “Bordeaux” and “Chianti” referring to their place of origin. Napa Valley, Willamette Valley, and more recently, Sonoma Valley wines have conjured specific expectations for their flavor experience. If the wine industry can do it, so can yours. Forge your own identity and give your community a reason to support you beyond, “they make a good bourbon.” Once tasting rooms are open again, you need to be a destination for your neighbors before being a destination for tourists.
Consumers have been increasing their purchases of higher-cost spirits for years, and that’s not slowing down for 2021. Brands that retail for $100 or more have been growing faster than the spirits industry as a whole. Since customers have been unable to enjoy libations at a bar, they’re doing it at home, and they want the best they can get if they’re going to be stuck inside. There’s a lot of room for increased premiumization for spirits that previously haven’t had representative brands of luxury status, spirits like American whiskey, tequila, and rum, which have the opportunity to shake any lingering plebeian stigma and punch through to the top shelf.
No matter what style your distillery creates, part of the premiumization process is making your drinks look as expensive as they taste. Creative label and bottle designs let consumers give you the benefit of the doubt that you’ve put as much thought into the spirit as its container. Of course, you need to have a grasp on your demographics and clientele to do this successfully. Will they consider modern minimalism a premium trait, with your bottle’s slender, straight lines and the label’s fine, sparse text? Will they expect something more ornate? Or vintage-inspired? Whatever the case, make your container match the quality of your spirits.
Having Creative Distribution
2020 cemented the idea that anything and everything can be delivered right to our homes. With closures of restaurants and tasting rooms, that meant alcohol, too. Now that the proverbial cork is out of the bottle, it’s not going to go back in. Direct to Consumer (DtS) alcohol sales are here to stay. And while the legal restrictions are more relaxed than ever, there are still hoops to jump through, and not every state allows the practice. Even though you’ll need special licensing to ship your spirits through UPS or FedEx (don’t even think about trying to ship alcohol through the US Postal Service), it’s worth your time figuring out a strategy for DtS shipping because of the potential revenue. Whether you’re shipping in-state, out-of-state, or even overseas, there are different hurdles, so get solid legal advice and plan accordingly. You’ll also need attractive and safe packaging as well as trusted carriers to make sure your spirits arrive without damage.
Getting your product into the hands of customers doesn’t just mean relying on cardboard boxes, styrofoam, and official shipping channels. To-go cocktails were a lifeline for many bars and restaurants in 2020, and it looks like the trend is going to continue. Being allowed to act like an off-premise alcohol retailer meant establishments could safely get drinks to patrons curbside without risking exposure to COVID-19. Thirty-two states currently allow the practice, and many are considering making the change permanent (some have already).
Since the ability to shout an order to a bartender is currently on hold, many people have started learning the art of mixology to make their own cocktails. Vermouth sales went up 59% in the 12 weeks leading up to May 23 last year as people experimented with making Martinis and Manhattans. This means more consumers are getting knowledgeable as they improve their skills and could be turning to your spirits for their creations.
The rise of home bartending provides an opportunity for distilleries and spirits producers to offer education courses. The more you position yourself as an expert, the more consumers will turn to you when it comes time to collect ingredients for their mixed drinks. Zoom and other social meeting apps provide an excellent platform for sharing knowledge with customers. Once the pandemic is over, those customers are going to want to continue honing their abilities. Setting aside time in your tasting room for showing how incredible your spirits can make a cocktail taste will help create loyalty and increase sales.
Your relationships with other producers should also grow. Craft beer has mastered the art of collaboration drinks, and this practice is starting to seep into spirits. Distilleries are already helping breweries create new and unique flavors and are beginning to help each other make new and interesting spirits. Spirits are often used as ingredients, so there’s an enormous opportunity for you to foster partnerships that get your spirits into more glasses, whether by themselves or mixed with someone else’s product.
Now’s also the time to give more attention to your business relationships. Your suppliers, manufacturing partners, and shipping partners have probably felt the squeeze amid the pandemic, too. Showing appreciation, whether through giving away products as a thank-you, brainstorming with them on ways you can help each other increase business, or simply arranging social interactions with employees, can keep your varied partners happy.
One Thing That Never Goes Out of Style
As a parting thought, keep your eyes focused on the one thing that never goes out of style and often significantly impacts sales: your packaging.
Remember, potential customers notice everything. This is why every detail matters, including label placement and appearance. What good is a well-designed, attention-grabbing label if it's misapplied? While on-brand and attractive labels should be a priority, it's just as important that they look good and are applied correctly each time. From grain choice and fermentation process to packaging and label placement, each piece has the potential to represent the high quality that your brand stands for — don't risk shortcuts with any of them.
To be sure your labels are applied correctly on every bottle, consider upgrading from manual labeling to automatic labeling. An automatic labeler will not only prevent misaligned, misplaced, bubbled, creased labels, but the right one can save you time and money. How? Check out our guide, Distiller's Guide to Bourbon, Vodka, Gin, and Whiskey Labeling Equipment, to learn how to choose the best labeling machine for your needs and to discover machine-related benefits, including money and time, that you might be missing by hand labeling.
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