I’ve been writing full-time about liquor since around 2005 and sometimes I’m still confused about who is the brand owner versus importer versus who has the distribution rights in which country and where stuff is sold. The global drinks business is some wild, wacky stuff. Based on the description below, I asked session moderator Philip Duff some questions.
How The Global Drinks Business Works
Time: 3 PM to 4:30 PM
Date: Wednesday the 20th of July, 2011
Venue: The Riverview Room, Hotel Monteleone
Moderators: Philip Duff
Ever wondered what a SKU is? Or why you can get brand X in Arizona but not in Seattle? Or why a drinks firm has brand Y in America but not anywhere else? What’s the difference between a brand owner and a distributor? Or between an importer and a wholesaler? And where do ambassadors come in? Industry veteran, bar owner, brand ambassador and fearless marketing consultant Philip Duff guides you up the ladders and down the chutes of the worldwide drinks business, from shore to shore and from grain to glass.
What do you think people are the most confused about the global drinks business?
I think everyone’s actually pretty confused! Importers and distributors have slimmed down staff and outsourced functions to the point where brand directors rarely even have the time anymore to go out to bars and on the road with sales reps any more, so they’re not staying up to date. Consumers are bombarded with information and choices that have expanded exponentially in just a few years while bartenders don’t understand why brand X owned by company Y is available the next state over but not in their area. Brands are very often less than transparent about where or how they are made. Companies are hiring brand ambassadors left, right and center from a fast-diminishing talent pool, and throwing them into the field with very little – and more commonly no – training on dealing with media, how the industry works and even basic details like how to participate in a marketing meeting and how to write a business letter or email.
How do you think this seminar might help bartenders or bar owners?
It’ll give them – I hope – a bit more insight into how local, national and global brands more closely resemble loose-related clones of each other rather than one big happy family; the questions to ask to determine where a brand really comes from or who owns it, and some tips and tricks for dealing with sales reps (who are overstretched) brand ambassadors (who are under-trained) and brand managers (who are drowning in KPIs). And what KPIs, SKUs and NLCEs are…I also hope this will explain a few of the more frustrating aspects of being part of the drinks business, and give a bit of insight into how business – any business, really – is done anno 2011. It’s still a people business, albeit a complicated one. Given that there’s a great chance you’ll either be negotiating with a drinks firm at some stage, or be hired by one for an event or some bar consultancy, it really pays to know how the business ticks.
Do other countries us America’s 3-tier system? Are there any advantages to it?
Not that I know of, and no, I can’t see any advantages for a modern, democratic country like the US: the 3-tier system drives up prices while distancing importers from distributors and eventual point-of-sale in liquor stores and in bars, which cannot be a good thing. It makes it much harder and much more expensive for brands to break into the US, and a lot harder to hit critical tipping-point mass because you have to fight for distribution county by county, state by state. This is understandable in a federated place like Europe where countries remain separate, but baffling in a single country like the US.
How do you think emerging markets in China and India might alter or shift the current global drinks business? What are changes we could see when these markets come online? Do we have a good historical analogy to this?
Well, essentially, we’d all better start learning Mandarin! Seriously, these countries will get rich quick and large swathes of the population will be upwardly mobile, but I think it’s only a good thing for drinks firms. China historically is not quite so mad for distilled spirit as India, so we’ll see a bit more A&P spend in China to rectify that situation, and just like in India we’ll see more brands owned by Western firms but being developed specifically for China.
We do have an analogy – I think it’s America. When America really got cookin’ in the 1800s, it ushered in the first Golden Age of mixology and within a few short decades the US had a very high standard of living – so much so that Prohibition and two world wars were little more than speed bumps on that road to prosperity. Drinking in 1800s US was driven by immigrants, as was the birth of the US whiskey business, but what I think will happen in China & India is that people will move around within those vast countries; I doubt there will be significant immigration to those lands. Culturally wine is a greater part of Chinese DNA than Indian, so more wine snobs there, and we should start seeing some interesting Chinese and Indian-produced brands in West. We already have some good examples in brands like Amrut whiskey.