What are the Key Issues Facing Independent Spirits Brands?

Stay focused on the issues, stay curious about your trading environment and take nothing for granted.

The issues facing independent spirits brands are many. From generating demand to rising costs and seismic supply chains. Focusing on key issues helps set priorities and prevent brands drowning.

Generating consumer demand and repeat business

Examples of overnight success are few and far between. Brands, generally, still need to put in the hard yards to make it a success.

Knowing your target customer is essential. What is it about the liquid that provokes interest and desire, and for who? Where do they drink? How do they drink? With friends, alone, in bars, or traditional pubs? What do they value? How can the brand position itself to bring the liquid seductively to them in a way that cuts through everything else? It must hit home. No one should be going into production without understanding demand.

Having a strong brand mission and purpose is an effective way to create an advantage. Differentiate in a meaningful way to set yourself apart and look to align with social and environmental causes that resonate with your target customers. Consumers expect brands to be ethical, not just in the production, but in every aspect of its values. Demonstrating, and communicating strong brand can help create traction and loyalty.

Supply issues and logistics

All industries have faced supply issues since the start of the pandemic with movement restrictions and staff shortages, making it challenging for independents to guarantee production of stock and price.

Just in March this year, 31% of food and drink businesses reported global supply chain disruption.

Lack of HGV drivers and operatives continues to be a challenge and we’ve seen many producers going back to basics, to focus on the value they can control and deliver, such as service and brand enrichment.

Cost increases and managing these for the consumer

Costs, including energy, have risen dramatically, and consumers are feeling the squeeze.

There’s been a fundamental step change in costs, almost entirely driven by hikes in oil and gas. This impacts everything from agriculture to transport, manufacturing and packaging. There’s no reassurances about the future so everyone must decide what is to be passed on to consumers. Absorbing all the costs is not an option for businesses. At the same time, they must remain competitive.

Businesses must review every aspect of their cost base and the priorities of their operation. See if there are there opportunities to renegotiate with suppliers? Will increased volume bring cost benefits? Are your processes lean? Can waste be eliminated? Could purchasing be more strategic?

Undoubtedly, prices will rise for consumers.

Ensuring ongoing business longevity

Commercially, brands must engage in the constant balancing act between volume and margin. Only 30% of businesses make it to year ten. But it’s the strategic decisions that will keep a business fit and flexing into the future.

Brands must set long-term goals and be prepared to make compromises and choices along the way to keep those goals in sight, whatever disruption to the market. Strategy must be a priority, including in the relationship between your brand and consumer. Explore your niche and develop it; become an authority in your field. Brand trust generates loyalty.

 And the longer you stay in business, the more you learn. Make it a priority to learn.

Identifying points of difference from competitors

Brands must understand their competition and their market, to bring an unforgettable story and ethos. Brands with strength of purpose are four times more likely to be purchased by consumers, which means living and breathing integrity and never cutting corners.

Whatever makes your brand and its story special, educate your consumers in it, bring them with you. Of course, the liquid has to be cracking, as we’ve said. But don’t forget, you’ll also need to stand out to the gatekeepers, the buyers in the industry, as well as consumers.

The other, not insignificant challenges of supermarket power, trends in alcohol consumption and duty

Stay ahead of the trends in consumer consumption and habits so you can stay relevant and desirous. Duty is a constant cost-factor for brands to take into account with positioning and brand. And, along with all the other challenges faced, the big supermarkets continue to rationalise and consolidate.

At the same time, supermarkets have to differentiate their offering, otherwise they’re only competing on price. If your brand can offer a point of difference and deliver the best liquid for customers, you are well-placed to cut through. Seed with the on-trade and nail that merchandising strategy.

If you can weather this…

There’s no doubt it’s a challenging time for independents, but there are so many lessons to be learned along the way that by weathering this there’s insight and advantage to be gained for the future. Stay focused on the issues, stay curious about your trading environment and take nothing for granted.