From G&T to DTC: Wine, Spirits and Brand after Covid-19

The way we drink has probably changed forever, thanks to Covid-19. 

Although bars and restaurants are open once again in most of the UK, five months of lockdown has dealt the on-trade a blow it will have to adapt significantly to recover from.

And for many wine and spirit brands, that means survival and growth are dependent on a strategic pivot towards Direct To Consumer (DTC).

My business partner at Mimo Brands Nicolette Robinson and I have worked on a fair number of leading drinks brands’ strategies over the years, and we think that DTC is here to stay. 

Indeed, there were plenty of signs pointing in that direction even before Covid-19. 

What’s so good about DTC? 

Where to begin? Well, a successful DTC brand - no matter what category it’s in:

• Is less reliant on retail and distribution third parties and contract negotiations
• Has more control over its branding, positioning and pricing
• Owns its own customer data and has a direct relationship with its audience
• Will generally see higher margins by virtue of eliminating middlemen

As digital technology has proliferated (and bricks-and-mortar retail has struggled to respond), the barriers to developing and pursuing a DTC brand strategy have fallen sharply. 

This graphic from Deloitte juxtaposes “traditional” (left) against “digital” (right) conditions, but DTC doesn’t have to mean digital. Indeed, many wine clubs have done a roaring DTC trade through the post for years... 

This is good news for new brands looking to bootstrap a niche in the market. 

It’s also a key opportunity for legacy brands looking to broaden their online presence and leverage name recognition and brand equity. 

But there’s one big problem…

Competition. 

There’s a huge number of competitors out there in most sectors and the barriers for new entrants are as low for them as they are for you. 

So, if you’re going to launch or develop a DTC drinks brand there are some important factors you need to take on board. 

#1 Who is going to drink this?

Bar staff recommendation and shelf placement have made up the holy trinity of traditional wine and spirits branding alongside the all-important “user image”. 

So understanding the market is critical before going DTC. A brand has to clearly understand how the market segments, and which segments to target.  It needs compelling positioning that maximises the business’ strengths and which meets the emotional needs of these customers.

Authenticity is an important ingredient here. 

The most successful DTC beer, wine and spirits brands have been differentiated by and thrived because of their distinctive personalities finding an audience they resonate with. 

Toast Ale is a good example. 

After a conventional start, the brand quickly tailored its positioning to take advantage of the DTC opportunity - recognising the power of its commitment to a world without food waste (the beer is brewed with surplus bread). 

Avallen Calvados is another brand we believe has potential. As well as taking a “back to basics” approach to its ingredients (just apples and water), its “bee positive” stance enjoys resonance amongst premium spirit buyers. 

The burgeoning interest in local produce and “craft” processes has seen many of the big brewers and distillers attempt to jump on the trend - using their distribution clout as a substitute for authenticity. 

Growing numbers of consumers are very alert to fakery in this regard, and established brands are better off playing up their heritage and residual affection than inventing a new story that doesn’t resonate. 

DTC gives a brand total control over its story and messaging, enabling it to pursue strategies that might be too edgy or niche for supermarkets and other retailers. 

And of course, an online DTC strategy provides a potentially global reach - unrestricted by distributors’ networks. 

#2 What’s the next artisanal gin?

If you’re looking for a trend to jump on - stop. 

You might reap short-run gains from a fad for “amaretto and ice” or “small batch gin”, but unless you’re spearheading the trend and building a brand behind that wave you leave yourself open to competition, commodification or simply going out of fashion. 

Bombay Sapphire, whose fortunes were transformed under Nicolette’s stewardship, managed to bring about a fundamental change in gin-drinking habits because it got closer to customers, found a real insight, made a small group of people true brand advocates and religiously preserved the brand’s user image throughout the process. 

They succeeded because they put brand first and category second. 

Don’t look for what’s hot right now. Instead, find out what insight - real insight - you have about your customer that nobody else has and build on that. 

Once you have that, use our Four Pillar approach to build a brand around your customers’ needs and desires. 

#3 How do I get it to the customers?

DTC brands have to be intensely aware of how they fulfil orders and deliver their goods to customers. 

The buying and delivery experience are opportunities to reinforce your brand story and values. And unlike a supermarket shelf, you have complete control over that. 

So, think about packaging, personalisation and opportunities to promote loyalty at every step of the process. The best DTC brands across all categories are those that have managed to personalise their relationships with customers and built communities. 

Although it’s not a DTC brand as such, Laphroaig’s “Friends of Laphroaig” community - entitling buyers to ownership of a square foot of their estate with every bottle bought - is an important part of the buying experience, the brand story and repeat purchase strategy.

Summing up

Whether you think DTC is an ideal strategy for your brand or not is rather beside the point. 

At the moment, some important routes to building a drinks brand are closed down or significantly constrained thanks to the coronavirus. 

Millions of businesses across the world that never thought about going online before have had to do so. A proportion of them have succeeded beyond their wildest dreams. 

Maybe you could be one of them...

Of course, there are important caveats around everything we’ve said in this short article. 

Wine is a law unto itself. 

There is still an overt snobbery even rejection around overt wine brands. Recommendation is far more important than brand for non-connoisseurs. 

That doesn’t hold true in the spirit world. Brand is more accepted and desired as a way to navigate and choose within a category. Remember - your brand is helping potential customers to choose you over the alternatives.

In conclusion, these are questions you should ask before taking the DTC plunge:

• What is the competitive landscape? 
• Is there an obvious gap in the market? 
• What insight do you have about your customer that nobody else has? 
• What is the purpose/reason for being that drives your brand story, how is this different? 
• How does your portfolio meet different customers needs? 
• How will your people deliver this to customers?
• What does a joined up customer journey look like?

Until you can answer these questions truthfully and concisely, a strategic pivot is unlikely to be the right move. But once you can...well... the possibilities are exciting.