With craft beer now estimated to account for 20% of the value of the US beer market, it’s no exaggeration to say that craft beer has revolutionised the industry. Despite craft spirits currently accounting for just 2% of the US spirits market, the signs are there for craft spirits to follow the same growth as craft beer and start taking similar share. The amount of craft distilleries opening in the US has tripled in three years from 2011 – 2014.
One reason for craft's success is the quality of the product itself, with higher quality ingredients being used, but a significant other factor is where it was produced. “People want that relationship with what they drink” said Evin O’Riordain, founder of Kernal Brewery. “We’re in London, this is a local beer, that means something to people”. A key question for both the beer and spirits industry establishment has been how best to respond to consumers who increasingly want to buy local and so choose craft over mainstream brands.
Pernod Ricard, owner of Absolut Vodka, Jameson’s and Havana Club brands have recently launched Our Vodka, A vodka aiming to challenge the assumption that a brand can’t truly be both global and local. Our Vodka is a global vodka brand, producing and bottling regional variations of it’s vodka in five cities across the US and Europe, with plans to expand into four more cities during 2016. Whilst consistency comes in the form of both branding and the recipe used, each distillery is tasked with finding their ingredients locally, making each city’s vodka unique to that city.
Gilles Bogaert, Pernod's chief financial officer said, "Craft can be an opportunity or a threat - a threat if we are not adapting our marketing platforms, however I think today net-net, we see it as an opportunity." Contrast that with beer giant Budweiser, who’s advertising clearly suggests they see craft only as a threat. Budweiser's 2015 Super Bowl ad mocked craft beer and their hipster fans with the gut-wrenchingly cheesy line; “Let them sip their Pumpkin Peach Ale, we’ll be brewing us some golden suds”. You could argue, picking a fight with craft is itself quite a ‘challenger’ thing to do. Craft can be expensive, and often associated with being pretentious and snobby, maybe it’s about time someone called them out on that.
The problem with Budweiser's approach however, is that they are still treating craft as a fad or trend, a problem that can simply be ‘advertised’ away. Craft isn’t a trend, it’s the new normal and the establishment need to get used to it. That’s why Pernod Ricard’s model is so interesting. It’s a global brand taking a long term approach and is actually taking craft seriously - not attempting to ignore, dismiss, or mock it. It's also an approach that genuinely responds to a growing consumer demand for more locally rooted products.
Bringing together the strengths of being global, such as brand awareness, financial support and network, with the advantages of being local, such as credibility and authenticity, Our Vodka's model could be the most sensible way for the beverage industry to respond to craft.
A key question is: is part of the attraction of craft and local that's it's just not big business and big brands? Will Our Vodka’s parent company soon be seen as a source of embarrassment?
Time will tell, and I’m left wondering, if successful, whether we’ll see the ‘Our Vodka’ model adopted by one of the larger brewers.
Berlin Bud anyone?
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Editor of The Challenger Project, marketing at eatbigfish. Fan of the underdog. West Ham supporter. All adds up really.