Either / Or VS. Both / And
July 24, 2024Surviving Market Disruptions
Recently we’ve seen a great number of posts and articles written about the factors driving the declines in the beverage alcohol industry. For an industry that has experienced declines in the mid- to high-single digits over the past couple of years, we would expect to receive a myriad of suggestions on how beverage brands can best weather this downturn.
To put some context around what is actually happening, let’s first take a quick look at historical growth rates for US Whiskey, and its subset, Bourbon, from 1993-2023 (data source is IWSR):
It’s clear to see that US whiskey has enjoyed stable and steady growth for the past 30 years. We can discuss the variations of growth, from slight decline to double-digit growth, of the various price segments within these sectors, but we can all agree that the industry has been stable and growing.
Now, if we’re being honest, the current industry shifts were foreseeable. Global events have impacted the Bev AL industry in similar ways in the past (recall the post-9/11 global recession and the 2008-2010 global financial meltdown). What may be different this time is the “multiplicity” of challenges brand owners are facing at one time. There are a few that immediately come to mind:
- Continued consolidation across all tiers of the industry
- Wholesaler & Retailer Post-COVID inventory management shifts
- Consumer preference changes and an influx of substitution products
- Generational consumption shifts and the new “sober”
- Past speculative inventory investments now seeking returns / flooding the market
Talk about drinking from the proverbial fire hose!
So, what’s a craft brand owner to do? Well, Brand Elixir Partnership has several thoughts on the matter, having successfully weathered more than a few “storms” in the past. To offer a rallying cry… we say, “Lean Into the Wind!”
- “Strategy”. It’s now more important than ever – define it, articulate it, and stick to it
- “Eat the apple one bite at a time” - short-term objectives can help you achieve your long-term strategy. Make informed & purposeful incremental steps each day towards that greater goal
- “Innovate”. The Chinese language uses two characters for crisis: Danger and Opportunity. The time to take smart, strategic risks to protect and grow your brand is now!
- “Understand & embrace the change”. Having an appreciation for the goals and strategies of wholesalers and retailers will better prepare you to find/create alignments. Leveraging your network relationships will be critical to navigating the “choppy seas” the industry finds itself in right now
- “Have Confidence”. Sticking to a workable strategy will pay dividends, and the industry will return to growth.
Having all the answers can feel like a daunting goal. We believe starting with the right questions is the better way forward.
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