Competing Against The Big Boys

Competing Against The Big Boys

Rules for Underdogs, Upstarts, and Challenger Brands.

Martin Pazzani @mpazzani

Founding Partner, BPG Spirits Investment Group

Reality check.

Basics of competitive

strategy.

The skill set for the next level.

Ideas.

My story: VP Marketing, Heublein

Expertise in outsmarting competitors

The siren song of craft

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1200+ Craft Distilleries

Reality Check

Outnumbered & outspent… Many competitors. Clutter. Chaos.

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Reality Check

Reality Check •  “If you build it they will come” is nonsense. •  No such thing as an overnight success. –  Lightning strikes once a year, maybe.

•  No one has enough money, resources, people.

•  The distributor sales force is not your sales force.

•  The distributor doesn’t care about your brand.

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Underdogs. Upstarts.

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The roots of Diageo: renegade, guerrilla, underdog marketers.

John G. Martin intro’d Smirnoff in the late 1950s. Launched it with the Moscow Mule. Built and dominated the vodka category for 30 years.

Brought Jose Cuervo to the US in the early1970s. Built and dominated the tequila category for 30 years.

Invented Prepared Drinks category prior to Prohibition*.

*Survived Prohibition with A1 Steak Sauce.

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How ‘the big boys’ think:

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Neglected brands in the portfolio…

250 50 10 250 50 25 100 25 75

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…would comprise one awesome company today.

There are only two basic business strategies:

Low Price (implies low cost producer)

No one in this room is the low cost producer.

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Craft is not about price

•  Price discounting: the slippery slope to nowhere.

•  Better plan: adding value & convincing the right people

you’re worth it.

But how? 14

Differentiate

Differentiate

Differentiation: Think Beyond These Entry Level Ideas:

Smooth.

# of times distilled.

Where you’re from.

The quality of your water.

“Babes”

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Don’t go here

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Own this position: “Not for beginners.”

•  “We’re #1”: They sell millions of cases to the mass market.

•  Craft: “We are for people who can tell the difference between mediocre and special.”

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De-positioning: making their strength into a weakness

•  They have a giant factory: “Industrial Grade Spirits”

•  You have an intimate distillery experience:

De-positioning

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De-positioning

•  They have a nameless, faceless factory manager:

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•  You have a Master Distiller:

Think new media

Digital media is the great equalizer

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Think PR not advertising

Publicity in Practice

1.Celebs+$$$ 2.Quality+Cra7smanship

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Publicity Beats Advertising

PESO Model

PESO Model in Action

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Publicity Beats Advertising.

Digital retailing: another equalizer

Geography Lesson

•  Which is better? 10,000 cases in 1 market or 1000 cases in 10 markets?

•  The path of least resistance has a better ROI. – The lure of NYC, LA and Chicago?

•  Black Velvet : –  #1 whisky New York state; but no NYC –  #1 spirit in Iowa

–  100k cases in Sacramento, Stockton; 0 in LA or SF

•  The Lesson of Tito’s.

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Focus

•  Not too many markets. •  Not too many accounts. •  Not too many flavors. •  Not too many products.

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What you need to get to the next level

•  Staying Power: persistence, survivor skills, $$ •  Courage to differentiate via marketing smarts •  Great product •  Sales infrastructure •  Integrity (relationships and financial) •  Willingness to learn and to trust •  Patience, to understand the pace •  Help

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Martin Pazzani Founding Partner, BPG Spirits Investment Group

martin@pazzani.com

860-375-0426

www.martinpazzani.com @mpazzani on Twitter