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The Alcohol Industry is Going DTC
By: Modern Retail
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The direct-to-consumer model is infiltrating the alcohol industry.

New alcohol brands, both independently owned or part of bigger conglomerates, are using online content and marketing strategies to appeal to younger demographics and apply a DTC sensibility to booze, one category that — unlike mattresses, razors, athletic wear, beauty and household products — has only recently seen the rise of direct-to-consumer contenders. Thanks to a few legal loopholes — along with some recent legal wins — online alcohol brands like Haus, Empathy Wines and One/Vodka (owned by Pernod Ricard) and are beginning to create a new growth playbook.

Traditionally, the alcohol you buy in stores relies on what’s called the three-tier model. It essentially means that booze makers are forced sell to alcohol distributors (such as Diageo and Pernod Ricard) who then sell to retailers. This has made it so that only the select brands are given the opportunity to have national distribution. US law, however, says that wine and other lower-alcohol beverages are able to circumvent this system and sell directly to consumers. Winemakers have been doing this already, through national — and international — subscription wine clubs (for example: Winc, Wine Club of the Month and Naked Wines).

The shift to direct selling for booze brands comes as buying alcohol online is beginning to hit the mainstream. In 2017, sales hit $1.7 billion in the US, according to Rabobank. Research from Gartner L2 found that online liquor sales increased 61% year-over-year between 2018 and 2019 — a much faster clip than the industry’s overall sales. Recent media coverage has focused on flagging alcohol sales, but the direct-to-consumer space is just getting started.

For e-commerce alcohol brands, the hurdle lies in getting people to buy a drink online that they’ve never tried before. Irresistibly DTC-style branding can help. When aperitif brand Haus launched online last month, it aimed its branding and marketing strategy directly at affluent millennials, selling for $35 a bottle and hiring DTC agency Gin Lane as its branding partner. It’s positioned as an online-only, health-conscious, hard alcohol alternative.

“There’s a lot more branding involved,” said Nik Sharma, the former head of DTC for VaynerMedia. “You have to get crafty — it has to be story-based.” Sharma helped lead e-commerce at the beverage startup Hint and then moved on to VaynerMedia. One of the projects he assisted on was Vayner’s alcohol brand Empathy Wines.



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This article first appeard in Mondern Retail www.modernretail.com
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