Rules for Underdogs, Upstarts, and Challenger Brands from a former mega-brand marketer turned craft distiller specialist.

1. Competing Against The Big Boys
Rules for Underdogs, Upstarts,
and Challenger Brands.
Martin Pazzani
@mpazzani
Founding Partner, BPG Spirits Investment Group

2. Reality check.
Basics of competitive
strategy.
The skill set for the next
level.
Ideas.

3. My story: VP Marketing, Heublein

4. Expertise in outsmarting competitors

5. The siren song of craft

6. 6
1200+ Craft Distilleries
Reality Check

7. Outnumbered & outspent…
Many competitors. Clutter. Chaos.
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Reality Check

8. 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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9. Underdogs.
Upstarts.
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10. 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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11. How ‘the big boys’ think:
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12. Neglected brands in the portfolio…
250 50 10 250 50 25 100 25 75
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…would comprise one awesome company today.

13. 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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14. 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?
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15. Differentiate

16. Differentiate

17. 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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18. Don’t go here
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19. 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

20. • They have a giant factory: “Industrial Grade Spirits”
• You have an intimate distillery experience:
De-positioning
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21. De-positioning
• They have a nameless,
faceless factory manager:
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• You have a Master Distiller:

22. Think new media

23. Digital media is the great equalizer
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24. Think PR not advertising

25. Publicity in Practice
1. Celebs + $$$ 2. Quality + Cra7smanship

26. 26
Publicity Beats
Advertising

27. PESO Model

28. PESO Model in Action

29. 29
Publicity Beats Advertising.

30. Digital retailing: another equalizer

31. 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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32. Focus
• Not too many markets.
• Not too many accounts.
• Not too many flavors.
• Not too many products.
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33. 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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34. Martin Pazzani
Founding Partner, BPG Spirits Investment Group
martin@pazzani.com
860-375-0426
www.martinpazzani.com
@mpazzani on Twitter