The U.S. is the number one alcohol market in the world, which makes it a highly desirable place to sell your brand. But given the size and complexity of the country, brands must be well prepared and develop a sound strategy to cement a strong market share.
We’ve put together a guide of key steps to assist in formulating the right market strategy for your brand in the U.S.
Understand the U.S. Market
At the federal level, the U.S. alcohol system is based on the three-tier system. The first tier is suppliers, the second tier is distributors, and the third tier is retail outlets. The system is facilitated by distributors who serve as the connection point between suppliers and retailers.
Additionally, each state has its own laws and regulations for suppliers looking to connect with distributors. These states can be separated into two types: Open and Control States. You can find out more about the difference between open and control states here.
In addition, some Open States are also Franchise States. These states have franchise laws that are designed to provide in-state distributors with an assurance that their suppliers will not be able to abruptly terminate a contract for no reason. Massachusetts, Georgia, New Jersey, and Connecticut are all examples of states with franchise laws.
You should also get a feel for the differences between states. Top tier markets like New York City, Los Angeles, Miami, and Chicago are highly competitive and costly for emerging brands to break into, but secondary markets such as Tampa, Nashville, and Indianapolis, offer a more cost effective option and a better chance for exposure.
Determine Proof of Concept
A common way to establish a presence in the U.S. is to begin with a proof of concept. One way to do this is to conduct research-based tests on a product’s performance.
Products should be tested at both chain and independent retailers, setting up tastings and securing your product’s best possible shelf position at these off-premise locations. On-premise, menu listings and drink features can assist in gaining exposure, but more importantly, research and discuss with your distributor the right kind of accounts for your product.
During the test period, the important metrics to monitor are 1) number of accounts, 2) re-order rates, and 3) conversion rates for locations where sampling is done. Having the right metrics that demonstrate profits, performance, and revenue growth help show that your product is differentiated and worthy of a distributor’s attention.
Choose Distribution Partners
Of course, many emerging brands would like to partner with a large distributor in a primary market, but it’s important to note that national distributors have thousands of brands to split their resources and attention. It is often worth it for newer brands to explore regional or specialized distributor partners.
A viable approach can be to seek out an importer who already has an established relationship with a distributor. Mid-sized importers with a small portfolio of brands have connections across the entire distribution network and can dedicate the necessary time and attention to brands during the nurturing years.
Once you’ve signed a distribution agreement, regardless of partner size, it’s crucial to build relationships with sales representatives. Mining these relationships will yield more exposure for your products.
Finally, some brands choose to take a do-it-yourself approach to market entry where self-distribution is permitted. In this strategy, you’ll need to build and maintain your own marketing, sales, and distribution channels. Regardless, this can work if your product is highly differentiated and gets consumers on your side quickly.
Most importantly, remember that brand building takes time. Make sure to balance your volume and distribution goals with your resources.