9 Tips To Grow Your UK On-Premise Sales
BTN gets insight into the UK premium and niche beverage market from David Flockhart, CEO of Premium Beverage Associates.
The UK market time was once dominated by the big brewers, who foisted their tasteless, gassy suds on to an increasingly fed up public. The terms “Craft & Premium” didn´t really exist as the big breweries also owned most of the UK´s pubs (unlike the USA), so the market was “tied” to the big brewer's brands with few other choices.
Slowly, the market opened up owing to pressure groups and governmental changes to the Tied brewery system, the big boys voraciously bought each other up, closed most of the big breweries and became leisure & property companies, more about property values than making great drinks brands.
Much like the USA, craft brewing and craft distilling has taken off like a rocket and now looks unstoppable.
The UK has one of the world`s most vibrant premium drink sectors, with London, in particular, the best launch pad in Europe for new brands. Over 15, 000 licensed outlets in London and 160, 000 in total throughout the UK
Importation and distribution is relatively easy via the bonded warehouse system, with no restrictions on how many distributors you can have in the UK and with the single EU market of 500million people, it´s one bottle size and one label for all markets, simple and effective with minimal cumbersome state by state regulatory issues that slow up progress.
Again...If it works in London...it can work anywhere!
This is true to a point, as getting it wrong in London is expensive, but getting it right can be as easy the brand owner's desire to succeed. If you are ready to put in the extra hours and dedication to your brand, then success depends on the following factors.
1. How should niche brands select what type of accounts to approach?
David Flockhart: In London, there are over 15,000 outlets, of which 2000 could be considered premium, but as many of the traditional pub styles of outlet converts to a more upscale environment, which is increasing substantially month by month as upscale food, decent wine, craft beer and premium spirits become the norm. So, you or your agent should have a carefully “Segmented Database” of outlets that are pitchable in line with the chosen positioning for your brand and that your brands are presented to the outlets and their key buyers if part of a group. Many individual and small chain outlets in the UK are now independent and have buying power and you and your agent will work closely with them and their preferred distributors.
2. Whats the best way for brands to get their first meeting?
Make sure that your brand is ready for the market, with the correct bottle size, excellent UK/EU ready packaging, good peer reviews - this is the start of the brand credibility exercise.
If you use an agency, your agency partner ( and their distributors ) will have sales teams that are well known to most of the key on-premise accounts that they have identified as targets, via your brand positioning and the market segmentation exercise. Therefore getting that first foot in the door is a relatively straightforward process as long as the brand proposition stacks up and will add value and prestige to the outlet.
3. When is the best time to approach new accounts?
Experience shows us “that there is no real best or worst “ time to pitch new brands to premium on-premise accounts, with the notable exception of the month of December, when all listings have been finalized. Again, it´s all about the relationship between the agents, their sales teams, the buyer and his bartenders, who are ultimately the best brand ambassadors, if they are on your side. Great new brands will always receive a fair hearing and review at any time of the year.
4. What are the most important points a retailer wants to hear about a new brand?
• Is it truly premium, cutting edge and innovative.
• Will its presence on my shelf enhance my outlet?
• Is it profitable? If it´s truly premium, then usually the cash margins are higher and the answer is usually yes
• How is the brand being promoted and will they receive brand and cocktail training from the agent.
• Will the agent and sales teams constantly offer brand support, the answer must be yes?
5. Premium on-premise accounts are often tough to crack. How important is it to use a rep or agency that has connections?
David Flockhart: Experience has shown that this is the No.1. a key issue in launching a new brand into London and UK. Using a well-connected London based drinks specialist is essential for success, as there are many foreign brand owners who will attempt to do it on their own or try to find an “importer/distributor, which is like “putting the cart before horse”. There is some commission only based brokers around, but that’s a very risky strategy and usually, fails. What is required is professional brand planning that includes a small regular financial commitment from the brand owner to get serious about their intentions in the UK and ultimately other EU countries. A competent specialist drinks agency representative will handle everything you need to enter the market, from importation requirements, bonded storage, sales, marketing, implementing & managing distribution, Media & PR, promo events, in fact, total brand management. That is a “paid for” service plus a commission on sales and costs can usually be recouped in year two, even if the brand is only moderately successful. Of course, if your brand fly´s then you have cracked one of the world´s key markets, without spending millions in the process.
6. How does a new brand gain market presence and how important is online marketing?
David Flockhart: Brand marketing is rapidly changing, but still the best way to gain initial brand recognition and loyalty is to build it through personal relationships with the key players who have to purchase and influencing power. London is a huge city, but there are approximately 200 key people who can help make your brand fly as their social networks are huge and influential.
A top agent/representative will know these people and more importantly, they will know the agent and his teams. Building a social media presence is an essential part of the toolkit for successful brand building and all new brands should understand the powerful potential of the getting your brand message out fast...and to the right people and their followers.
7. What margin should niche brands be expecting from accounts?
David Flockhart: UK pricing is a complex issue, as the import & excise duties make up a significant proportion of the end price and this requires detailed work before launch. Depending on your brand positioning, distributors will usually look for around 17-25% margin, with retailers looking at 100 - 200% markup inclusive of VAT (20%).
8. How do you strategically price your brand to be successful? Is it smart to discount your brand to fill a menu gap?
David Flockhart: It is never smart to discount a new premium niche brand...that's the door downstairs to the failure basement.
By all means help with some promotional stock, event participation and POS materials, but NEVER discount your premium brand when launching.
If the UK is your target, then your agent will work out a pricing matrix that reflects the brand positioning, competitor brands and agreed mutual targets and how to get there.
9. If the brand takes off in London, how does it work in the rest of the UK and to launch in Europe?
David Flockhart: If you have good coverage in London in the first 4-12 months, then further distribution will be extended out by your agent, to every key city in the UK and their local distributors, who can be supplied directly via London distributors or directly from the bond account. Usually, one or two top distributors will wish to be the main lead distributor for the UK after success is shown at on-premise level....you as the brand owners are now in the driving seat, you have a successful, desirable, growing brand and you can be more confident of achieving the correct pricing and pathway to success throughout Europe...because what happens in London...Europe follows and fast.
BTN wants to extend our thanks to David Flockhart & Premium Beverage Associates for their insight into the UK Market.
David Flockhart is a well-known UK drinks industry sales & marketing specialist, niche brands pioneer within the premium beer & spirits sectors, well-published drinks journalist and all round niche brand, enthusiast. Now CEO of recently formed Premium Beverage in London, David cut his teeth at the sharp end of the business importing, distributing and kick-starting the fledgling premium & craft beer market with the launches of Hoegaarden, Leffe and lots of other weird & wonderful beers.