Pulling the lower-the-price lever to gain market share in a highly competitive category such as adult beverages is tempting. But it is not a good idea for all of the following reasons:

• Erodes profit margins
• Provides short-term gains at the expense of long-term strategy
• Reduces ability to invest in innovation
• Lowers perceived value deterioration
• Dilutes brand image
• Puts you in an unsustainable price war
• Hinders your ability to raise prices later
• Puts too much pressure on the need to increase the volume

So, what should you do instead? We’re so glad you asked! Keep reading.

1) Protect and strengthen your brand equity

Brand equity is a brand's value and strength built over time. Preserving brand equity should be your top priority. Every spending decision must be weighed against the potential threat to brand equity. 

Another way of thinking about brand equity is “pricing power on the shelf.” 

Here are twelve practical ways to strengthen your brand equity:

• Ensure the quality and consistency of your wines
• Develop a compelling brand story
• Establish a strong and distinctive visual identity
• Offer exceptional customer service and support
• Engage customers through education to position your brand as a knowledgeable and trusted authority
• Foster a community of loyal customers through wine clubs, email marketing, and social media engagement
• Embrace sustainable and environmentally friendly practices in wine production and packaging
• Utilize targeted marketing campaigns and public relations to reach your target audience
• Innovative and attractive packaging to stand out on the shelf
• Expand distribution and channels to increase visibility and credibility
• Leverage awards and reviews
• Develop a strong online presence via your website and eCommerce platform to reach younger, tech-savvy consumers

Strengthening your brand’s equity involves combining all of the strategies listed above. This will enhance your brand’s recognition, reputation, and customer loyalty. 

2) Be selective in the accounts you target

One of the best ways to gain market share is to target the right accounts to increase depletions with less time and effort.

The most effective way to do this is to narrow your focus to only the highest volume accounts.

Your competitors are unlikely to do this as most sales teams use a more-is-more approach to tackling the account base. They believe in a wide and shallow approach instead of a narrow and deep one. The result is a lot of “waste” in time, and money, and, of course, fewer sales. 

It is critical that sales teams “fish where the fish are.” This takes discipline, research, and, of course, data.

Consider these examples:

Distillery A tells their salespeople to spend X number of days per week “in the market” selling. The belief is that more sales calls equal more accounts. They give very little thought to WHICH accounts to call on. The game they are playing is a results-by-volume approach. The result is lots of activity but not necessarily lots of depletions. 

Distillery B takes the time to research the richest targets in the market (typically based upon volume potential) and then restricts the activity of their sales team to ONLY these accounts. The results are a dramatic acceleration of depletions and big gains in market share. 

The key to success is using objective, empirical data to identify the right accounts to target. Here are some of the data points to leverage:

For on-premise:

• Start by analyzing your own depletion data. Which active accounts sold produce the highest volume per POD (velocity)? Carefully study the “attributes” of these accounts for clues that can lead you to others like them. For example, restaurants with lots of private dining space have many times the volume of those without. The same goes for lots of outdoor seating. 
• Another powerful data source is the internet. Utilize Google, Yelp, Open Table, Eater, and Tripadvisor to research which accounts are the busiest (defined by comparatively higher foot traffic). There is a perfect correlation between foot traffic and sales volume! The average restaurant has between 200-400 reviews on Yelp. However, the highest volume restaurants have well over 1,500 reviews, and some as high as 4,000-5,000. The Yelp app allows you to search for restaurants in any US market and then sort the results by “most reviewed.” This is an incredibly reliable metric! This is one of the best ways to find high-value target accounts you’re not currently calling on but should. 
• Consider the “day parts” most aligned with the type of products you sell. The busiest brunch restaurants sell lots of vodka for Bloody Marys and tons of Champagne and sparkling wines. Accounts with robust happy hours or late-night traffic sell large volumes of cocktails and wines by the glass. You get the idea. 

For off-premise:

• Take a hard look at your own depletion data for metrics like Sales per POD (velocity), frequency of ordering, # of PODs per account, and overall depletion volume. Carefully study the “attributes” of these accounts for clues that can lead you to others like them. For example, independent package stores that have a well-developed eCommerce platform and a clear emphasis on email marketing do far more volume than the average store.
• Yelp and Google can also be rich sources of information about foot traffic in independent off-premise accounts. The Party Source in Newport, KY, has nine times as many reviews on Yelp as its next closest competitor. In Nashville, Frugal MacDoogal and Midtown Corkdorks have far more reviews than any other stores in the city. 
• Carefully inspect the websites of package stores. Is their website optimized for converting visitors to their email list? Do they have a robust online shopping experience? Are they a “Drizly Partner?” Do they offer services for handling large events and weddings? 

Other key data sources include existing field sales-level activity (pulled from your CRM system) and insights from your planogram system (share of shelf info). 

By being more strategic about the accounts you target, you can greatly accelerate your sales results. To the degree you do this, you will most assuredly gain share versus your competitors.

3) Understand your markets and competitors

Here is where data truly comes in handy. IRI and Nielsen data are the most obvious market and competitor data sources. But many other sources exist, such as TARGIT, NABCA, SipSource, and IWSR. 

But having access to the data is not nearly enough. You must be able to process, analyze, and even visualize the data quickly and easily. 

Investing in tools and platforms to leverage data is essential to gaining market share. These investments pay dividends continually. 

When evaluating your options, consider these critical questions:

• Can they transform data into actionable insights for more effective sales and trade marketing?
• Do they have integrations with other tools and data providers?
• How robust and user-friendly are their dashboards and reports?
• Are their services and tools specific to the adult beverage industry?
• Can they pull together internal and external data (i.e., supplier + distributor + agency partners)?
• Can they also manage pricing and trade spend?

Brand owners serious about gaining market share must also get serious about their suite of technology solutions. 

Your distributors are also a treasure trove of market data, which is an important reason to seek better relationships and communication with them. 

4) Use innovative sales and marketing strategies

What used to work may no longer work (or work as well). “Innovation,” especially related to accelerating sales results, is a well-known weakness in our industry. We tend to be so focused on the products themselves that we fail to fully leverage innovations on our businesses' sales and marketing end.

As the rest of the world embraces technology, the wine and spirits industry must catch up to other consumer product categories in adopting technology, data, and analytics, potentially hindering its growth and profitability.

Some of the top areas of focus should be:

• Expert use of CRM
• Trade promotion management
• Automation in price collection, aggregation, and reporting
• Retail space management
• Category management

Other critical areas of innovation in marketing strategy involve the use of artificial intelligence, a focus on sustainability, and balancing product knowledge with solid business acumen.

One of the simplest ways to start on the path to innovation is to use your sales resources more effectively and efficiently. This is an essential component of gaining market share. 

When it comes to the expert use of a CRM system, many companies capture contact information but fail to apply a methodology to execute against a sales strategy and enrich the visibility to more than just depletions or sales data. Expert use of the right CRM system goes well beyond simple data capture!

A great separation in our industry is taking place right now in the use of technology. Resolve to take the necessary steps to avoid being on the wrong side of this split.

5) Focus on customer service excellence

Of all the ideas presented in this article, this is the one most within your immediate control.

In high-competition environments like the wine and spirits industry, customer service excellence is increasingly recognized as a key differentiator. 

With this in mind, we present a shortlist of things all adult beverage companies, large and small, can start improving immediately:

1. Transparent communication. Clear, honest communication builds trust. Be as open as possible about policies, procedures, and any changes in service offerings. Your customer-facing website is a great place to start.
2. Build a customer-centric culture. This philosophy needs to be a shared goal across your entire organization. Many companies say they are customer-centric, but few actually are. 
3. Solicit and act upon feedback. You need systems to acquire, measure, and act upon customer feedback (ideally in real time using live chat).
4. Employee training. Your employees are the front line of customer service. But, without regular training on executing your company's commitment to customer service excellence, you risk continually falling short. 
5. Proactive problem-solving. Anticipate potential problems and act on them before they impact your customers’ experience.
6. Speed and convenience. In today’s fast-paced world, customers value fast, personalized service.
7. Leverage technology. Technology like CRM systems, chatbots, and artificial intelligence can help you consistently provide best-in-class service.

6) Form strategic partnerships

While this can be a very broad topic, allow us to provide some specific, practical ways even the smallest brands can form partnerships that help grow market share:

• Joint marketing and promotional efforts
• Access to new technologies through companies that possess this expertise
• Leveraging your partners' customer base (and vice versa)
• Expanding distribution networks 
• Global expansion

Strategic alliances and partnerships can provide wine and spirits companies with many benefits. 

Too many brands isolate themselves from collaborations that could be potential game-changing opportunities. 

A practical way to get started is to gather your team and spend time brainstorming about potential partnerships to leverage. Throughout history, the most innovative thinking has come from front-line employees (not just from the “ivory tower”).

Invest in new product development

How much of every dollar of revenue does your company invest in R&D? 

Here’s what some of the top companies listed on the Nasdaq spend on R&D as a percentage of their revenue:

• Amazon (14%)
• Meta (30%)
• Google (14%)
• Nvidia (27%)

Significant investment in R&D is likely expected among the top tech companies. But the fact remains that focusing on innovation is equally important to wine and spirits producers, if not to the same degree.

This industry is not one to stand still. And while we’re not for one minute suggesting you chase every fleeting trend, we suggest you protect and grow your market share by having a finger on the pulse of changing consumer preferences. This takes investment, and the payoff in gaining market share makes it all worthwhile.

Here are three trends that are most likely here to stay, according to Truist:

• A growing commitment to healthy options
• Persistent premiumization
• The quest for unique flavors and experiences

For the wine and spirits category specifically, we can easily add these “sticky” trends:

• Focus on sustainability
• No and low alcohol
• Alternative packaging

New product development is mandatory if growing your market share is on your list of priorities for 2024.

Keep your hands off the lower-the-price lever!

We highly advise against price cuts in the adult beverage industry, advocating instead for strategic alternatives like strengthening brand equity, targeting high-volume accounts, utilizing data, innovating in sales and marketing, emphasizing customer service, forming strategic partnerships, and investing in new product development.

We would love to have a conversation with you about how to implement these innovative strategies. It’s what we do! We invite you to click here to schedule a no-pressure conversation about your company’s needs and desires. You don’t need to go it alone!