Spirits Brand Global Launch
The Eastern European spirits market, though impacted by heavy regulation and in some cases the banning of certain kinds of advertisements, continues to grow. In a 2017 report, the compound annual growth rate (CGAR) for spirit consumption in Eastern Europe was estimated to grow a moderate 1.8 percent over a five-year period from 2016 through 2021. Russia represents 61.2 percent of the market, with vodka sales being the most purchased spirit, commanding over half of the market share. Poland and Romania trail Russia with a respective 9.3 and 7.1 percent share of vodka consumption.
The Asia Pacific region accounts for 57.8 percent of the total value shares in the global market and was reported to grow at a CGAR of 5.4 percent through 2022.
There are opportunities to grow a spirit brand in both Eastern Europe and Asia using a focused strategy that considers the region's market dynamics and unique challenges. Market research will help the probably of a successful global launch. However, trends point toward strong brand positioning, product differentiation, and online marketing efforts for a strong global impact.
Marketing Costs For Launching A Spirits Brand in Eastern Europe and Asia
While specific costs relating to launching a product in Eastern Europe or Asia was not found in our research, several resources described a few things to consider when launching a product globally. There are many variables to consider such as, how much about the product does the market already know? How large is the target market? Where and how will budget be spent? To start, SIS International Research lists 22 countries that comprise Eastern Europe. How a company plans to market their product and where they plan to target their efforts will affect the cost.
Laurel Mintz, CEO of Elevate My Brand recommends earmarking 12-20 percent of projected revenues for marketing efforts, which can eventually be reduced with consistent product sales.
The Hook Agency recommends that seven to eight percent of gross revenue should be spent on marketing. This recommendation pertains more or less to the ongoing costs of marketing rather than a global launch.
Diageo, one of the largest producers of spirits spent more than one billion (USD) in global marketing activities in 2020.
According to Entrepreneur magazine, a great deal of time and money should be spent on educating consumers if they are not familiar with a product.
There is a great emphasis on branding. Forbes magazine gives a broad range in terms of cost for branding, from $1,000 USD to $50,000. While a brand image for a product may be established in one market, launching the same product in another market may need to be re branded due to cultural considerations or to build brand perception and awareness.
Alliance Experts provided generic information regarding global expansion costs. They feel that a new market entry can cost at least $100,000 USD in investments. Again, the cost can vary based on the type and complexity of the product. Below is a graphic describing the investment by product type.
Global Launch Marketing Strategies
1. Brand Education
When launching a brand globally, efforts around refining the branding message to resonate with the consumer is of utmost importance.
Consumers in Eastern Europe are increasingly interested in premium spirit brands that are not currently available in their market. However, some challenges are posed when attempting to reach new consumers due to alcohol regulations that limit spirit brand advertising in Eastern European countries. These restrictions are what prompted the regions effected to become known as "dark markets". In dark markets, alcohol ads are heavily restricted, or even banned. Some sales teams take to the streets to create conversations to increase knowledge about their product.
Some spirit companies have been able to navigate around the limits of dark markets by associating their brand with non-alcoholic products to increase brand awareness.
An article in the online magazine Beverage Daily, says that spirit brands need to budget a good amount in marketing in China where imported spirits represent only five percent of the country's spirit consumption. An Australian based company called "The West Wind" describes having invested 18 months of focus around developing their brand's story and connecting with consumers via taste tests and classes to make a notable mark in China.
The Beluga Group, a leading producer of distilled spirits in Russia, announced in their first quarter operational results that strengthening the position of their product gave them the edge to grow their spirit and wine sales by 41 percent. They also honed their efforts around digital tools, managing prices, and a customer focused strategy to provide better service.
A report on China marketing trends, mentions a study conducted by Field & Binet’s research that recommends a marketing budget should allocate 60 percent toward growing brand awareness and 40 percent on consumer purchasing initiatives. Some tools highlighted in this research are to concentrate on building brand equity by being more engaged in social selling tactics by leveraging the opportunity to reach the consumer with short video marketing, social platforms like WeChat, and Weibo, and to consider mobile radio and podcasts and collaborations with growing gaming and eSports industries.
Neilson, a data a measurement firm, explains how advertising restrictions in Eastern Europe has prompted investments into eCommerce as more alcohol purchases are made online. They also emphasize the growing popularity of spirits with lower alcohol by volume (ABV) due to a trend toward "healthier drinking".
2. Product Differentiation
Asia Import News reports several trends effecting industry growth in the current alcohol market. These trends include the premiumisation of spirits, a shift toward products with lower alcohol by volume, alternative packaging, more affordable price points for premium brands, customer experience and convenience (the ability to purchase alcohol online.).
China has a market five to ten times more competitive than other markets due to a large amount of competitors living in any given category. Effective marketing in Asia should focus around creating distinction. In China, where the larger players enjoy 35-65 percent of the market share, niche markets experience strong consumer loyalty and a more profitable LTV by focusing their strategies around building their brand.
Specific information relating to average costs of launching a spirit brand or another product globally was not found in our research. We interrogated many resources to find recent case studies or any relevant information to suggest average marketing spend specific to Eastern Europe, Asia or other markets. We uncovered a broad range of variables that could determine how much a company is willing to invest or have invested based on projected sales volume, the size and location of the target market, the length of the marketing campaign, among other considerations that are unique from one company to another. The marketing strategies outlined in this brief were selected based on recurring mentions of those strategies in the opinions of global marketing experts.