In late October, we received an email from Lori Edelman of Second Self Media asking if we’d be interested in reviewing a new book by Arthur Shapiro, the man behind BoozeBusiness.com. Since this book is all about a topic that is near and dear to our hearts (and our livers!), we obviously said yes.
Mr. Shapiro’s book, Inside The Bottle, covers his 30+ years in the wine and spirits industry and is a compilation of the almost 300 articles that he’s published on his website. From his 15 years as a senior executive at the Seagram Spirits and Wine Company to his experiences as a consultant to both big and small companies in the wine and spirits industry, this book is chock full of stories about his experiences in the booze business.
Throughout Inside The Bottle, Mr. Shapiro works like a master blender at a top notch distillery by balancing war stories from his days at Seagram with current booze industry stories. One minute, you’re flying with him to Stockholm in the Seagram private jet to put the finishing touches on the Absolut deal. The next minute, you’re learning about new product development (the Coyote Tequila story) and the importance of your product actually tasting good (“if it tastes awful, it’s doomed”). And then the next minute he’s telling you about what it takes to succeed in the booze industry by introducing you to people that he’s grown to respect and admire over the years (i.e. Jackie Summers of Jack from Brooklyn, our friend Allison Patel of Brenne, Dale DeGroff, Larry Ruvo of Southern Wine and Spirits, and many others). From start to finish, Inside The Bottle is an informative and highly entertaining read. If you’re as fascinated by the booze business as I am, then I highly recommend that you pick up a copy.
In case you haven’t noticed, we’ve published quite a few interviews on this here blog in 2016. Bartenders, Brewmasters, Wine and Spirit Importers, and even a Cruise Line Executive have all stepped up to the plate for a little banter with your Booze Dancing friends, so when Lori Edelman initially contacted us about Inside The Bottle and asked if we would be interested in speaking with the book’s author, we of course jumped at the opportunity. While we would have loved a face to face with Mr. Shapiro over a couple of drinks, given the time of year (Bah Humbug!), getting to NYC wasn’t happening, so we had to settle for a quick chat via email.
Let’s move on to the Q&A…
Question 1: In your introduction to Inside The Bottle, I really appreciate how you went the full disclosure route by stating that the book is basically a compilation of your BoozeBusiness.com posts (with updates and enhancements whenever necessary). With all of the new distilleries that keep popping up all over the world and all of the mergers and acquisitions that keep happening in the industry, how do you think it will affect revised editions of your book in the future?
It is likely that there will be a More Inside the Bottle edition in the future, perhaps focusing more on the people and brands who are part of the emerging new booze business world, and less on the stories. In the meantime, there is a novel in the works that will provide additional insight into the industry. Other ideas for future nonfiction books on the industry may focus on the changing bartender role or on the new breed of entrepreneurs entering the craft and startup fray.
Question 2: On numerous occasions throughout the book, you stressed the importance of target marketing via Social Media and other digital advertising channels, as opposed to mass media advertising, when promoting a particular spirit brand. We receive emails from distillers, brewers, and PR firms that work for distillers quite often, asking us to help promote their products. How do you see outreach to bloggers as an effective strategy in helping to promote a brand?
In a number of ways..
First, the alcohol industry, in all categories (spirits, wine, and beer), has become a word-of-mouth business with focus on the influencers among the drinking public. This favors blogs about the industry and the audiences that they reach. More and more, I’m finding that consumers are fascinated by the business and are hungry (or should I say, thirsty) for information and equally anxious to share what they learn.
Second, this phenomenon is not lost on the big brands, which have learned that ‘micro’ marketing is more effective (in reach and cost) than mass marketing. To paraphrase a thought in the book – not everyone exposed to a mass ad is a drinker, but all of a blog’s readers are interested in the category/topic covered.
Question 3: Whenever I’m watching a movie or TV show, I always pay attention to the brands that are featured on screen (watches, cars, clothes, computers, etc). Over the past few years, I’ve noticed that alcohol brands are being mentioned quite often. It happened in practically every episode of Justified on FX (good guys drink Blanton’s, while bad guys drink Pappy Van Winkle. And soon to be dead guys drink Mags Bennett’s Apple Pie Moonshine!), and in a recent episode of Atlanta (also on FX!), Donald Glover’s character explicitly asked for Laphroaig. How does the relationship work between liquor companies and networks/movie companies and what do you think of the overall effectiveness of this as a marketing strategy?
Great question. I’ve been very much involved in product placement over the years and have witnessed the power as well as the failures. It’s a gamble. (See page 79 in the book for good examples.) Generally, if the placement seems natural and fits the story or the character, then it will be more impactful that a “forced” placement.
On balance, I’m a fan of product placements but more recently, I’ve been admiring the potential of branded content (sometimes called branded entertainment) and its ability to reach important audiences. Here is what I’ve learned about product placement (p.80); copied here for your convenience:
- Positive impact on a brand is not a foregone conclusion. No matter how well the product is shown and integrated, sometimes the only winner is the TV or film producer.
- For adult beverages, how the product is portrayed is as important as the portrayal itself. Enough said.
- If the story doesn’t click with audiences, the brand becomes “collateral damage.” Unfortunately, there’s no real way to predict it—but it’s worth the shot.
Question 4: You mentioned in the book that major liquor companies like Diageo, Campari, Beam Suntory, etc. actively pursue the acquisition of small, established brands in order to fill niches in their portfolios (and make money of course!). If you were still on that side of the business, what boutique brand would you go after and why?
Wow. I may have to charge you a consulting fee! Seriously though, it is less expensive to buy a new brand than to build it. If I were still on the big company side of the business, I would look for the following:
- Is the brand a me-too or does it have some uniqueness that sets it apart from the competition?
- Does the category have further room for growth or do other large players control it?
- What types of consumers are they attracting? Is its market loyal or just passing through?
- What are the brand’s reorder rates? Does it sell through?
- Who are the people behind the brand and is their vision sustainable?
Question 5: Although your book focused on the liquor industry, you did talk a bit about Craft Beer. Distribution and shelf space is one of the biggest hurdles that a small Craft Brewer has to face, i.e. getting their product out to customers. That being said, based upon my brief visits to a few small breweries in New England, South Jersey, and Southern California, it seems like many of them are keeping their distribution very local and selling the majority of their product at the brewery itself. This is great from a beer tourism perspective, but it sucks from a consumer perspective (i.e. “Yah Cahn’t Get That Crahft Be-yah He-yah!” Said in my best Maine accent). So what’s the deal with this? How can this Craft Brewers’ strategy of cutting out the middle man be sustainable long-term?
As you know, the alcohol industry is a 3-tier system whereby the manufacturer cannot sell directly (with few exceptions) to the consumer and must use a distributor (middleman) to sell to the retailer, who in turn sells to the consumer. Clearly, this penalizes the craft brewer in favor of the mega brands.
The wine people have moved more and more to a direct to consumer business, where allowable. Spirits are trying to do the same through companies like Drizly or local retailers.
The Beer Business Daily newsletter, just this morning, wrote that there’s a loophole known as “premises use,” which allows beer to be sold “directly from brite tanks to consumers at breweries and is growing rapidly.” It’s a variation on brewpubs. Their estimate is that it is roughly 10% of draft sales. But, all these sales are a drop in the bucket and the 3-tier system is not likely to change any time soon. So while this “cut out the middle man” approach is growing, it (the 3-tier system) will still be there for some time to come.