Forward-thinking Marketing Is About Looking Back

By: Jim McCune

HefeWheaties is a new beer from Fulton, which collaborated on the brew with another Minneapolis company, General Mills.

Many beer brands have recognized the value of “nostalgia marketing” by tapping into our fondest childhood memories to sell more.

But What is Nostalgia?

  It’s a human emotion defined as “a sentimental longing, or affection for the past”.

  As we grow older, we develop fond memories of our younger days. From the food, candy, and ice cream we ate, the events we attended, the music we listened to, the video games we played, the clothes and sneakers we wore, to the TV shows we watched. 

  Your experiences from your past, form your personality and identity today.

  Scientific research has proven that nostalgia is a powerful feeling that provides a pleasant effect to both mind and body, and the natural phenomenon is sometimes referred to as the “warm and fuzzies”.

  It seems the more we move into an age of technology and innovation, the more we enjoy revisiting a simpler past and the joyous memories that come with it.

  Nostalgia can be activated at any given moment by any of our senses. A certain sound, scent, or color can trigger a nostalgic episode. Nostalgia can appear as a flashback, a vivid memory, or a wave of seemingly out-of-place emotions.

  One of the reasons we love Netflix TV show “Stranger Things” is because of our desire to look back fondly on our own formative years. This show really nailed the time period of the eighties and allows viewers to relive certain aspects of their past that they enjoyed.

  Nostalgia triggers emotion, and emotion activates purchase. This is why nostalgia is smart and effective marketing tactic.

  Breakfast cereals, vinyl records, candy bars, gaming systems, ice cream cake, and literally everything in between. Brands are engaging beer drinkers by tapping into their positive memories from decades past in fun, innovative new ways.

  Retro tactics have found their way into most marketing channels. Throwback Thursdays hashtag across social media, Facebook’s “On This Day”, and apps like Timehop now account for hundreds of millions of new photos linked to personal memories.

  In a series of experiments conducted by the Journal of Consumer Science, they found that consumers who thought about “the good old days” were more willing to spend money. In contrast, less likely to spend bucks when thinking about “the present or future”.

  The research study examined how nostalgia evoked feelings of connectedness and community due to childhood memories being linked to friends, family, and a sense of trust.

  Other interesting findings from the study is that nostalgia is experienced at least three times a week by persons of all ages, and across all cultures.

  It was also determined that most persons see their nostalgic event “through rose-colored glasses,” meaning they were revising history in their favor.

  Additionally, and most interesting, persons who were exposed to extreme heat or cold found relief and comfort from these adverse states when experiencing the joy of nostalgia.

  The emotional component of your brain is far more advanced than the logical side.

  80% of your decision-making derives from emotion rather than logic. This is why most consumers make their purchase decision at the beer shelf based on what they see and feel.

  But, 64% of this group admitted they would change their mind at the last second if “something else better” caught their eye.

  Smart brands are successfully using the timeless marketing strategy to attract new drinkers by elicit the stopping power and emotion in their branding. The results have been extraordinary with the GenX and Millennial aged groups.

  If you peruse the shelves of your local beer distributor, you’ll quickly see how evident, and brilliantly, nostalgic marketing is being employed by many beer brands.

  Why does nostalgia resonate so well with these marketing segments?

  Mainly because childhood for them during the 70s, 80s, and 90s (commercially-speaking) was all about them, and chock full of awesome. So, looking back on these days, there’s bound to be a lot of great memories.

  Children born mid–1960s to 1970s were considered the first generation of children to be directly advertised to. They would be known as “Generation X” and marketers discovered that this segment was impossible to define.

  Advertisers eventually discovered that although GenX children were not the purchaser, they could use them as “parental influencers”.

  If they could get a kid super excited about their product, they would eventually get to the mum. Many parents reported being pestered by their children for products they saw on television. This new marketing tactic was termed “pester power”.

  The result was an onslaught of exciting new youth products advertised directly to kids during their Saturday morning cartoons, movies, comic books, video games, and beyond.

  The pester era was fueled by a major surge in birthrates during the 80s and 90s that ushered in the new marketing segment, known as “Generation Y” aka Millennials.

  Studies at the time estimated children spent an average of 28 hours per week watching TV and playing video games which exposed them to approximately 20,000 ads a year.

  During these 3 decades the youth market became expansive and accelerated economic growth around the globe to the tune of $250 billion today.

  Millennials were also a big part of the craft beer boom. Over the past eight years, as this age group reached legal drinking age of 21, the craft brewing industry experienced its most significant growth.

  Millennials were labeled the “Peter Pan Generation” due to their tendency to delay “Adulting” for longer than any generation prior.

  So, it’s no wonder, if a beer brand could leverage favorable memories from our childhood and evoke these warm–fuzzy feelings that allow us to suspend our disbelief for a few moments, that we’re actually adults … you’ve likely made the sale already.

  You’ll also forge a meaningful connection with this consumer at an extremely–emotional level that results in brand loyalty (a consumer quality that hardly exists in beer today).

  An alcohol watchdog group recently reported that consumer complaints were stacking-up. As increasing numbers of beer brands rollout nostalgia in their marketing, more cases are being upheld because their label “appears to be aimed at kids” or “encourages immoderate consumption.”

  It’s been urged that breweries, marketers, and designers tread more carefully with the design of their retro packaging that depicts candy, toys, and cartoons. Ensuring the alcoholic nature of their beverage is communicated clearly, and when appealing to one’s inner child, not going too far to inadvertently appeal to a child.

  Check out these 5 beer brands that did great jobs using nostalgic marketing:

1.  Captain Lawrence Brewing Company of New York collaborated with Carvel Ice Cream to make “Fudgie the Beer” a 6.0% ABV beer brewed with Carvel signature chocolate crunchies, fudge and ice cream from their famous cake. Fudgie the Beer has smooth creamy cocoa notes with a roasted crunchies finish. (https://fudgiethebeer.com)

      This innovative concept worked so well, Captain Lawrence Brewing extended the line with Cookie O’Puss St. Patrick’s Day Beer, and Cookie Puss Birthday beer.

2.  Virginia-based brewing company Smartmouth is releasing a “magically delicious” IPA with all the warm and fuzzies. “Saturday Morning” is a throwback to the early mornings in front of the TV watching cartoons in your pajamas eating your favorite cereal. Smartmouth brewed with Lucky Charms-inspired marshmallows. (https://smartmouthbrewing.com/beers)

3.  450 North Brewing Co. of Indiana is pushing the envelope with an extensive line of mouth-watering retro packaging. Peanut butter cups, ice slushes, fruity and cocoa pebbles, firecrackers, French toast sticks, rocket popsicles, marshmallows, Nintendo games, tacos, and anything else you loved as a kid is represented. (https://www.instagram.com/450northbrewing)

4.  Two of America’s iconic beverage brands, Harpoon Brewery and Dunkin’ of Massachusetts collaborated on a limited-edition 6% ABV Coffee Porter. The co-brew combines the taste of Dunkin’s Espresso Blend Coffee with Harpoon’s famous craft beer for a balanced and smooth brew offering robust and roasty notes. (https://www.harpoonbrewery.com/beer/dunkin-coffee-porter)

      Harpoon and Dunkin’ just released a bright, summery follow-up brew with “Dunkin’ Summer Coffee Pale Ale” at 5% ABV.

5.  California’s Altamont Beer Works has an extensive line of cool–looking brews. They left no childhood stone unturned with their heady, and retro plays. Catty Shack, My Little Pony, Grand Theft Auto, NKOTB, Crunch Berry Cereal, to The Dude. (https://altamontbeerworks.com/1/beers)

  Nostalgia is a positive emotion. It’s more than a passive flashback to our yesteryear, it has strong implications of our future. It temporarily alleviates discomfort of our present and provides much needed motivation to head into our future.

  Like any trend that’s rediscovered and overused, nostalgia marketing will eventually be met with skepticism and quietly fade away, only to return again when today is tomorrow.

  Jim McCune is director of the Craft Beverage Division of Melville-based EGC Group.

Reach him at …

jimm@egcgroup.com

(516) 935-4944

Burning Questions From the Craft Brewers Conference (Part 2)

By: Jack McCraine – Firm Director, Baker Tilly

Continuing with part two of our Q&A from the Craft Brewers Conference from Denver, with additional follow-up questions to our panel of experts. It was clear that times are tough and brewers are feeling the pressure from every aspect of their business. Innovation and disruptive solutions to engage consumers and capture retailer interest were top of mind during our discussions.

  Consumers are using their disposable income on more than just beer, with consumption patterns and drinking occasions changing constantly. Generation Y and Z are entertaining spirits, RTD’s and wine as well as new and emerging industries in seltzer and cannabis (medical and recreational). Minimum wage pressures are challenging employee recruitment and retention, forcing pressure on engagement and culture. Virtual distributor models and companies like Amazon Prime are making distributors rethink and retool their sales and service strategies. 

  Diving deeper into your business plan and implementing a detailed strategy to scale your business to be more effective and efficient is a must do for brewers who want to enjoy continued success in the future. Here are some additional questions from our audience and answers from our Baker Tilly team of subject matter experts:

  Question: There’s a lot of data available and I don’t always have time to utilize it. How can I better use my data to run my brewery?

  Answer: Knowing what to track and having a process to capture and interpret the data is 1/3rd of the challenge. Another 1/3rd is knowing strategies and tactics to deploy that will correct or accelerate performance. The final 1/3rd is sharing the information beyond ownership and Sr. Management to really get your team moving in the right direction. At a minimum, record your own historic information to allow for benchmarking and variable pay opportunities that can be used to incentivize and motivate team members to accelerate performance. Here are a few good reports/charts to run:

Sales:

•   Pareto charts: They help identify the most frequent factor that you can count or categorize. Distributors, brands, SKU’s, reps, etc. These reports can be created at any level and visualize what’s helping or hurting the business. Brewery reps should spend half their time calling on these accounts.

•   Rate of sale: Measures how quickly volume is moving through a given account. This is very important to improve and an indicator of brand health.

•   Simple distribution: Number of buying accounts divided by total account base will show penetration of a given brand, SKU, etc. in a given territory.

•   Weekly time series (current and previous year): This can help identify significant events from previous years and allow you to prepare for them as they come back around in the current year.

Production:

•    Packaging efficiency such as yield target on loss: This is deeper look at breakage, low-fills and mislabels against a target/goal.

•    Yield target on loss: Hitting yield targets in total barrels filtered (by style). This shows tank utilization vs your target.

•    Reduce controllable production cost per BBL (by style, etc.): Your P&L should capture controllable COGS compared to last year.

Financial:

•   Gross profit trend lines before allocated costs: The overall percentage is important, yes, but the trend line is most important in this view. The reason you want to view prior to allocated overhead is to measure your real costs including labor. Utilization of your production facility will affect cost per BBL with allocated or overhead costs imbedded. This will allow you to forecast new brand costs, pricing and profitability.

•   Labor costs: Labor should be tracked not only to real production volume on a cost/BBL, but also as it relates to sales, overhead and management. This should trend down as your overall volume grows and efficiency improves.

•   Brewhouse and tank utilization: For obvious reasons, you need to set baselines for each of these and track overall utilization. It will allow the long-term forecasting of sales, capex planning and cash flow management.

  Question: When measuring break-evens (ROI), what is acceptable? How do I measure success? How many months/years?

  Answer: It depends. A loss isn’t a bad thing if your intention wasn’t profit but rather impressions. Creating a detailed business plan by department is the first step in understanding ROI’s. Each department should have KPI’s established that tie into the achievement of the plan/budget. Agreed upon actions and required resources should be identified, tracked and measured to achieve the KPI’s. Frequency of measure really depends upon what you are tracking. From a production standpoint, it could be by brew, by monthly/quarterly budget, etc., sales by month or distribution by quarter. These are good measures, but recouping profit only tells part of the story.

  Breakeven analysis is a great way to understand what is at stake or what you need to get back your investment. A standard percentage return is not always the best approach, but can be a good way to begin the discussion. There will be some things you can and should make more or less on depending upon the intent of the offering. You can put a breakeven on manpower, brands/SKUs, special events, etc., but all shouldn’t be the same ROI.

  From a timeframe standpoint, it would vary. People and equipment tend to have longer tails with ROI so those could scale quarters to years. Products and special event breakeven could be achieved overnight. It’s best to categorize the opportunity, apply a timeframe and capture it with a tracking/measuring system for future benchmarking.

  Question: How do you balance the setting of aggressive goals vs. selling correctly to the right accounts?

  Answer: Aggressive but realistic goals are great for any organization’s sales team as long as you have the following clearly outlined:

•    Variable pay: Compensation over the target so your team doesn’t stop selling after the objective was achieved in the 3rd week of the month. A threshold also needs to be set so you aren’t paying for easy layups too. 80% of achievement before 40% of payout is realized, or something of that nature. 

•    Standards: What does execution look like at retail? How many cases actually qualifies for a legitimate display? Is it the same for cans and bottles? Should there be a price on it? Pre-printed or handwritten? There are a number of things that beg to be defined. Salespeople want targets so they can be marksmen with their achievements of the objectives. You get what you ask for, so be specific in your standards with a document comprised of pictures and words.

•    Tools: Such as a POCM (point of connection material), account level data, profit calculator and a toolbox/kit with protocols for inventory replenishment:

           1)  POCM example:

•   11 x 17 accordion folder or box which includes the following:

A) Case cards and posters

     1)  Brand specific

     2)  PTC specific (all available pre-printed PTCs)

B) Sell sheets for all brands (core, seasonal, etc.)

C) Brand calendar

D) Brewery stickers

E) Tap stickers

F) Shelf strips

G) Tear pads (if applicable)

•   Coasters (where legal)

•   Case of glassware (where legal)

•   Tap handle (example)

•   Metal tacker (example)

•   Focus calendar – current quarter or year (wholesale sales rep distribution)

•   Brand matrix chart

•   Copy of retail standards

•   Bin displays (min of 1-2 per rep. for key account opportunities)

1)  Cooler with samples (ice)

2)  Tape

3)  Scissors

4)  Box cutter

5)  Zip ties

6)  Business cards

•    Structured selling process to clearly define, communicate and execute the critical actions of a sales call. The benefit is that standardization removes unnecessary steps and improves efficiency, sales productivity and focus of the sales team. The goal is for each salesperson to become a valued business partner with retailers and distributors through service, relationships, knowledge, collaboration and follow-through. Below is a brief example of a structured sales process:

  Our recommendation is to have the right goals set with the right accounts with the aforementioned in place instead of goals that don’t make sense for accounts and/or geographies that you are targeting based on your plan and budget.

  The goal of every good company is to plan for and achieve realistic business objectives that tie into all aspects of your business. The collaboration of departments into one business will help avoid pitfalls of silo development, which lead to mistrust within your organization and hinders the organization’s performance. As stated with these questions and answers, having a collaborated and efficient organization is the key. If everyone knows their role and targets (not just the sales team) then you can start to operate more effectively and efficiently as one company, tackling the industry together and scaling up efforts to drive elements of your business plan.

  Jack McCraine, Firm Beverage Director with Baker Tilly and leader of craft beverage services for the firm. He has more than 28 years of sales, marketing, consulting, training, revenue management/pricing, sales/service strategy, routing and training experience in the beverage industry. Jack specializes in accelerating client performance with sales and revenue growth, utilizing proven strategies and tactics to achieve business plans for wholesalers and brewers across the country. He has extensive experience with wholesaler distribution systems, compensation and incentive programs to motivate sales organizations.

For more information contact…

Jack McCraine

Firm Director, Baker Tilly

jack.mccraine@bakertilly.com