There’s something romantic and powerful about the aspiration to own a big national brand. When our clients say they want to build a national brand, we respond with, “You have to walk before you can run.”
Building a strong regional brand is hard enough, and this is especially true for consumer-product brands. It’s easy to think your brand is strong when you have achieved some initial local retail presence. But strong is when you have garnered a significant market share in your region and survived several years of annual cuts to like brands on the retail shelf.
So, don’t get too excited when a national broker or multi-state distributer wants your brand. They may want it for reasons besides building a national brand, such as to control it or just take a share of whatever business you have established. When it comes to brand building, everybody wants to milk the cow; nobody wants to raise the calf. Distributers are generally not brand builders. If you buckle to the temptation to give the rights to sell your brand to an out-of-state distributer or broker, you may regret it sooner than you think.
The national chain and box stores each have their own unique policies, test markets, and authorization requirements. With them, you only get one chance at bat. If you don’t hit the ball out of the park, you get discontinued – pretty much forever. What’s worse is your brand gets the reputation of being a “slow mover.” Then, other buyers will be less likely to give you a chance in their stores.
We often hear new brand builders bragging about the strength of their brand. They say things like, “Our brand is now in 200 retailer stores!” But are they sure it’s still on the shelf? The easiest way to lose a new retail placement is right after you get it. Why? Because the store and the distributer’s representative may simply not remember to reorder, because it’s new. Or worse, the distributer’s rep may have an incentive to place someone else’s brand in that store and will use your space to do it.
Beware of growing too quickly or spreading yourself too thin in an expanding market. It’s amazingly easy to strike out. Sometimes it’s better to not be in those stores than to be in them and not get reordered for whatever reason, resulting in getting discontinued. It may not be that your product didn’t sell; it may be that it did sell – and was not replaced!
So what can a brand builder do to grow their brand in such a challenging environment? The only people you can depend on to provide the reliable vigilance and service necessary to keep your product on the retail shelf are on your payroll. This means the larger your market area, the bigger your payroll has to be. Brokers and distributers have many brands to attend to, and some are a higher priority than yours are. So it’s up to you to manage the merchandising right down to the retail shelf level and this quickly becomes the largest part of your budget when you are growing a consumer-product brand.
Our advice to brand builders is start small, build slowly, and take notes! Even if your brand is only in one region, take the time to learn the market and earn the reputation of being a “fast mover!” Make the mistakes you are bound to make in a small, manageable area. Spend a few years building a solid cash flow in your own region so you can afford to hire the people you will need to take your show on the road. National brands are built from strong regional brands.
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders
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