Lessons for startups from the craft gin innovators

Gin has overtaken vodka to become the most popular spirit in Britain, evolving from the home-made C18th gut-rotting drink that was the scourge of the poor, to the tipple of colonial civilisation, and now the many-splendoured glories and choices of hipster watering holes.

We don’t know exactly what went into the strong water made of juniper that the diarist Samuel Pepys knocked back on October 10, 1663, but it did the trick he said, allaying his constipation. A couple of decades later, gin’s popularity exploded, after the introduction of jenever, a Dutch and Belgian liquor. Originally a medicine made of juniper berries, William of Orange, brought the tipple with him from Holland when he took the throne.

This was the time of the gin craze. More than half of London’s drinking establishments were gin emporiums. Parliament reacted by passing various laws to control the drinking and production of gin, and by the 1850s, things had calmed down.

The enthusiasm for the spirit, nicknamed ‘mother’s ruin’, took a different turn in the 1800s when colonialists in India used it to make malaria prevention more palatable. The antimalarial quinine, derived from the bark of cinchona trees, was effective but tasted awful, so colonialists mixed it with sugar and gin to cut the intense bitterness. The gin and tonic was born.

Today, surging popularity and wide-open competition has led to consumer’s conflation of gin with gin liqueurs. Many products are pushing or breaking the boundaries of established definitions in a period of genesis for the industry. We have a bewildering array of craft distilleries along with spas and hotels devoted to selling gin parties, gin menus, ginvent calendars.

The passion for all things gin has resulted in 315 distilleries in Britain – more than double the number operating five years ago. Nearly fifty opened last year. A total of 47m bottles worth £1.2bn were served up last year, enough for 1.32bn gin and tonics. The craze has even reached BBC Radio 4’s series The Archers, where Toby Fairbrother produced Scruff Gin, flavoured with his own mix of botanicals.

Torn between a Tommyrotter and a Cathouse Pink? Can’t tell the difference between a Spirit Hound and an Ugly Dog? You’re not alone! There are now gins of every shade, for every social occasion. By any reckoning, the demand for the juniper-flavoured spirit made by small-scale craft and artisan producers has been a freakish phenomenon, reaching a market outside traditional gin drinkers.

We have Monkey 47, a gin from the Black Forest of Germany, which has become something of a cult, largely on the ground of its botanicals. Not a big deal, you might say, given that botanicals are in every gin – they are the ingredients – floral, herbal, spicy etc. that, via an alchemy provide each brand with its singular magic. In most gins, the number of botanicals tends to stay in the single figures. Not in Monkey 47, though, whose name is a statistical boast. Personally, I can’t even think of forty-seven botanicals!

Few innovations have been more successful than Hendrick’s gin, thanks in part to its apothecary-style bottles. Hendrick’s is part of William Grant & Sons, a Scottish firm that owns Glenfiddich, so has some marketing muscle. Gin aficionados and new producers alike owe a huge amount to Hendrick’s as the category’s real trailblazer.

Developed in 1999, Hendrick’s launched its gin product, with the inclusion of two unlikely essences, rose petal and cucumber, and started the ball rolling in the new market with two factors, premium pricing and taste. The pricing factor together with high quality packaging served to signal to consumers that the stodgy old gin image was gone. As to taste, Hendrick’s was among the first to move out of citrus and herbaceous into a novel new flavour for gin.

This was followed by the emergence of the micro-brewery and craft ale renaissance, which has seen the alcohol market undergo a major shift in the last few years. We’re drinking fewer units, less often but still spending more. For more and more consumers, a night out means a couple of cocktails or fine craft ale that’ll look great on Instagram. In this sector as with others, it’s become as much about the experience as the product.

So that’s the back story, what lessons can we learn from how gin producers found new ways to excite and engage with more and new consumers, for other startup ventures introducing new products?

Understand your product’s market position Gin benefits from being versatile, and thus a more interesting product than vodka. When mixing in simple drinks or fancy cocktails, it’s possible to bring out different aspects of the gin by choice of ingredient, or indeed bring out different elements from the cocktail by trying it with different gins.

Gin is also more affordable when compared to a lot of spirits. Aged spirits command a premium due to time spent in the barrel, angels share etc., where as gin is a relatively quick spirit to make, therefore the price tends to be lower meaning it’s a more accessible category to explore.

Be agile in your product thinking Whilst it is not at easy to produce a great gin, the production time is relatively short, with no need for aging like fine whisky and wine. This has allowed producers to be agile, moving to swiftly rise with the demand and to create new products.

With gin simply being defined by having juniper as the prominent flavour, it allows for experimentation and diversity in the market. This not only gives it broad appeal to people’s different tastes, it allows distilleries to rapidly create powerful narratives around their new gins that capture consumers’ interest.

Like the micro-breweries, some gin distilleries have been going the extra mile to reflect their locality, using botanicals that are locally foraged and distilled. The Botanist is a prime example, distilled from twenty-two types of berries, barks, seeds and peels found on the Isle of Islay in Scotland.

Put innovation and experimentation at your core Gin has the power to transport the drinker through the powers of taste and smell. One of the reasons craft gin has proved so successful is because it’s quick and easy to tweak and tailor as highlighted earlier. There isn’t really another spirit category in which you can commission your own product so easily. With gin, it’s a matter of days before it can be on the market.

This enables experimentation, making your own gin experiences and bespoke offerings for anything from hotels and restaurants to events. Distilleries will also continue to experiment with distillation techniques and barrel ageing, for instance, to increase depth of flavour. They will also get more and more creative with the flavours and botanicals they use, to create new and unexpected flavour profiles.

It seems that the more theatrical that producers can make their botanical constituents in their gin, the more success they have. This seems to have replicated the growth in wine sales. When it comes to the actual wine in the bottle, one of the biggest innovations was the move by supermarkets to start promoting wine by their grape variety and not brands per se, to engage with shoppers. It is arguably what kick started our love affair with Pinot Grigio.

Use storytelling to build advocacy Hendricks tells a great story, using nostalgia of a bygone era, while positioning as a contemporary, exciting and innovative product – a blend of the old and the new. Skilful storytelling is essential, partly because premium gins are sold at a high price point.

The Hendricks storytelling was about selling something more than just a better taste – the experience, a ‘proper’ gin and tonic, a gin that deserves to be savoured – it needs to work in a loud, busy bar when somebody asks What’s a good gin? A truly great story can be distilled down to an instantly appealing point of difference.

There are many examples that show new demand can be built by a new product with a good story and a bit of audacity. For example, long before craft gin was a thing, Grey Goose won itself a huge share of the premium vodka category.

The brand had a great story, a beautifully made, unabashedly French vodka from the Cognac region. Determined to take on Absolut, which dominated Grey Goose’s category in the US, the brand almost doubled its retail price overnight. The genius behind this was Sidney Frank, the man who also turned Jagermeister from a herbal digestif for German grandmothers into the booze half of a Jagerbomb.

I think that provenance had a lot to do with the success of craft gins. Those interested in buying things locally, or from specific regions liked the idea of gins with firm roots. They bought into the story of where they’re produced and the people that produce them, giving a strong connection to the products.

Know your customers as individuals The craft gin boom follows a surge in demand for locally made small scale beers, as the hipster generation seeks drinks with a more interesting taste created by individuals rather than faceless international corporations. Who are these consumers?

When launching Hendricks, their marketing identified ‘The Activist Consumer’, defining their characteristics, which are driven by lifestyle trends:

·     Always seeking to identify optimal experiences and the best products for the moment.

·     Exploring the ethical ramifications of their choices.

·     Multi sensory experiences enable brands to differentiate their interface with consumers.

·     Dreams of extremes: embrace moments that transport them outside their comfort zones.

·     Augmented crafted products, through a mix of ingredients, craft and ‘mixology’

·     Tangible transparency: brands that share consumers values and beliefs

·    Seek to combine high-speed gratification with balancing their always-on lives.

Personalised choice, allows brands to connect with their customers using multi-sensory techniques can all contribute to the higher-level experiences that people are looking for. The aim is always to surprise and delight your consumers.

Whether it’s a lavender infused gin and tonic or a spit-roasted pineapple gin with ice, there are now seemingly endless ways to drink gin that go beyond the standard G&T. This growth has been helped by a string of new brands, flavours and innovations entering the market, and now Amazon has joined in, further establishing its direction of travel in the grocery sector with the launch of its own premium gin brand – Tovess will retail for £24.99 and is described as offering a ‘smooth Mediterranean taste’.

There are lessons for us all in the attitudes of gin entrepreneurs, their world is everything-is-possible and optimism rules. A strong sense of the possible is essential to driving innovation that in turn leads to success. Whilst the image of the swashbuckling adventure-hungry risk-taking buccaneering entrepreneur is somewhat of a caricature, positive energy and exuberance are key, and the new gin innovators have it in buckets.

We all need to have new ideas, different ones, about what’s changing in our market, and how those changes could disrupt our business model. You also need to think about how you can disrupt yourself.

We need to live with the future customers and in the future markets of our business, we need to work on the business, not in the business. The world isn’t waiting for you to get inspired, you have to inspire it, and at the same time don’t let your doubts sabotage your thinking – there are far better things ahead than any we leave behind.

We are all confined by the mental walls we build around ourselves, sometimes innovation starts with a critical decision to reinvent yourself and kick-start your business 2.0 – a moment of truth, flash of brilliance or the end result of a bout of determined reflection to make a difference. But whatever the trigger, take a leaf from the craft gin folks, pushing limits and challenging conventions, live craft.

Changing lifestyles factors are driving the growth of the companies in gin industry, driving product strategy from a customer’s point of view and with customer-based insights, to ensure the business model is as robust as it can be.

The macro lesson is this: focus on the horizon and hold your vision. Do something everyday to move your business forward, and that makes you stand out from the crowd. A sheep has never stood out from another sheep, so don’t follow the herd blindly. People will take notice.

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