Year after year, industry commentators confidently report the gin boom is subsiding, claiming that the gin fatigue seen across the bartending community is quelling consumers’ insatiable demand for “Mother’s Ruin”. And at Barfly we’ve shared that very same view with clients, confident that the burgeoning category growth will relax over the coming twelve months. But year after year we all eat our words, as a multitude of new gins are unveiled in every flavour and colour imaginable, and consumers continue to lap them up.
But now there’s a new gin in town, and it could be one of the most significant spirits launches for some time. Tovess didn’t grab too many headlines when it was unveiled back in December. From my perspective, the packaging is uninspiring, the name doesn’t conjure up much, and from what I’m told the liquid itself is adequate, nothing more. But, at £24.99, it’s arguably not trying to be a contender. In short, Tovess Gin feels very own-label. And technically it is, because the world’s largest retailer sits behind it.
And it’s the fact that Amazon are the producers that makes this such a potential game-changer. Sure, the ever-ambitious retail giant was always going to formally enter the space at some point. They’ve had a keen eye on manufacturing premium products for some time, and spirits fit that definition snugly. In addition, the business has built tiers of talented category management teams, all staffed by former retailers, clearly demonstrating they’re not here to make up the numbers. So, we knew this was coming.
For me, this is disruption at its finest – the world’s most powerful retailer now a bona fide spirits producer, with an ability and desire to drive sales for their own products, not just others. The implications are significant, given spirits producers can arguably no longer rely on Amazon as their primary e-commerce channel, especially if the retailer starts to innovate across other categories.
And let’s face it, it’s the right time to join the party. Spirits volumes through e-commerce are eye-watering, and growing. Across the ten leading spirits consumption markets, IWSR recently reported that online sales are continuing to swell at a rate of 15% per year, compared to total trade growth of around 1%. Think about that for a moment.
I do think Amazon has a real challenge ahead to lift their spirits production above own-label standing, certainly if Tovess is anything to go by. One thing we all know about success in the premium spirits game is the importance of brand and status, and building a premium proposition from a purely digital platform will be tough. Bartenders won’t like it, they certainly won’t sell it, and so the reliable code of “Build in the On, Sell in the Off” is out the window.
But online peer-to-peer recommendation is what drives volumes in e-commerce, and Amazon are masters of this dark art. It can be somewhat alien to those who have religiously followed conventional spirits marketing approaches for decades, and done very well doing so, but the tide is turning. Amazon have thrown the rule book out many times before as they’ve become leading producers, not just retailers, of a range of premium product SKUs. They can, and probably will, do it again in spirits.
So, for me, it’s a fascinating product more for what it means, than what it is. Everyone in the industry should be keeping a very beady eye on Tovess and the retail giant’s next play.
Perhaps that gin boom isn’t over just yet.
This article was written by Nick Dudley-Williams, Managing Partner