How might we innovate in the alcohol industry?
Creating the world's first crowd-sourced branding platform for alcohol.
Alcohol is a $400B per year industry in the USA that is in a state of flux. Millenials want an emotional connection with their drink. This can come through supporting a small company or from loving the branding. I learned from creating a wine recommendation kiosk for liquor stores that the only thing many people care about (after the price) is the label design. Is there a way to create unique and lovable labels that can be turned into profitable brands? Crowd-sourcing offered a way that nobody had tried before, and the champion of crowd-sourced design is Threadless.com.
The Threadless.com business model is one of my favorites. It’s a win-win-win. The people who submit designs win because they join a community of like-minded people, get feedback on their craft, can earn respect in the design orld, and can make money from selling their designs. The users of the site get access to some of the most fun and imaginative designs in the world. The business creates a product that people love, generates huge annual revenues, develops a loyal following, and has high barriers to entry because it would take years to replicate the community they have built.
I attempted to apply this model to the alcohol industry last year. Wine shelves are dominated by lackluster brands. The #1 rule of wine label design is “don’t offend.” The few brands that break this rule in interesting ways reap huge rewards. Young consumers often choose a bottle of wine based on the label, and I saw an opportunity to create lovable brands that would stand out on the liquor store shelves by creating the Threadless.com of alcohol. We would be the first company to crowd-source designs, choose the winning designs by letting the crowd vote, sell bottles of the best brand from our website, and sell popular brands to high-volume producers.
What is the best way to prototype this idea? I couldn’t print out fun labels and try to sell the bottles in public because… the law. I did host parties where I showed people several different styles of wine bottles and asked people to talk about them: which ones they liked, why, how much they would pay for them, and if they would buy it online. I also spoke with several friends who were graphic designers and loved the idea. These informal surveys told me I could invest in building a small MVP to get higher-fidelity feedback.
I visited several contract wineries and distributors in California to learn about pricing and distribution. Based on this data, we built out a conservative financial model that could start with limited capital and grow into over $1MM revenue within one year.
I limited the MVP to one month of building the site and doing marketing, one month of running the contest, and $1,000 in marketing expenses. I recruited a technical co-founder to help build an MVP of the site with design submission and voting. We set up a Kickstarter campaign to raise money for the first batch of wine… and to test if people like the idea enough to vote by donating a few dollars. We found a custom crush winery in California that would bottle two pallets of wine if we raised $10,000 on Kickstarter. I found two designers on Dribbble and paid them to create the initial designs and get the ball rolling. I recruited designers from design sites and tried a few art schools. By the time voting began on Nov 1, we had 20 designs, and 5 or 6 of them were better than anything on the shelf of my local liquor store. A working winery bought the winning design and hired the designer to rebrand the winery’s entire product line.
When the contest ended we had a definitive answer from our test. People love the idea and would buy many of the bottles if they were in the store, but they weren’t willing to donate a dollar or two to see it come to life. They didn’t connect money with internet with real wine. We were not willing to commit $10,000 to create the first two pallets of wine to try selling our own wine. We were in discussions to create the branding fro two startup distilleries, but both of them decided against using the Drink Crate model.
I view the contest MVP as a success. We got a definitive answer and only spent $1,000 and two months to get that answer. An high-volume producer could have viewed the contest as a success and rolled it into the existing product line. A bootstrapped startup saw the contest as a learning experience, but not a business opportunity.