Life isn’t easy for a small, artisan cidery If you want some insight into the challenges, just read the Cidernomics, by Eden owner Eleanor Leger. It describes the travails that face a small producer of high quality cider. But there is a path to success for cideries that has been proven to be successful, particularly in this time of rising competition and consumer demand for authentic products.
Direct to Consumer Sales.
Any small, artisan cidery that is relying on traditional, three-tier sales where the cider is sold to a distributor who then sells it to retailers who then sell it to the consumer will have a difficult time in the long run. The margins are smaller and the control you have over your brand are far less.
A look at what small producers have done in the wine industry, however, point the way for small batch, artisan cideries. According to a new report by ShipCompliant/Wines & Vines, wineries shipped direct to consumers more than $2.3 Billion worth of wine in 2016. This was up 18.5% over 2015. What the remarkable achievement and growth rate indicate is that a large number of smaller wineries have come to grips with the fact that Direct To Consumer sales are the engine that drives success.
Even if a cidery does not have an accessible tasting room, they still can cultivate direct sales via the Internet. But the best case scenario is for a cidery to find a way to open a consumer facing tasting room, be it on the cidermaking property (best case scenario) or in a high foot traffic area in a tourist destination. The key to this path to market is the “intimate touch” the cidery achieves. The key is that the consumers forms a relationship with the cidery. And the key is the cidery obtaining important information about their customer that simply can’t be had through tradition wholesaler-driven distribution.
Today, wineries are investing considerable resources in the tasting room experience as well as the digital experience of their customers. Many augment the tasting room experience with “clubs”, events, robust social media interaction and even in-home winemaker dinners. With the greater margins that are achieved via direct sales vs. wholesale sales, the winery is able to invest in direct touch points like those noted above as well as others.
The small, artisan cidery should be doing the same thing.
It’s also important to note that most cideries are actually categorized as wineries for most states. What this means is that cideries can take advantage of the favorable direct shipping laws that wineries have worked so hard to put into place on a state by state basis over the past decade. Today, upwards of 90% of Americans live in states where it is legal for out-of-state cideries to ship wine. There is of course the cost of obtaining permits and remitting reports and taxes, but there are also affordable services that the cidery can engage to take care of this aspect of the business.
The large, international and bulk cider manufacturers will continue to capture the majority of the cider market in the United States as they distribute those products to grocery stores, drug stores and convenience stores. But those products continue to falter. Serious cider drinkers looking for something of quality and something authentic, however, continue to seek out unique, orchard-driven ciders and they are willing to pay substantially more for those products just like serious beer and wine and spirit consumers are willing to pay more for craft versions of those products.
The only way serious cideries will be able to capture that consumer is by providing them with an authentic, high touch experience and following up with the kind of profitable repeat sales that are generated by going direct to the consumers.