Brand support: Listing fees and pouring deals

15 November 2015

Necessary evil, poisoned chalice or serious opportunity? Clinton Cawood looks at what it means for your business to accept support from brands bearing gifts


dark car pulls up outside the bar, blacked-out windows. A shadowy figure gets out, walks into the manager’s office, puts down a briefcase full of cash. Back in the bar the niche, independent spirits selection evaporates, the cocktail list homogenises before everyone’s very eyes, the bartenders’ hands shackled behind their backs…

Brands support bars in a variety of ways, but talk to some, and this is the scene they’d conjure. And it’s in the nature of these deals that they’re seldom discussed. It’s time to address the elephant-with-the-lucrative-pouring-deal in the room.

Cold, hard cash
There are many ways for a brand to support a bar, including training and incentives, but for now let’s focus on the tangible, monetary ways. This can take the form of listing fees, pouring deals or retros (sell a certain number of bottles and get a bottle or cash equivalent in return). For many, these are an essential part of the business model. For others, they represents a capitulation, or selling out – a compromise of integrity.

What’s best for your bar? That depends, of course, on your venue, and on the deal. As Jason Atherton’s former executive bar manager Gareth Evans says: ‘The trade isn’t universal in having brand support.’ Indeed, he points out how this varies around the world. ‘In Singapore they are smaller, in Hong Kong, difficult, and in the US they are just plain illegal.’

We don’t have the same legal concerns here in the UK, as Niall McCann, head of licensing and gambling at law firm Joelson Wilson, confirms. ‘I can’t see any issue with a negotiation between two private parties. You could have issues if a supplier was encouraging a bar owner to do irresponsible promotion, though,’ he says.

So assuming you stay on the right side of licensing law, what are the benefits of accepting these kinds of deals from drinks companies? James Triffo has some useful perspective on this, given his position as both a small business bar owner (NOLA in London) with ‘no external investors, family wealth or financial safety net to rely on’, as well as having set up Spirit Cartel, which he calls ‘a distribution agency, working primarily with new-to-market brands.’

He offers some insight from his point of view as a bar owner: ‘For businesses similar to my own, listing fees are vital extra sources of marketing revenue. If applied correctly they can go a long way to strengthen the relationship between bars, brands and our guests.’

Evans agrees. ‘If you’re savvy it can be a massive difference to your business. In some cases it can even be the difference between opening a bar and not having the capital to do so. It does mean you tend to be tied in more to brands and can’t just change your menu when you feel like it, but we use retros and support where it is available, and of course we make the most of it.’

Listing fees are vital extra sources of marketing revenue

James Triffo

There’s one condition, though – cocktail lists aren’t included. ‘I’m very upfront about that because otherwise I’m just hindering the bar managers and their teams. I want them to make the best drinks they can and this isn’t going to be helped by me telling them that 50% of their list has to be made up of a certain gin or whiskey – they would just leave and the list would be unbalanced and frankly, a bit shit.’

At London’s Artesian at The Langham, Alex Kratena also has certain conditions. ‘I never work with brands I am not keen on, and I don’t favour a monopoly approach, ie signing major deals with one big portfolio for the entire hotel. If you are clever you can gain good deals with everyone.’

Brand support undoubtedly plays an important part in helping Artesian to create its spectacular menus. ‘The huge amount of financial support we gain via deals is invested into creating amazing experiences and serves,’ says Kratena. ‘In this way our venue has a unique product, and brands gain in terms of volume, marketing and publicity.’

What’s the catch?
There’s clearly a lot of potential benefit for both brands and bars, but the idea of making a deal is still maligned in the industry, and not something that people like to talk about.

Triffo has one suggestion for why this might be the case. ‘Sadly, the money is often never put to use to help support on-trade marketing or events at the venue level. This stigmatises industry perception regarding listing fees and retrospective offer,’ he explains.

But there’s a more practical reason for operators to be wary of signing their bars away to brands, and that’s the sacrifice of some degree of autonomy. Alastair Burgess, owner of Happiness Forgets and Original Sin in east London, puts into words what many are thinking. ‘It curtails what you’re able to do with a drink menu. You can’t make the best possible drink if you can’t try all of the options available to you. That’s my biggest beef with pouring deals and brand support,’ he says.

That doesn’t mean that he doesn’t work with brands. ‘To survive, and maintain standards, is hard. Things like paid trips are good exposure for us, and that can only be done through brands,’ he says.

Burgess has had a few deals with brands in the past, but currently only has a retro deal in place with The 86 Co. ‘For that I get no money, no sponsorship. Just a retro deal to bring the price of that bottle down. And we work with the brand during London Cocktail Week for exposure for both bars, and for the spirits too. That’s the kind of deal I’m into,’ he says. ‘Helping small companies that are passionate about what they do – it’s not just about the bottom line.’

The alternative
An example of a spirits company that’s working on finding different ways to support bars is Maverick Drinks. If there were any doubt about its position on the subject, you could refer to the branded t-shirts the company brought to Imbibe Live this year, reading: ‘Fuck kickbacks. Fuck retros. Drink craft.’

Maverick’s Michael Vachon has some reasoning to back this up. ‘The financials don’t make sense,’ he begins. ‘It’s crazy.’

It’s become an expectation – and we’re challenging that because it makes no sense

Michael Vachon

The way he sees it, a one-in-twelve retro on a £25 bottle of gin, selling four cases a month, is two bottles a month for free. Over six months that’s 12 bottles. ‘What they’re asking for is £300 over six months, which is relatively insignificant,’ he says.

An example of an alternative would be a gin tasting for customers at the bar for 30 people. ‘We bring a bunch of gins we think are amazing. You charge £10 a ticket. That’s £300 covered in two hours,’ he explains.

‘It’s become an expectation – and we’re challenging that because it makes no sense,’ adds Vachon. ‘There’s a difference when a big company offers £50k and says, “We’re investing in your bar.” I don’t blame a bar for taking that kind of deal, but you potentially lose the ability to choose your spirits on merit.’

And there’s the crux of the matter – finding the balance that’s right for your bar, between the benefits that brand support can bring, and the necessary compromises that might entail. Feeding that elephant in the room, while keeping your team free to create those experiences that are unique to your bar. And perhaps looking beyond that briefcase full of cash, as attractive as it might be.


Can’t buy me love

Cash and stock isn’t the only way to work with brands, and even if you have those kinds of cash deals
in place, there’s more value that can be gained, for both parties. ‘Some of the best support we’ve had doesn’t come from an invoice being paid in 30 days, but from a brand’s commitment to work with us to support important events and activities,’ says NOLA’s James Triffo.

Artesian’s Alex Kratena confirms: ‘Big brands are helpful with cash, but small brands can often deliver unique ways of support – things that the big boys can’t do.’

Education is one invaluable element, offering you a way to improve your offering, reward and retain staff, as well as build closer relationships with brands. ‘We encourage brands to educate our team so that we can do a better job discussing with our guests why we chose certain flavours to work together,’ says Triffo.

This is important for Alastair Burgess, of Happiness Forgets and Original Sin, too. ‘Training is a really good thing,’ he says. ‘Brands can offer amazing ambassadors, with bags of knowledge to impart.’

Ultimately, the most benefit you’ll get from brands is through creating long-term relationships, with a mix of different types of support. ‘Working with someone just as passionate is more rewarding, with more longevity,’ says Burgess. ‘If you build a good relationship with a company, there’s a lot more support.’


Pro tips

‘I would always say: don’t sacrifice your integrity for a pot of cash. And don’t be greedy. If you work hard, you’ll get there.’ Alastair Burgess, Happiness Forgets and Original Sin

‘My job is to put together a support package that is attractive enough to both parties that they want to work together anyway. You choose good brands the bartenders want to get behind, with financial incentives and packages that the bar managers will lean towards to hit their budgets and GPs. The brands get their exposure and volumes, the managers get their figures in line and a bit of help and the bartenders get decent booze. Everyone wins.’ Gareth Evans, ex-The Social Company

‘Prior to going into any negotiations, clearly list and understand what you want to achieve, set yourself a target to meet, don’t agree on anything you are not comfortable with and clearly articulate what you want to gain from brands. Always remember to be polite, tactful, and well prepared.’ Alex Kratena, Artesian at The Langham

‘Be truthful with expectations. It’s much better to slightly underestimate volumes than overestimate and get called out by your boss or the brands at the end of the arrangement. Know your account managers and build a strong relationship with them. In this industry you will likely be running into each other for many years.’ James Triffo, NOLA

 

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