The document discusses challenges and opportunities facing alcohol brands in Canada. It notes that while Canadians are drinking more alcohol overall, consumer behaviors and expectations are changing rapidly due to new technologies and demographics. Successful brands are engaging customers through social media, mobile apps, and community events. The article provides examples of brands like Molson, Bacardi, Pabst Blue Ribbon, and others that are adapting well to these new realities.

1. Drink 2.0
ANYTHING BUT “THE USUAL.”
A critical look
at the challenges
and opportunities
facing alcohol
brands in Canada.

2. “
It is about winning the alcohol
share of stomach."
Kevin Meens
Chief Operating Officer
Cool Brewery
Toronto
2

3. INTRODUCTION
As the marketing agency that coined the term Perhaps it’s this excitement that led us to examine
brand infiltration™, Espresso is acutely interested the alcohol industry as our second “2.0” subject.
in understanding how consumer expectations are Perhaps we’re just a little thirsty? Either way, we
changing in step with evolving technology, know you’ll agree that a perfect storm of new
demographic shifts, economic factors, and cultural economic forces and lifestyle choices has been
phenomena—and helping our clients rise to the brewing, challenging the staid assumptions within
challenges that unfold along the way. the alcohol industry.
So begins our foray into the world of Drink 2.0, But today’s challenges come with significant new
the second in a series of publications we are opportunities, as well. Drink 2.0 examines how
releasing in 2010, in which we examine the brands can adapt to emerging consumer trends,
challenges and the opportunities facing businesses create more meaningful relationships with their
as digital and social technology dramatically alter existing enthusiasts, and pave the road to
the way people discover, experience, and share enduring success.
information.
Cheers!
For marketers, this shift is truly seismic.
The unwritten rules of communication to which
we’ve adhered for decades are being burnt to the
ground, and from their ashes, a new model based
on unprecedented openness is emerging.
Words like “transparency,” “authenticity,”
and “engagement” are replacing beloved turns Jacquelyn Cyr
Chief Executive Officer
of phrase like “on message,” and “on brand.” Espresso
It's quite possibly the most terrifying time for
marketers in over fifty years - yet, without
question, the most exciting.
3

4. Industry Trends
Change, Distilled
Brands Getting it Right
Infiltration How-Tos
Conclusion
Credits
4

5. “
It's a tough environment.
Everybody is just downgrading
and that's what is happening
with liquor.”
Trevor Johnson of National Bank Financial, who covers the Liquor Stores Income Fund
5

6. THE ECONOMY IS DRIVING US TO DRINK.
Despite (or perhaps due to) the current economic downturn, sales of beer, wine, and spirits in
Canada are growing. Sales in 2008 hit $18.8 billion, an increase of 4.3% from the year before.
October 2009 sales were up 17% over the same month in 2007, according to a Statistics Canada
snapshot of unadjusted sales by large retailers’ liquor stores.
"People are backing off big purchases. They're not
buying a car this year, but they still like having a glass of
Approach
wine or a beer with friends. We're returning to the daily
• Social activity audit small pleasures.”
• Stakeholder interviews
• Competitive analysis Brent Barr
Marketing & Retail Business Professor
• Ideation Ryerson University, Toronto
6
PHOTO: Todd Heisler/The New York Times

7. STAYING IN IS THE NEW GOING OUT.
68%
are doing less
fine dining.
59%
less often.
are going to bars
SOURCE: Nielsen, Oct 2009
PHOTO: Adidas

8. BREW IT YOURSELF
In addition to the increase in off-premise consumption,
Canadians are also making their own alcohol for home
consumption in greater numbers than ever. Retailers
that allow people to inexpensively make their own
beer and wine are seeing a boost in sales. For
example, business at Vancouver-based
West Coast U Brew, and Ottawan Wine
Kitz, has been growing steadily.
PHOTO: awesomepickle.com
8

9. BARGAIN-HUNTING.
“
People who were buying $20 to $25
wine are now buying $15 to $18
bottles. People who were buying $15 to
$18 bottles are now buying $12 to $15.
Some of the $15-price-range products
have slowed in sales but the $10 to
$12 products have increased
dramatically.”
Tom Green of 20 Bees Winery in Niagara-on-the-Lake
9

10. DOMESTIC BEER GROWING COLD?
“
Beer is still Canadians’ drink of
choice, but according to Statistics
Canada, the past two decades have
seen its overall market share Mainstream beer sales have been
drop 7%. Within the category, stagnant or falling for years.”
imported beer continues to outpace
domestic products, more than Stephen Beaumont, beer writer and industry expert
doubling market share in the last
decade.
By 2002, imported brands comprised
approximately 9% of Canadian beer
sales. That figure is three times what
it was 10 years before, and continues
to climb today.
In 2008, imported beer sales
increased 7.2%, while sales of
domestic brands remained virtually
unchanged.
10

11. THE OTHER RED & WHITE
“Wine is becoming more and more
a part of everyone's culture
and day-to-day experience.”
Sherri Haig, spokeswoman for the Wine Council of Ontario
Driven in part by a larger drinking-
age population, a better
assortment of choices, an increase
in private liquor stores, and
increased demand by women,
Canada has seen wine sales grow
11% over the past two decades.
Since 2000, red wine sales have
surged an impressive 130% and
white wine grew 33%.
In some parts of the country,
wine sales have almost tripled.
11

12. Liquor stores and agencies sold $4.7 billion worth of spirits in 2007/2008. While whiskies, scotches,
and bourbons are still Canadians’ spirits of choice, it is vodka’s gains in the category that continues to
fuel sales growth of spirits. In fact, the 4.4% gain in the spirits category over the previous year was due
mainly to a 9.1% increase in vodka sales, according to Statistics Canada.
12

13. BOTTOM LINE: WE’RE THIRSTIER THAN EVER.
Overall, Canadians are consuming 12% more alcohol now than we did a decade ago,
a development which is attributed to a variety of factors, including the aforementioned
larger drinking population, a better assortment of choices, more private liquor stores,
and a better retail experience at vendors like the LCBO.
“
Turning really miserable retailers
that looked like you should cross
yourself three times and feel
guilty when you walked through
the door into nice places was a
success…. The LCBO is the
perfect example of this. It’s now
a fun place to go.”
Alan Middleton
Marketing Expert
York University
13

14. Industry Trends
Change, Distilled
Brands Getting it Right
Infiltration How-Tos
Conclusion
Credits
14

15. ONCE UPON A TIME…
Advertising used to be simple.
“Media fragmentation” just
meant cable. A bigger ad buy
was the best way to increase
market share. And a brand’s
marketing success lived
and died by its TV spots.
15

16. TODAY,
THINGS ARE
A BIT MORE
COMPLICATED.
16
IMAGE CREDIT: http://www.barcelonaschiringuito.com/no-hay-marcha-atras

17. INTERNET > TV.
The mainstream Canadian consumer
is far more digitally sophisticated and
venturesome than commonly believed.
According to new research from the
IAB, the Internet is the number one
medium in terms of percent share of
weekly time spent for 18-34 year-olds
in English Canada.
Not only does the Internet reach more
adults per week than magazines,
newspapers or radio, but it’s neck-in-
neck with TV for weekly reach among
the increasingly large segment of
18-24 year-olds.
17
PHOTO: http://www.bandlem.com/Xmas/2006/

18. CONSUMPTION FACTS
• 84% of consumers rely on the web
to get current news or information.
• 76% regularly watch online video
on sites like YouTube and Hulu.
• 73% regularly visit social networking
sites like Facebook, MySpace, and
LinkedIn.
• 62% listen to music online through
services like iTunes and Pandora.
SOURCE: Razorfish FEED Study
18

19. SOCIAL MEDIA IS UBIQUITOUS.
• Virtually all consumers have searched for a brand online.
• 76% welcome brand advertising on social networks.
• 73% have posted a product or brand review on a web site like Amazon, Yelp,
Facebook, or Twitter.
• 70% have read a corporate blog.
• 67% have watched a commercial video on YouTube.
• 65% have played a branded, browser-based game.
19
PHOTO: http://www.flickr.com/photos/constantine-graphics/3859971253/

20. SAY GOODBYE
TO “THE USUAL.” --Razorfish FEED Study
Your customers are increasingly more digitally
savvy. Their palates are increasingly more
sophisticated and their wallets are noticeably
thinner. Meanwhile, your competition keeps
growing. And the old reliable methods of
gaining market share and maintaining brand
loyalty are going the way of the VHS.
Yes, these days, the alcohol business — like so
many others — is anything but usual. Your
customers are less likely to order Dad’s brand
at the local bar than to whip up their own
signature cocktail at home—using a boutique
vodka they heard about on Facebook, no less.
To thrive in this new landscape, your brand must
embrace the digital medium and adapt to the
ever-evolving needs and expectations of a 21st
century consumer.
The cape and tights, fortunately, are optional.
20
PHOTO: http://www.flickr.com/photos/wengistein/472176875/

21. Industry Trends
Change, Distilled
Brands Getting it Right
Infiltration How-Tos
Conclusion
Credits
21

22. MOLSON: CROWD-SOURCED RECORD-SETTING
Beginning in February 2009, Molson asked Canadians
of legal drinking age to show their support for their
2010 Olympic athletes by uploading an image of
themselves cheering on Team Canada. A year later,
over 13,000 Canadian faces comprise the final tribute
to Team Canada, which spans the side of Molson’s
Kitsilano brewery building in Vancouver, creating
Canada’s largest photo mosaic.
22

23. BACARDI: BRINGING THE PARTY HOME
In 2008, Bacardi made the smart
decision to adapt their
marketing in step with both
consumers’ digital media and
off-premise consumption
habits. Their Bacardi Mojito
Party Facebook app helped
guide users in mixing the perfect
Bacardi Mojito and planning
their own at-home parties. Also
included were an iPod tutorial,
a Cocktail Calculator, and a
feature that let users invite
friends via Facebook or Evite.
The application was installed
100,000 times in its first week
and ultimately helped Bacardi
Limited produce its highest
sales in history for the fiscal year
ending in March 2008.
23

24. FLYING DOG ALE:
EMBRACING OPEN SOURCE CULTURE
In the Summer of 2008, Flying Dog launched an extremely limited edition
beer. The brew was the result of a collaborative creation process—called
“Open Source” for the practice of openly sharing information and access,
prominent within the hacker community—in which brewing enthusiasts were
able to contribute their input on the ultimate Flying Dog beer recipe.
True to the open source ethos, the recipe for the beer was made public so
others could brew their own.
24

25. IMAGE: Diageo
DIAGEO: RAISING THE BAR
In December 2009, Diageo, the world’s leading premium drinks company, whose portfolio includes
Smirnoff vodka, Jose Cuervo tequila, Captain Morgan Original Spiced Rum, Johnnie Walker blended
Scotch whisky, Sterling Vineyards wine and Guinness Draught, launched a mobile version of its very
successful website thebar.com. Consumers of legal purchase age were essentially handed an on-the-go
resource to help inspire, plan, and shop for any occasion, on any budget.
Like its parent URL, the mobile site offers an extensive drink recipe database supported by the breadth
of the Diageo portfolio, detailed drink information, notifications on special offers, a store locator, and
more—right in a user’s pocket.
25

26. PABST BLUE RIBBON:
EVENTS
[aka THE OTHER SOCIAL MEDIA]
After more than two decades of steady decline,
Pabst Blue Ribbon sales had hit their lowest
point in 2000. But a few years later, the brand
started popping up in trendy urban bars all
across the country. By 2006, the brand’s volume
was over 1.6 million barrels, according to trade
publication Beer Marketer’s Insights.
PBR’s unlikely comeback started — and was
most pronounced in — Portland, OR. The local
community of punks, skaters, and bike
messengers had started drinking the beer
because it was cheap. In the process, they
ended up redefining what their own meaning
for the aging, almost blank-slate of a brand.
Passing on higher-profile partnerships, Pabst
instead chose to support alternative subculture
events like rowdy “bike messenger polo
matches.” Pabst saw its sales rebound through
mini event sponsorships and partnerships with
the communities that had embraced its brand.
26
IMAGE: Traitor

27. ROCK ART BREWERY:
THE SOCIAL MEDIA REVOLUTION
In September of 2009, Matt Nadeau,
founder of Rock Art Brewery,
a nine-person company based in
Morrisville, VT, received a cease and
desist letter from Hansen Beverage
Company, which owns Monster
Energy Drink. Nadeau was ordered to
stop using the name “Vermonster”
for one of Rock Art’s specialty brews.
Trademark attorneys informed
Nadeau that while he could probably
win this dispute in court, fighting for
the name against a billion dollar
company would likely bankrupt him.
Nadeau aired his outrage online,
and ignited a nationwide social media
maelstrom.
The “Vermonters and Craft Beer The hashtags #monsterboycott and #boycottmonster became trending
Drinkers Against Monster” Facebook topics on Twitter. And all this happened in just three weeks.
group gained 19,000 members. The
YouTube video of Nadeau explaining
his side of the story (“Matt and the On October 20th, the two sides reached a settlement that allows Rock
Monster”) was viewed over 82,000 Art to continue to market the brew. Nadeau credits the power of the
times. social media grassroots movement for the win.
27

28. Industry Trends
Change, Distilled
Brands Getting it Right
Infiltration How-Tos
Conclusion
Credits
28

29. 1. ENGAGE YOUR CUSTOMERS.
What we drink can be incredibly personal. Our choice of beverage is more than just a matter of taste;
it’s often an expression of who we are. The desire to feel involved with and a part of the brand we
love is therefore that much more acute.
Whether it’s a chance to be part of a huge fan-generated mural or participate in co-creating a new
product, an iPhone app that helps users throw a better party or a Facebook app that allows them to
share their enthusiasm with friends, or even just the opportunity to stay in the know and offer
feedback via a brand blog, consumers want the kinds of access and experiences that let them feel
closer to the brands that are important in their lives. These experiences serve not only to keep 29
customers, but to attract new ones.
PHOTO: David Cyr

30. 2. INVEST IN COMMUNITY.
Bacardi did it through an app that engages Facebook users’ existing friend
networks. Pabst Blue Ribbon did it by supporting the subcultures that had
embraced it. Rock Art Brewery did it through a uniting rallying cry. Molson did
it by putting their community literally on the side of their building, Flying Dog
did it by creating a platform that invited enthusiasts to collaborate with the
brand while paying homage to progressive digital-culture values.
The most successful branded experiences aren’t gimmicks. They’re true
commitments to nurturing and cultivating a vibrant community that reflects
both the brand values and that of its enthusiasts.
30

31. 3. ADAPT WITH SHIFTING CONSUMER TRENDS.
Your customers are spending as much
or more time online as they are
watching TV. Their palates are becoming
more sophisticated and their drinking
habits more off-premise. Adapt your
marketing strategy to address these
shifting behaviors and expectations.
Consider mobile applications. Explore
social marketing opportunities.
Entertain them, provide them with
utility, sponsor the events and causes
they care about—or better yet—
create new ways to make
those events even more
interesting and meaningful.
Inspire old fans and new
customers to be creative
in their newfound frugality
with applications, games,
and branded entertainment
that markets with them,
not at them.

32. 4. EXPERIMENT!
Change is definitely brewing. We can face that
change with fear and resistance, or we can
welcome it with open arms and fresh ideas.
Right now, there are unprecedented
opportunities to connect with consumers in more
engaging and meaningful ways than ever before,
turning customers into avid enthusiasts, and
enthusiasts into ambassadors.
Right now, the world is watching the innovators,
the daredevils, and visionaries eat everyone else’s
lunch.
Our view? Clearly, we recommend rolling up your
sleeves and getting those hands dirty. Experiment
with new digital tools and social strategies.
Pursue new ways to engage your consumers. Take
risks.
You may be surprised to discover that these days,
trying something new is the safe bet, and the
real danger is in sticking to the status quo.

33. CONCLUSION
Like the shifting tides in consumer beverage choices, the widespread consumer adoption of and
reliance on digital and social technology is not a passing fad. Things are not going back to the way
they were before. The reign of the ad is as dead as the Budweiser frogs. The new digital mainstream
consumers expects you to market with them, not at them. They’re more than happy to be part of a
conversation, to laugh at your jokes, to respond to your questions, to be part of your experiment. But
they’re not even remotely interested in your latest “campaign.”
To survive and thrive in a brave, new Drink 2.0 world, you must adapt your marketing strategy to meet
your customers on their terms.
Brands that embrace this philosophy will
discover unprecedented opportunities to
generate revenue, grow their consumer-
base, and earn the loyalty of their most
avid enthusiasts.
Those that do not, well... they won’t be
there for the next round.
This is not “the usual.“
This is Drink 2.0.
Bottoms up.
PHOTO: Hottrix

34. Hi, we’re Espresso. Nice to meet you.
Drink 2.0 was researched, written, and produced by a team of amateur beer geeks and
spirits connoisseurs who also happen to work for an integrated marketing agency called
Espresso. We’re a bunch that firmly believes it’s time to stop wasting precious
marketing dollars creating ads that people ignore, and focus instead on creating
experiences your customers (and prospects) will love. We’re super-committed to doing
just that in the most [cost-]effective way possible—while never losing sight of our
relentless pursuit of being Amazing at Life™.
SAY HELLO,
WHY DON’T YOU?
TORONTO
Jacquelyn Cyr
Chief Executive Officer
416 620 6773
jacquelyn@brandinfiltration.com
twitter.com/infiltrators
BOSTON
Marta Kagan
Managing Director, US
617 477 5811
marta@brandinfiltration.com
twitter.com/mzkagan
brandinfiltration.com

35. Infiltrate Now!
www.brandinfiltration.com