Spirits Brands Spending Big Money These Days


We had an investor prospect ask us an interesting question recently. “How much do spirits brands generally spend on marketing as a percentage of revenue?”

In doing a little research, we find that’s a tough question to answer in detail.

Victoria Duff states, “If your company is volume-driven, like Wal-Mart, your percentage spent on advertising will be smaller than if your company is margin-driven, like a liquor company. Wal-Mart spends approximately 1 percent of its revenue on marketing and advertising, but the liquor industry companies generally spend 5.5 to 7.5 percent.”

Advertising Age reported in 2008 the following numbers. 

DISTILLED AND BLENDED LIQUOR

Advertising as a % of Sales

15.6%

Advertising a % of Margin

25.9%

Annual Ad Growth % in 2007

18.2%

WINE & BRANDY             SPIRITS

Advertising as a % of Sales

3.6%

Advertising a % of Margin

10.6%

Annual Ad Growth%

     in 2007         10.6%

MALT                         BEVERAGES Advertising as a % of Sales

9.5%

Advertising a % of Margin

18.3%

Annual Ad Growth% in 2007

6.9%

Jamie Turner of 60 Second Marketer Reports that alcohol brands are spending 10.5% to 14.5% on marketing. His numbers come from SEC Filings. In the graphic below, courtesy, Statista.com you see what has been spent in the aggregate by Diageo per year since 2012.

Diageo Worldwide Spend

While it is not related specifically to the percentage of revenue spend for marketing discussion it is worth sharing what is likely the most definitive article on digital advertising evolution in the alcohol business.

The article titled, Alcohol Marketing in the Digital Age is the best I’ve seen.

In conclusion, it’s safe to assume that the smaller the brand, the lower the revenue, the earlier in the release cycle of the new brand, the higher the percentage of spend will be on marketing. Spirits advertising rings the highest as a percentage and that’s no surprise. That is where the highest margins exist.

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