Cachaça must focus on online sales

On the first leg of my cachaça trip in early February 2020, which led me to Rio Grande do Sul, I discovered something quite interesting about the industry. Many distilleries sell the majority of their products on site.

Now, I’ve noted this previously in other postings. But as current events have drastically changed circumstances, I thought I would revisit this subject.

Though I don’t believe there is a federal decree, most states, particularly those where there are large numbers of distilleries, have ordered producers to close their doors to tourists and on-site sales.

I’ve bought cachaça during the pandemic. First, I purchased through my favorite local store, which is now making home deliveries. Second, I purchased from a producer and had the box delivered to me directly. But I didn’t make this purchase online. I had to email the producer because they don’t have a portal to make online purchases.

I have no numbers in front of me, but it’s safe to say that most distilleries are suffering. As I’ve also noted previously, there are few lines of distribution between distilleries and marketplaces. Producers have to connect directly with stores to get their products on shelves. Not an easy task with more than 4,000 legitimate distilleries.

I should note that the largest seller of cachaça in the country is the online-based Cachaçaria Nacional. Its brought exposure to cachaça, as a whole, and has been great for bringing previously small distilleries into the spotlight. But, it’s not easy to get noticed on the site.

There doesn’t seem to be any limitation on selling online or shipping liquor across state lines. So why aren’t more individual producers selling directly to consumers? Sure, for individual distilleries, this might mean increasing their emphasis on marketing. But one can see how fragile the systems are. Essentially, because travel is limited, there is only one major outlet for distribution, which may or may not treat distilleries the same. In this competitive game, shouldn’t most producers emphasize marketing? 

This pandemic is going to put a lot of people out of business and teach those that survive some valuable lessons. Relying heavily on in-person sales, particularly in remote areas, is damaging to business and the future of cachaça.

Relying on one point of online sales is also not a good idea. One can have the best products in the world, but how does one stand out against 250 other producers, also with good products, selling on the same site? It’s nearly impossible.

Marketing is not everything. But in the cachaça market, it’s probably close to it. If you’ve got a good product, or even a halfway decent product, it’s not going to sell itself through the online efforts of other people. It’s only going to sell if one gets their name into the public consciousness.

My prediction isn’t particularly bold. By the end of this crisis, we’re going to see quality producers go out of business. Those that last will be those who’ve invested in marketing and brought exposure to their products to gain an advantage on major online retailers.