What do Ryan Reynolds, Fergie, and David Beckham have in common? No, it’s not that they are all richer than me (which they are). It’s that they all have their own celebrity alcohol brands.
Celebrities tend to use their name and likeness to create their own products, and alcohol is no different.
Diageo, one of the largest alcohol companies in the world with many brands in their portfolio, recently acquired Davos Brands LLC and Aviation American Gin LLC, which is co-owned by Ryan Reynolds, for $610 million.
The Celebrity Alcohol Industry
Why the alcohol industry? Well for one, most American adults drink alcohol. And second, it is a growing industry. From the early 2000s to the early 2010s, alcohol use in the adult population rose from 65 percent to 73 percent, according to a study from JAMA Psychiatry.
Beer still rules in America, but hard liquor is growing. In 2000, 55.5 percent of alcohol consumption was beer and 28.7 percent was hard liquor. Fast forward to 2018, beer is down to 45.5 while hard liquor is up to 37.3 percent, according to American Addiction Centers.
Within the growth of the hard liquor segment, there has also been an increase in the high-end liquor market. More consumers are purchasing liquor that is more expensive and considered “top-shelf”. These are the brands most celebrities are starting. Within 2018 and 2019, sales for hard liquor products $25 and up increased in sales by 13.2 percent.
Using Their “Brand”
All companies strive for brand loyalty. This is when consumers repeatedly buy one company’s product over the competitors because they trust the company they know. Think of Nike and Adidas; while there are other players in that market, those are the two biggest. Some people only buy Nike, some only Adidas.
The same is true for any industry. A great way to build brand loyalty is to have a product backed by a celebrity. People know, trust, and adore celebrities. If they create a product, people are going to try it, and if it’s good, stick with it. This leads us to celebrity alcohol.
Celebrities use their fame to create more than just alcohol brands. A lot of celebrities tend to promote clothing or shoe brands. But some venture out into weird territories, like when David Beckham sponsored fish sticks.
A more textbook example is Michael Jordan. He was sponsored by Nike, and then created his own brand under them: “Air Jordan.” This has done extremely well and helped “the GOAT” become a billionaire.
Selling Their Business
Reynolds and his group aren’t the only ones to sell their brands to bigger companies. In 2017, Diageo bought the tequila brand Casamigos, which was founded in part by George Clooney. Diageo paid $700 million for it, with the potential for $300 million more to be paid out in the future.
It’s great starting a business. It’s even greater selling it for millions. There is fun and adventure in creating and building your own product. But all good business minds know there is also a time to sell.
Next time you’re at the liquor store looking for hard alcohol, treat yourself to a fancy brand from your favorite celebrity. Think, “what would Brad Pitt drink?” Pick it up, then remember you don’t have the money he does, and go back to the cheap stuff.
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