After reading all sorts of predictions for the upcoming year, I’ve decided to add my own.

However, I should alert you a few things. First, while this blog has a diverse audience, these predictions are distinctly spirits and wine industry oriented. My ‘editor’ thinks they’re a bit too insider. But, it’s call Booze Business…duh.

Second, please be aware of the fact that any similarity between these forecasts and the likelihood of occurrence is, well, unlikely.

Without further ado, here are my tongue-in-cheek predictions for 2011.

Companies

In a complete reversal of expectations, Fortune Brands will become the majority stockholder in Diageo and the expected owner by 2012. “Hey, we’re one of the only American owned spirits companies left,” a Fortune senior executive will say, “…and the groundswell of patriotic fervor helped us raise the funds.”

Wholesalers/distributors

McLane Company (whose parent company is owned by Warren Buffett) will finish 2011 by buying nearly all spirits and wine wholesalers except for Southern Wine and Spirits.

Meanwhile, in a related action, Southern will announce that it is vacating the distributor tier and will become a spirits and wine supplier. Someone with the company will say, “What the hell, we’re the ones who build the brands anyhow… it’s time we started making the stuff.”

Products

The blended scotch market will start to grow dramatically led by Haig, Cutty Sark, Old Smuggler and Black & White. The Scotch Whisky Association will declare a drought of inventories and prices will soar. As a result, consumers will leave scotch by year’s end.

Next year will indeed be the year of brown goods, as sales of blended American whisky will increase, led by interest among millennial drinkers. Brands like Philadelphia, Carstairs and the venerable Seagram’s 7 will lead the growth. Some entry-level consumers will remark, “If it was good enough for my great granddad, it’s good enough for me.”

The maker’s of 4 Loco will reformulate the product replacing the energy drink component with a Viagra-like ingredient. Their advertising will include the statement, “We make no claims about sexual prowess but do suggest that it’s the best 4 hours you’ll ever have.”

Also in the new products area, trying to capture a large share of the aging baby boomer market, the makers of Metamucil fiber products will license their name and ingredients for a liqueur. A spokesperson will explain, “While everyone concentrates on the youth market, we’re looking at the other end of drinkers.” The brand will bring a new meaning to the phrase, the morning after.

Privatization

In a startling development, all the control states looking at privatization will decide to keep the status quo and remain state run. They will explain that control states are the only way for small brands to survive. Not to mention the financial well being of their employees.

Retailers

Big box store chains will reverse course and stop selling major brands at extremely low prices. They will say, “We’re less interested in deep discounts and more interested in building brands and making sure that the independent stores are able to compete.”  Executives in charge will be committed.

Seagram

The former Seagram owner will sell his shares in a music company to invest in a new spirits product that consumers will love, will generate huge profit margins and will revolutionize the spirits business beyond imagination. Unfortunately, none of the distributors will handle the brand.

Now for something totally different and unrelated to the booze business…

My last posting on vodkas from around the world stimulated a lot of conversation about Americans doing business internationally. My friend Ernie Speranza, a toy industry executive and former head of marketing at Toys R Us told me the following story that I want to share with you.

“Ah, the fun of working for an international company. While not as much fun as the spirits world, the international toy world had its share of strangeness too.

We (Toys R Us) were opening our first store in Saudi Arabia and the night before we opened the authorities came in and told us we could not open because of the packaging for Bathing Suit Barbie. It seemed they were concerned that people could not handle such an obscene display of western flesh…. or plastic.

We then had to work into the night using black magic marker on the see-through packaging in order to hide Barbie’s breasts. Here I am, an MBA, the head of marketing for arguably the largest toy retailer in the world with 20 years experience in marketing, and I am sitting on a concrete floor in an Arab country under penalty of jail time using a black magic marker to hide Barbie’s breasts. You just can’t make this shit up.”

A new product idea — Burqa Barbie

­­­­­­­­­­­­­­­­­________________________________________________________________

Getting back to the booze business, Ernie once told me a story of his experience doing business in Japan and I used his story when working with the Absolut brand owners.

Let me set the stage for you… When we started working with our Swedish partners, every now and then they would lapse into conversations with each other in Swedish. Since their command of English was as good or better than many of us, we were a bit dumbfounded and not sure what to make of it. Invariably we were told something like, “oh, please excuse us, it’s sometimes easier to share our thoughts among ourselves in Swedish.” Sure.

On one occasion I decided to relate a story my friend Ernie had told me about a trip to Japan to open the retail market there on behalf of Toys R Us.

They brought an American with them who was fluent in Japanese, and was told to not to let it be known that he was translating. His role was to quietly inform the American team of what actually was being said. The meeting was with a leading Japanese ad agency to discuss messaging, media and related topics. As the meeting ensued, the Japanese translator was giving sanitized answers to the American team’s requests and the American translator was providing the real statements.

When the Japanese ad folks were supposedly saying “good idea”, “we understand what you’re looking for and we’ll work on it” they actually were saying things like “they don’t understand the Japanese culture or people” “keep smiling and shaking your head, they will go home soon and we’ll do what needs to be done.” Ernie kept telling his translator to keep a low profile and his role will be revealed when the time is right.

After an entire morning of this, it was time to go to lunch. The agency execs were still making comments and their Japanese translator kept sanitizing their remarks. Finally, the team from the States could no longer take it. As the waiter came by to take the table’s order, Ernie whispered to his American translator, “now!”  In fluent Japanese, this American, who had sat quietly through the meetings and just taking it all in, began to order food in perfect Japanese. The agency executives turned pale and lowered their heads.

Ernie said, “Please tell them that after lunch we will start all over.”

When I told this story to the folks from Absolut, they just smiled and nodded their heads.

I’ve been thinking about expanding the Absolut Tales that you see in the Categories section to the right. So as I was gathering my notes and recollections, I was reminded of two attempts at trying to launch vodka as the category was beginning to show its strength.

Both attempts failed.

I was running marketing for the Asia Pacific/Global Duty Free division and like the rest of Seagram we needed a vodka brand. By the time I got there plans were well underway — a concept, package, manufacturing, sales and marketing plans and an interesting name, Bolshoi. The brand was made in an eastern European city and the idea was to ship it through Siberia to the port city of Vladivostok and then on to markets in Asia.

When I got to the group, I was greeted with the marketing plan and budget. As I went over the materials to acquaint myself with what was going on, I noticed something peculiar in the shipping costs. There was an invoice for close to or over $50,000 (I can’t recall the exact amount) that was over and above the actual transportation costs. It was marked, “Transport Support.”

I asked about it and was told it was for a company of security guards (probably soldiers) who would accompany the initial shipment through Russia, the Urals and Siberia. The guards were needed to make sure the shipment got there safely.

The brand did well in Asia but was discontinued when Absolut came along. Good thing because the cost of goods would have killed it anyway.

The other attempt involved Wyborowa from Poland. The W’s are pronounced as V’s and therein lies part of the tale.

Imported vodkas in the US were just beginning to make their move and somehow we got a shot at getting the distribution of this brand with a long pedigree. It dated back to 1823 where it sold domestically, became a strong export brand throughout Europe and the first vodka brand to get an international trademark in 1927. Best of all, the Soviet Union dissolved and the Poles were eager to go capitalist.

A group of us went over and quickly learned what it takes to deal with a country emerging from the shadows of communism. We were at a conference table and there were many different liquids for us to drink, as you would expect, while we discussed the prospects of doing business. Mineral water, sparkling water, spring water even tonic. The bottles were in all different colors, some were brown, some clear, some tinted. So when you poured a liquid from a particular colored bottle (none had labels) thinking that this one was the sparkling water, it would turn out to be tonic. Our hosts made it clear that the economic difficulties meant that all bottles were reused and did not allow the “luxury” of dedicated glass.

Okay, I thought, these folks are doing the best they can, making do and trying to move forward despite the obstacles. Good for them.

As the discussions progressed, the issue of package size came up. They had a litre size but the next size down was a 700ml, which is the required size in Europe. Unfortunately, that size is not legal in the US, which requires a 750ml. We explained that in order to sell in the off-premise trade, we needed them to produce that glass. After much whispered conversation and heated exchanges in Polish, the managing director said that they had found an answer. He informed us that rather than go to the expense of new molds and glass manufacture, they would use the litre bottles and simply fill them three quarters full.

None of us laughed nor revealed our amusement. It was, after all, a creative solution stemming from a difficult economic environment. We merely pointed out that the US government wouldn’t allow that and joked about the interference of bureaucrats — east and west.

Turns out that the production problems were solved, a new contemporary package was developed and the brand was launched. Nothing, however, could overcome the brand name and call issue. No one wants to stand in a bar and call for a brand they can’t pronounce. Ad campaigns and on-premise programming couldn’t counter the verbal stumble of saying Wyborowa.

The brand does under 2 million cases around the world — most of it in Poland. The rest is in Italy, France and Mexico. Proper pronunciation is not required.

I came across an interesting and fun piece in Ad Age Daily I wanted to share with you, in case you haven’t seen it.

Derek Walker, whom I’ve never met but hope to, has a blog about advertising. He describes himself as “the janitor, secretary and mailroom person for his tiny agency, brown and browner advertising based in Columbia, S.C.” So right off the bat I like him.

His posting in Ad Age was called, Clients Say the Funniest Things. Since I’ve been on both sides of the desk I found his client quotes and reactions to advertising creative to be right on target and very funny.

So to those of you on the agency side, please enjoy. Those of you on the client side, well, here’s what some of your counterparts elsewhere, ahem, sound like.

For those of you who haven’t witnessed the presentation of creative messages and the reactions, this will be a window on the dance that sometimes takes place.

Here’s the interesting part — these reactions often happen to marketers themselves when they present creative work to their management who, in effect, is a client.

With thanks to Derek Walker for his approval, here are some client comments he has heard:

• “We love the concept, it’s great! But can we change the visual, rework the headline and adjust the copy. Other than that we love it!”
• “We don’t want ‘friends’ or for people to ‘like’ us. We want customers.”
• “In the marketing class I took in college, the instructor said you should mention your company’s name at least seven times in a radio spot to be effective. Can we add 5 more mentions? That would make it great.”
• “We don’t want to use emotions, we’re talking to business people and they don’t have them.”
• On social media: “I get it but I’m worried that people will start talking about our product without us.”
• After laughing hilariously for a couple of moments: “That’s great! It does everything we want and it stands out. But seriously, let’s see the real work.”
• “Everyone loved the concept, then I took it home and showed it to my wife who used to be an English teacher and she said the line isn’t grammatically correct. Can you write a new headline?”
• “We can’t do this; it is nothing like what we’ve done in the past.”
• “Why talk to customers, can’t we just tell them what we offer?”
• “I don’t understand why you put in so much effort. It’s only a website. Couldn’t we just throw up something and be done with it?”
• “None of our competitors are doing or saying anything like that. How do we know it will work?”
• “We don’t want to spend any money but we want everyone to know about us, we want to be everywhere our customers are.”
• “Do we really need to be creative? I mean, isn’t our product great enough to attract attention?”
• “I don’t believe in advertising, we’re only doing this because our competitors are.”
• “I sure miss the days when all we had to do was produce a calendar with tits and ass and everyone was happy.”

For some of us in the booze business, the last one really resonates.

My own personal favorite is when a presenter of creative gets pushback from the client and asks for specifics on how to address the concerns. Too many times, I’ve heard the phrase, “I can’t tell you… I’ll know it when I see it.”

After reading my last post on quality control, a good friend and marketer from outside the booze business wrote me about his recent observation of consumers making a wine purchase decision.

(Of course, I’m taking some liberty and embellishing the story.)

A husband and wife are walking back and forth in the wine section just before Thanksgiving. They are obviously having a hard time deciding what to buy.

At a different time and place somewhere in this world, the owners of a vineyard have worried about the harvest, pressing, fermentation, testing, blending, fining, filtration, bottling and dozens of other things the vintner and owners are concerned about. They taste, refine and taste again. On and on it goes until they are satisfied.

At the same time, the marketing and sales people are concerning themselves with the name, packaging and brand identity. They fuss over the label; they agonize about the back label copy; they pray for good reviews.

We now return to the retail shop where this new wine is on the shelf. Our consumer couple is staring blankly at the shelves. We eavesdrop on their conversation:

He: What difference does it make? Pick one.

She: I’m confused. Should we pick it by price? Or, based on these little cards with ratings?

He: I don’t know. Price doesn’t always mean anything. Do you know what the Johnson’s like?

She: No idea. Let’s ask the sales guy.

He: Are you kidding? Does he look like he knows anything about wine? I might ask him about beer but… It’s like asking for directions. Forget it. Let’s decide ourselves.

She: How about this one? It’s a cute name.

He:  Dancing Elves? Looks more like Fornicating Elves to me.

She: If it were up to you, you’d probably pick Farting Bears.

He: Okay. Enough. Just pick one.

She: I got it. Look at this bottle. It’s all in earth tones. Marge’s dining room décor is orange, yellow and brown — this one will match her table setting!

He: Great. Let’s go. The game starts soon.

Somewhere in the world there is the sound of gunfire. Another vintner has blown his brains out.

I can’t tell you how many times I’ve heard or even used the expression — “It’s all about what’s in the bottle” — when referring to the appeal of a spirits brand.

It’s homage to the intrinsic appeal of the product and recognition that image alone is not sufficient.

Couple of interesting questions…

If that’s the case why do some awful tasting brands of booze sell well? To maintain my friendships in the industry I won’t cite any examples but lets just say there are brands that sell more on image than product taste.

The more important question is, who decides if it’s “in the bottle?” For the smart marketer it’s based on consumer taste tests, sensory panels and research of that nature. Generally there are benchmarks, action standards and criteria or hurdles of acceptability.

Except when the owner or senior executive decides that he/she knows better than the consumer.

At Seagram there were the owners who made the decisions and their deputies who established the criteria.

I once asked the head of quality control who had been trained by Mr. Sam about Jack Daniels and got a 20-minute lecture on what was wrong with the quality of the brand. I protested that his view of the product was counter its performance in the market place and consumer appeal. Good thing Mr. Sam was long gone by this time or my head would have been rolled down the building plaza.

A good friend who was there when Seagram introduced a Scotch called 100 Pipers recently told me a story that illustrates the point.

Despite the fact that the company owned Chivas Regal, the leadership at the time, from Mr. Sam on down, was Canadian whiskey driven. So when the idea of 100 Pipers came along the QC folks, led by the owner, kept rejecting the formulation until it reached their notion of acceptability. Research was ignored; R&D and production was ignored; they kept fiddling with it until it tasted the way they thought it should. They felt that no one wants to drink Scotch so take the Scotch taste out.

The result — a good tasting Canadian whiskey that Scotch drinkers hated and Canadian whiskey drinkers wouldn’t consider. It never clicked.

Guess what? According to data I recently saw, it sells over 2 million cases today with more than half of that in Thailand. Who knew?

Still made by Chivas Brothers and owned by Pernod Ricard. Bet it tastes like Scotch too.

In keeping with the theme of the last few postings on sales promotion, dealer loaders and assorted point of sale issues, I thought I would continue that theme particularly in light of the holiday season. The Advertising and Promotion Awards in the Nov/Dec issue of Beverage Dynamics also prompted me to address this subject.

First, for the uninformed, the Urban Dictionary defines Tsotchke as “free goods given by companies to consumers, buyers, trade-show participants or other target audiences to promote brand recognition or customer loyalty.”

So, here are some points of view on the subject including some picks and pans from yours truly…

The most consistent and impactful POS has to go to the Absolut folks, particularly their multi-case floor displays. In fact, Beverage Dynamics gave it 1^st place for 2010. No wonder, since Carol Giaconelli at Pernod Ricard (and a Seagram alumnae) is among the most imaginative sales promotion people I know. Even after working on Absolut for many years and for different regimes, Carol maintains her creative edge.

While I’m on the subject, I suppose the Hall of Fame for floor displays with loader items has to be the Captain Morgan mirror. According to Sam Ellias, the CM guru back in the day, that promotion was a prominent reason for the brand’s early success. Apparently, all a sales person had to do was to show the mirror in order to get the question, “how many cases do I need to buy?”

I managed to find a photo online. Despite it’s popularity at the time, you can still get one on eBay for under $25.

Now to the pans…

There are lots of awards in Beverage Dynamics for co-packs, gift packs and cartons/tins. The so-called value added packaging. Sorry, but I still don’t get it. In this environment manufacturers expect to entice consumers with Tsotchkes? If you want to measure effectiveness go to a flea market or eBay after the holidays and you’ll find glasses, shakers and pitchers galore. I wouldn’t be surprised if most of them came from retailers.

The Hall of Shame best/worst sales promotion item of all time came under my watch on behalf of Coyote Tequila. Don’t get me wrong the promotion item was great. It was a back bar pedestal with a howling Coyote as the centerpiece with a bottle on the base. Each time the bartender picked up the bottle a button was triggered and the sound of a howling Coyote was heard. Very cool. Very effective.

Just one small problem — Coyote Tequila tasted like crap. As the saying goes, “I wouldn’t drink it with your mouth.”

And now, dear reader, I have two questions for you.

Care to share your nominees for the best and worst promotions you’ve seen now or in the past? Either hit the comment button or send me an email.

Also, as I went through the 40 advertising and promotion awards by Beverage Dynamics, there were lots of first, second or third place winners from many major suppliers — Brown Forman, Heaven Hill, Skyy/Campari, Pernod, Bacardi and others. None were from Diageo. I wonder why? It could be that their market position and brand shares allows them to spend in other ways. That would explain the dearth of POS recognition. But no ads, traditional or digital, made it either. Huh.

As we used to say in Brooklyn, wait ‘til next year.

I first heard this expression when I was running Seagram America’s marketing and went with the CEO to visit markets in South America.

His view of senior management market visits can best be summed up as follows: “What a waste of time. Everything we will see in the stores will be staged for our visit. It’s a tunnel of love tour but we need to do it.”

I felt he kind of missed the point a bit. Market visits were, and still are, designed to “see how we look” and in that regard it’s in the human condition to put your best foot forward. But you can’t stage how the competition looks and what they are up to at point of sale and who can control what Mr. Retailer has to say.

My favorite tunnel of love anecdote took place in a large, important US market known more for its on-premise business than retail stores. Nevertheless, the distributor wanted to show us how good he and our local marketing and sales reps were doing and how our floor programs stood out.

The entourage — a better description might be the sheriff and the posse — went off on the visit/tour and once inside a store, some spoke to the owner or manager while others checked the displays and floor programs.

A member of the group was fascinated by a multi-case display of one of our brands and the very attractive and large case card that accompanied it. Never having seen it before, but still admiring it, he called others over to have a look. Someone touched the case card and to his surprise, smudged it. It was hand painted… and still wet. We all smiled at what appeared to be a permanent holiday display that obviously had just been put up for our visit. “That’s okay,” someone said, “maybe it’ll stay up and look how much real estate the brands have.”

Smiles turned to laughter at the next stop, also a large store with a massive display right at the entrance.

There was the same case card with the same smudge in the same spot.

I have no idea how they moved that thing so quickly.

He was hired as the head of market research (aka marketing insights) from outside the booze industry. Bright eyed and bushy tailed, he decided that he was going to learn the business by talking to consumers, retailers and the sales folks on the street.

For weeks he did nothing but visit market after market and rode along with local sales managers. He learned a great deal in the field, more than by sitting at a desk and listening to presentations.

Among other things, he learned that the business is based on relationships and, for the most part, respect between the buyer and seller. He learned how the 3-tier system works, how the consumer needs to be factored into the equation and the difference between a smart sales rep and one that’s just going through the motions.

The plan was to see as wide and diverse set of retail situations as possible — bars at night and stores during the day. Some open-ended consumer focus groups were thrown in here and there, just for the learning.

One day he found himself in Detroit. The morning was spent in suburban stores and the afternoon was devoted to downtown. The local sales manager for the company was among the best. Really knew his stuff.

A new word entered his vocabulary — “bank” store. Stores in tough urban settings with thick Plexiglas separating the clerks and the customers.

At one large, important account, the owner greeted the sales rep warmly. In a Middle Eastern accent, said to the sales rep, “How are you? What do you have for me today?”

“We have a Seagram’s Gin program coming up that you might want to look into,” said the salesman.

“What will I get?” asked the owner. “Never mind,” he quickly added, “I don’t need to promote Gin. What’s in your bag? Any tee shirts or hats?”

“No, just shelf talkers, window ads, banners and sales sheets.”

“Paper” said the owner. “I don’t need no paper.” “Got any more Captain Morgan mirrors? My father-in-law saw it in the store and took it home. I want one too.”

“I’m sorry,” said the salesman. “That program ended months ago and it was so successful we ran out.”

“ What do you have in the trunk of your car?” asked the storeowner.

By now the market researcher is watching this interchange with his mouth open and in total shock.

“Listen, I’m just showing this gentleman from New York around the market and different stores. You’re an important account for us and I wanted him to see it. I don’t have sales promotion or loader items. Maybe next time.”

“Sure, sure” said the storeowner. “What do you have in your trunk?”

“Nothing.”

“Come on, come on, what’s in the trunk?” asked the retailer.

With total poise and calm, the salesman handed his car keys to the owner and said, “check for yourself.”

He went on, “but this time leave the spare tire.”

{Got any sales promotion stories you want to share?}

Nearly all the business executives I know who use car services for travel avoid limousines in favor of sedans. One exception I can think of, is when there is a large group so a limousine is more cost-effective. The other is the old school types  (now few and far between) who think they are impressing suppliers by picking them up in a block long vehicle.

However, the car service companies sometimes feel they are rewarding a good client by “upgrading” them to a limousine from a town car.

I remember an occasion at the end of a long trip that culminated in an offsite meeting in the New York area and the concern I felt when I was told, “Oh, and since you are such a good customer, we are sending a limo.” “Please don’t; it’s not necessary.” The reply — “It’s on us, no extra charge.”

“You don’t understand,” I said. “My associates will be picked up in sedans or drive their own cars and there is no way I want them to think that I use limos … which I don’t.”

“I’m sorry,” the dispatcher said, “but the car is on the way and should be there in 10 minutes.”

In a near panic I replied, “Listen, call him and tell him to stay at the entrance and I’ll come down the hill to him. No way I want to be picked up at the main entrance.”

So my luggage and me walked half a mile and, like someone who is on the run or has something to hide, I looked left and right a dozen times before I got in the limo. If I could disguise myself, I would have. I got away undetected.

Someone else I knew was not so lucky.

The company plane came back from a trip. It could have been the retreat at Ivy Creek or a Tunnel of Love tour to the regions. I can’t remember which.  It was raining, no, make that teeming. The plane — Whiskey 7 — pulled up to the hanger at Westchester Airport and stopped. The tarmac was full of car service vehicles waiting to pick us up.

When the crew opened the door and dropped the stairs, a driver from the limousine at the head of the line ran up the stairs with an umbrella. We all thought it was for Edgar Jr. But, in a loud voice he declared, “ Mr. A please?”

Out of the back of the plane, more than a bit sheepish, Mr. A said (in a very low voice) “Be right there.”

Mr. A was known as someone who did a great job for the company but also liked his creature comforts. His favorite expression was “The best revenge is a good meal.”

As he walked down the stairs, as the rest of us waited, Junior said, “See you tomorrow… Stretch.”

He was known as Stretch evermore.

To this day I don’t know if he was a victim of an over zealous car company or a guy who got caught.

There’s been lots of press (WSD among others) about Starbucks testing a concept in Seattle to sell wine and beer in a store location to be named 15^th Avenue Coffee and Tea.

Presumably, if the concept works they will roll it nationally. And if they put spirits on the menu it’s fun to think about what these “bars” might be like.

So, borrowing a page from David Letterman, here are my top 10 reasons I won’t be having a drink (other than coffee) at a Starbuck bar/café:

10. Can’t see myself saying, “I’ll have another please barista-keep.”

9. The new drink sizes called “buzzed,” “blitzed” and “I love you man.”

8. Drinks like the Seattle Slammer made with Frappuccino, Starbuck Cream Coffee Liqueur and Puget Sound Vodka.

7. PIA, the instant Whiskey powder.

6. Martinis served in recycled paper cups with caff/decaf and other shot options.

5. Iced Chai Latte with a shot of Sochu.

4. Bar food choices like oatmeal, hummus and veggies and apple bran muffins.

3. Scotch from Kenya, Costa Rica, Sumatra and Pike Place.

2. You line up to order and wait for the staff to stop talking about their date last night and for the customer ahead of you to search for money. Then you wait again for the drink, complain that they got it wrong and leave in disgust vowing never to come back.

1. The thought of a 90 proof soymilk shot with a beer chaser makes me want to gag.

Okay, okay…so I’ll keep my day job.

Care to offer any reasons of your own?

Lots of readers have commented on the last posting about the Bronfman sisters and their $150 million problem with what has been described in the press as a cult. If you didn’t work there and experience the good, bad and ugly, it’s unimportant. But for those of us who were at Seagram it’s at least interesting to try to figure it out. (The rest of you can hit the back button.)

Comments I received ranged from glee at the 3^rd generation’s continued problems, with many references to “shirt sleeves to shirt sleeves”. (See March 13, 2010 posting.)

One reader took me to task for passing the article along:

Unnecessary to kick them now after all the years they were the Liquor business…it’s not news it’s GOSSIP!

The most interesting comment was this one:

The third generation Bronfmans seems to have a spectacularly pathological need to piss away their fortune. Amazing.

So, after much thought and consideration, I’ve come to the conclusion that what they have done with their inheritance — the company or their personal fortunes — is their business and probably more to pity than to scorn. I found this online in an article from the New York Observer (Aug 10, 2010):

Inherited millions are often fraught with an array of pathologies and dysfunctions. In 1987, Joanie Bronfman, then a Brandeis philosophy doctoral candidate and the daughter of Edgar Bronfman Sr.’s cousin Gerald, investigated the peculiar psychoses of the rich in her dissertation The Experience of Inherited Wealth: A Social-Psychological Perspective. In the course of her research, she attended “wealth conferences” and interviewed heirs and heiresses. Drawing from her own experience of growing up “visibly wealthy” and full of “shame” as a result of it, Ms. Bronfman argued that inheritors of massive wealth tend to be emotionally stunted. They adopt paranoid worldviews and come to see humans as radically selfish. They perceive relationships to be transactional. Their misanthropy derives from the attempts of absentee parents to buy their affections as compensation for outsourcing their rearing to hired professionals. These feelings are reinforced when they interact with the world outside their class and are alternately solicited for donations or mocked as dilettantes by the media. It was that last many-tentacled villain she accused of promulgating a destructive bias toward inheritors, one that she termed “wealthism.”

Could also explain the Busch family.

Maybe it should be called the un-lucky sperm club but I don’t think so.

I’m away this week but saw this lead story in Wine & Spirits Daily today. I’m sharing it with you with permission from Meghan. My comments will be posted soon.

Wine & Spirits Daily

October 13, 2010

How a Cult Allegedly Swallowed $150m of the Seagram Fortune

Dear Client:

Vanity Fair has published a detailed, fascinating account of the Bronfman sisters’ alleged involvement with a so-called cult, resulting in a loss of roughly $150 million over the past 6 years.  The article sums up how the heiresses to the Seagram fortune, Sara and Clara Bronfman, became involved with nxivm (pronounced Nexxium) and its founder Keith Raniere.  It also speculates about their relationship with their father and how Raniere “seems also to have tapped into a complex emotional rift between the sisters and their father, billionaire philanthropist Edgar Bronfman Sr.”  Note that Raniere, Edgar Bronfman Sr., Sara and Clare did not comment for this story.

“What seems clear, from court documents and interviews with ex-nxivm members–and those who have come into conflict with the group and its mysterious guru–is that Sara and Clare Bronfman could be in serious trouble,” says the article.

The author, Suzanna Andrews, says that as much as $150 million was taken out of the Bronfmans’ trusts and bank accounts over the past 6 years, according to legal filings and public documents.  $66 million was allegedly used to cover Raniere’s losses in the commodities market, $30 million to buy real estate in Los Angeles and around Albany, $11 million for a private jet, and millions more to fund “a barrage of lawsuits across the country against nxivm’s enemies.”

A number of people have reportedly come forward in recent months with stories about nxivm regarding “private detectives allegedly obtaining bank and phone records of nxivm opponents; stories of its critics being followed and threatened and, in one case, reportedly run off the road by a black limousine; accounts of a motherless three-year-old boy, brought into the group as a newborn under mysterious circumstances, and about the circumstances behind the Dalai Lama’s visit to Albany.”  In all, there are “multiple lawsuits” today involving the Bronfman sisters, with allegations of possible blackmail, perjury, theft and “a conspiracy to forge documents.”

Here’s a link to the full article: http://www.vanityfair.com/culture/features/2010/11/bronfman-201011?currentPage=1

A reader wrote an interesting comment on one of the Crown Royal postings. The question was:

Why do you think Crown launched Crown Royal Black? I’ve seen a lot of consumer comments comparing Black to Special Reserve (as opposed to the cheaper versions of the brand). Would they be risking cannibalization of their higher end product?

Got me thinking. As some of you know I’m a wannabe playwright and I imagined this totally fictitious scene whereby the decision to introduce the line extension took place.

Messing with the Jewels

Characters:

Boss, Marketing Maven and Planner

The Boss enters the room and joins the others at a conference table.

BOSS

OK, what have you got for me?

MARKETING MAVEN

We’ve got a good idea to help the brand.

BOSS

Good? Not great?

MARKETING MAVEN

Just want to manage your expectations, chief.

BOSS

Look… the brand is slipping. Line extensions haven’t helped. So let’s go back to basics; why are we losing sales? (Pause) How do you intend to fix it?

PLANNER

Well, there are two factors at play among consumers.

MARKETING MAVEN

And a sales issue.

BOSS

What kind of sales issue?

MARKETING MAVEN

Our guys are the best in the business but they don’t understand the brand and what makes it tick…

BOSS

(Interrupting) Because of those damn line extensions. I don’t get it either.

MARKETING MAVEN

I’ll get to that in a minute. The other sales problem is that the brand doesn’t get enough focus. There are too many other priorities.

BOSS

That’s nonsense. Aw, all you marketing guys just want to blame sales. When I want an opinion about sales, I’ll give it to you. I repeat, what’s the problem and how are you going to fix it?

PLANNER

Consumers are drinking more whiskey but it’s Bourbon and flavored Whiskey.

BOSS

Okay, what else.

PLANNER

Consumers are confused about all the variations. In focus groups they tell us that they don’t understand the differences and we’re pissing them off. It used to be simple — better and best. Now we have original, best original, different betters, best better, saved recipe, and so on. Some believe it’s all marketing hype.

BOSS

Okay Maven, you created this mess. What are you going to do about it?

MARKETING MAVEN

Borrow a page from our Scotch brothers.

BOSS

Are you nuts? Don’t tell me you’re thinking of a Scotch line extension?

MARKETING MAVEN

No, no … Our Scotch line extensions are easy to understand. The price and quality vary by color… red, black, gold, and blue. We don’t talk age we talk color. Easy choice for consumers.

BOSS

So…?

MARKETING MAVEN

We’ll introduce Black as a line extension then gradually change the names of the other extensions to other colors. Wait until you see Purple.

BOSS

All right. Start with Black and show me a plan for the rest of the line.

The Boss leaves.

PLANNER

You got to be joking.

MARKETING MAVEN

Why?

PLANNER

That’s just going to add to the confusion.

MARKETING MAVEN

Nah, it will work. Besides, in a year, I’ll be off the brand and working on that Vodka.

PLANNER

Listen my friend, if it doesn’t work, a year from now you’ll be lucky to be handling the Tequila brand.

The Keepers of the Quaich is a Scotch Whisky society with membership by invitation only. Along with others, James Espey founded it to acknowledge those who have contributed to the Scotch Whisky industry.

As an aside, James has held very senior positions in the liquor industry including at UD, IDV, Seagram and others. He’s known for the creation of Bailey’s and Malibu, among other brands, and is the consummate marketing and managerial professional.

He also has a great sense of humor so it comes as no surprise that he would help found a 500-year-old society in 1988.

This is a Quaich (pronounced kweix). It is the classic small drinking bowl of Scotland and the centerpiece of the society and the induction ceremony.

Everything about the society and its induction process is serious and worthwhile but in my humble opinion it’s a hoot, especially the stories surrounding the event and ceremony.

On the serious side, while I’m not sure how it works today, the people who ran the society when I was inducted put on a great event. The Keepers had its own tartan and inductees received a cummerbund made in that plaid. There is a coat of arms with the motto Uisgebeatha Gu Brath which means “The Water of Life For Ever.’’

The event itself is held at Blair Castle (not to be confused with the Blair Witch project), which is the ancient home and fortress of the Earls and Dukes of Atholl. The ceremony, as I recall it, was something to behold even for the most blasé  “been there and done it” booze business executive.

Throughout the induction ceremony and the serious and splendid dinner, you actually feel honored and totally enthralled by the evening. It isn’t until the end of the meal when the inductees are full of Scotch, Haggis and singing while standing on the tables that one realizes that this is just good fun.

About the standing on the table bit, perhaps some readers who are members can enlighten me as to the number of injuries that might have occurred over the years when tables collapsed. My memory is a bit hazy on that aspect of the evening. I recall standing and singing a Scottish drinking song and vaguely remember joining everyone else as we stood on the chairs while raising our voices. But, how the few hundred others and I got on the tables to end the song is beyond my recollection.

Ah, and the Haggis. Now there’s a tale Laddie.

As the dinner began two men appeared, one holding the Haggis and the other looked like he had come from central casting and, with a booming voice, recited the Robert Burns poem, Address to a Haggis. Allow me to set the stage for you.

As you remember from High School, Robert Burns was a renowned Scottish poet and lyricist, widely regarded as the national poet of Scotland.

Haggis is a dish containing sheep’s liver, lungs and heart mixed with onion, salt, oatmeal, other stuff and simmered and served in a sheep’s stomach. Let’s just say that, like Scotch, it’s an acquired taste. (The term ‘mystery meat’ you used in High School doesn’t begin to describe it.)

The poem is a celebration of the dish’s role as a unique and symbolic part of the Scottish identity and culture. So it’s more than fitting that the Keeper’s dinner should begin with this presentation of the Haggis accompanied by the Burns poem.

As the story goes, at one particular induction dinner, things went awry. Picture the server carrying this enormous Haggis followed by the booming voice reciting the poem.

As he walks down the dining room, his voice gets louder as he approaches the final verse, the translation of which is:

You powers who make mankind your care

And dish them out their meals

Old Scotland wants no watery food

That splashes in dishes

But if you wish her grateful prayer

Give her a haggis!

Just then the server slips and the Haggis is tossed four feet in the air. It lands with a loud thud and showers Haggis all over the place. We’re talking meat and offal on the tables, floors, chandeliers and a few dozen Keepers in tuxedos with their unique tartan cummerbunds.

At which point one of the longstanding members was heard to remark: “I see they’ve added a new element to this year’s event…the flying Haggis.”

There were two couples and the pilot on the small plane as it returned from sightseeing in the African countryside. They were heading for the “base camp” some 20 minutes away. Actually, base camp was a misnomer; it should have been referred to as the Ritz in the Jungle.

It was a very elaborate sales incentive trip that a spirits company decided to offer its distributors and outdo Seagram. From what I’m told this was indeed a spectacular trip.

No one really knows what caused the eruption and noises coming from one of the distributor’s stomach. It could have been the huge breakfast, maybe the elaborate dinner the night before, perhaps jetlag, or even the water. Possibly, it was all of the above.

Whatever the cause, the big guy in the back row was in distress. “Hey pilot, I got some stomach trouble…real bad…how long ‘til we land?”

The pilot’s answer was far from comforting. “About 20 minutes. Can’t go much faster.”

“You don’t understand son, I can’t last that long. Isn’t there any place closer where you can land?” howled the distributor.

“Not really” said the pilot.

By now, the other three people in the plane were also in distress worrying about his discomfort and the elevated sounds coming from the distributor. “Please,” said his wife, “isn’t there anything you can do.”

“Well…Okay, I have an idea,” the pilot offered. “There is a flat area without brush just ahead. I think I can land…it’ll be a bit choppy…not too bad…just hang on.”

Sure enough the pilot landed amidst a few bumps but surprisingly smooth for the middle of the jungle.

“Now what?” asked the distributor.

“As soon as I stop, leave the plane and head about 200 yards to that brush area and do what you got to do.”

The plane had barely come to a stop when he jumped out and did a combination crab-walk and jog for the foliage.

A few minutes later he walked out of the brush with a smile on his face. Ran to the plane, got in and the pilot immediately took off.

*                                             *                                             *

Somewhere in eastern Africa there is a bushman who often tells the villagers the story of how he was tending his flock and, out of nowhere, an airplane lands. A big white man jumps out of the plane into the bush, makes awful body noises, jumps back into the plane and off they go.

To this day the bushman must be telling his friends that he has no idea about how or why this happened. But it was surely the strangest thing he had ever seen. It took hours to round up his flock.

*                                             *                                             *

If it were a Seagram trip, there would have been a bathroom on the plane.

Think about E.T. and Reese’s Pieces. Smirnoff and James Bond. “You’ve Got Mail” and Starbuck’s.

Product placements in film and TV, depending on whom you talk to, are considered a critical brand building or reinforcement tool. There are some, however, who see it as low impact — it’s ok if you don’t have to pay for it.

In doing a little research on the subject lately, I’ve come across some interesting information.

First, consider this from a study on the subject: (Link)

“…the type of product-placement an advertiser opts for should depend on their marketing goals. If you want to build awareness … it’s probably best to opt for a placement that plays a role in the story itself. But if you just want to reinforce preferences for a well-known brand (say, “Coke” versus “Pepsi”), it’s probably not necessary to go to that expense. Just having your brand in the movie works just as well.

Second, I spoke to Joel Henrie who runs Motion Picture Placement, a leader in the field and an old friend who informs me that the upcoming Wall Street: Money Never Sleeps (the sequel) had adult beverage companies tripping over themselves to pay for placement. We’re talking big bucks here.

My first exposure to product placement (albeit from a distance) was shortly after I joined Seagram. It was on behalf of Herradura Tequila.

Based on film industry connections, the company had an opportunity (which I believe turned into a mandate) to place the brand in a film called Tequila Sunrise. Aside from the title as a perfect fit, the placement involved brand exposure galore — verbal mentions, bottle exposure on the bar and consumed by the actors, signage, even a bus passing by with a Herradura ad on the side. So, there was a role for the brand in the story, not a central role, but the title alone made the brand a key element.

Even more, Tequila Sunrise was star studded and sure to have target audience appeal. Mel Gibson, Michelle Pfeiffer and Kurt Russell starred; Robert Towne wrote and directed the movie. A sure thing, right?

The movie sucked and never lived up to its promise. A Variety review summed it up nicely: “There’s not much kick in this cocktail, despite its mix of quality ingredients.” Roger Ebert wrote, “It’s hard to surrender yourself to a film that seems to be toying with you.”

The small number of people who saw the film agreed.

I’ve always been a proponent of product placement and integration. To me, it makes good sense as a brand-building tool. But, I’ve learned the following:

• Positive impact on a brand is not a foregone conclusion. No matter how well the product is shown and integrated, sometimes, the only winner is the TV or film producer. But, that’s true for all media.
• For adult beverages, how the product is portrayed is as important as the portrayal itself. Enough said.
• If the story doesn’t click with audiences, the brand becomes “collateral damage.” Unfortunately, there’s no real way to predict it, but worth the shot.

Have you noticed what E.T. did for Reese’s Pieces? As I’ve been told, it was first offered to Mars on behalf of M&Ms and they turned it down. Hershey said yes.

Wine and Spirits Daily had a story last week entitled, IS TEQUILA THE NEW VODKA?

Good question.

The article quoted a writer at the Washington Post who said… “A new trend emerges: the proliferation of ‘ultra-premium’ tequilas targeted at a club crowd that slowly has begun to trade in Grey Goose for Patron.” The article goes on to point out that “various social indicators, such as Al Roker claiming on the Today Show that Tequila is the new Vodka.” (I must have missed the announcement about Al Roker as social forecaster. I thought he did the weather.)

A few observations:

Drinking Patron at clubs at the expense of Vodka brands like Grey Goose is not a new concept. They are often interchangeable depending on the mood and occasion. Both brands are at the top of the heap in terms of being icons.

Further, it’s not Tequila, it’s Patron. Generally speaking, among most consumers, the Tequila category has three brands…Patron, Cuervo and all others. Remember the old adage? Consumers drink brands not categories.

Tequila will grow as it continues to be the focus of new product introductions and in that regard, it will be the new Vodka. I don’t have the actual data but I’d bet there have been more new Tequilas introduced in the last few years than Vodka. The shifts in Vodka preferences from the high end to mid-priced and value brands make new Tequila entries more enticing.

So, among most consumers, Vodka will continue to rule. Whether Al Roker thinks so or not.

The Chairman of a global spirits company decided that he wanted to build a distillery in the land of his ancestors in Eastern Europe. After all, he reasoned, the communist regimes had recently fallen and since most countries in the region were impoverished, it would be economically beneficial for all. The country was known for its Vodka capabilities (not to mention consumption) and had the manufacturing infrastructure. With some upgrading and reasonable investment, world class Vodka could be produced and sold by his company.

Perhaps the rudiments of manufacturing infrastructure existed but everything else in the country was in a state of economic disrepair.

Nevertheless, the wheels were set in motion. The executive in charge of the European business unit was given the assignment of making it happen.

Things moved along well. A plant with capacity for expanded growth was found, production experts were engaged, top-notch grain was somehow located, distillation and formulae were worked out and the plant began to produce Vodka.

Proud of the achievement his idea set into motion, the Chairman decided that he would come to the country to officially open the factory and visit with the leaders of the newly democratized country. He also thought it would be a good idea to meet with the leaders at a lakefront villa or dacha.

This was a major problem for the executive in charge. Even the most lavish dachas were shabby and dilapidated and the Chairman and his entourage were used to the very best.

What to do? His colleagues in New York told him to spare no expense. The Chairman was known for his anger and disappointing him would be a career ender.

So, the head of Europe found a dacha, engaged workmen from the country and flew in top-notch carpenters and plumbers from England to assist. Floors and ceilings were repaired, electricity was enhanced, plastering and painting took place and the rundown dacha was transformed. Furnishings were rented and flown in.

About a week before the scheduled arrival, the team realized that getting food the Chairman enjoys was an additional problem. No worries … a container of provisions was purchased in London and also flown in.

All was set for the arrival of the Chairman after much last minute scurrying and concerted effort.

His private plane was met and, since it was late at night, the entourage was driven right to the dacha and went to bed.

The next morning the executive arrived at the dacha and was asked by the Chairman to join him at breakfast, which was an elaborate meal.

The executive (holding his breath) said, “So, Chairman, how did you enjoy your first night?”

To which the Chairman replied, “Oh you know me, I’m used to roughing it in these third world countries.”

The Gulfstream took off from Stockholm’s Arlanda airport with a full load of executives, all of whom had the satisfaction of knowing that the global distribution rights to Absolut were signed, sealed and delivered.

If you’ve ever flown on a corporate jet, you know how great it is. You board quickly and easily, take off on time (or even ahead of time) and generally are met on the tarmac a few steps from the plane and off you go.

Despite this great convenience, I’ve heard people complain about the absence of frequent flier miles, which always makes me laugh at the silliness of the thought. For me, however, this particular flight had one disadvantage — it was full of Seagram brass. Every one of the 14 seats was taken and there was no place to hide. And, every one of the 14 had 5 or 6 ideas about marketing and how best to grow the brand further. After all, we were taking over the brand from the legendary Michel Roux who grew the brand with a series of innovative and effective marketing actions.

While getting the brand elated us, we were also mindful of the daunting task ahead. Especially the marketing guy…me.

This was best summed up by the owner who, after laying out his thoughts and vision, said, “Arturo, I have four words for you — don’t f**k it up.”

Michel Roux was indeed a hard act to follow. Carillon Importers was part of a large corporation, but he ran the brand entrepreneurially, with vision and resources to take this fledgling brand to renowned marketing levels.

There is a great story about Michel’s brand champion efforts that I recently asked him to confirm. I wasn’t sure if it was true or a booze business myth.

It seems he was in the Detroit airport waiting to depart when he noticed a man wearing an Absolut t-shirt. Alarm bells went off in his head for two reasons. First, there were no Absolut t-shirts and he and didn’t want them, so clearly it was counterfeit. Second and most important, the man in question (according to Michel) must have weighed over 350 pounds and despite the triple XL size, it was a very snug fit.

Clearly bothered by his brand portrayed in such a manner, Roux stopped the man, told him he was looking for that particular t-shirt and offered him $100 to buy it. The man accepted the generous offer. They went to a souvenir store, bought a replacement and now Michel owned it.

The man left happy with this transaction and the Absolut t-shirt was promptly tossed in the trash.

True story.

In my opinion, the Absolut brand has gone through 4 periods in its development. The first era was with M. Roux and Carillon Importers. Next came the Seagram years and further, albeit different, growth. The third period was one in which the brand began to languish despite the efforts of some (but not all) capable people. Today, the ownership of the brand is in the hands of Pernod Ricard with the difficult task of once again polishing its luster.

I plan to cover the Absolut story from these vantage points in the future.

Borrowed credentials is a term I like to use when a brand “borrows” something or someone to identify with, such as a brand name or a person as the endorser.

The intent is the “approval” or “license” to give a brand some prominence. But, more often than not, it doesn’t seem to work.

Three categories will help you to see where I’m going:

1. A brand that has licensed the name from another business or category. Godiva, for example.
2. A brand closely identified with a star or celebrity. Such as, Ciroc.
3. (My favorite) A brand named after a star or celebrity.

So here we go…

Licensed Brand Name

The two that come most readily to mind are Godiva and Starbuck’s, both in the liqueur category. I gotta tell you that I thought Godiva would be a crack-of-the-bat homerun. And, I wanted to license Starbuck’s so badly, I could taste it. Alas, neither has set the world on fire.

Association with a star or celebrity

This is a mixed bag best characterized by the nursery rhyme… “There once was a girl with a curl in the middle of her forehead. When she was good she was very, very good but when she was bad she was horrid.”

So in the “good” category we have (not necessarily in order of goodness):

• Ciroc and P Diddy (forgive me if I have the wrong name; who can keep up?). Probably the gold standard in celebrity links.
• Crystal Head Vodka and Dan Aykroyd — talk about chutzpah.
• Cabo and Sammy Hagar — (notice I didn’t say Cabo Wabo) good for you Skyy, it’s about the product not the star.
• Red Stag and Kid Rock — the brand is a homerun with or without him. But he sure does help.
• Margaritaville and Jimmy Buffett — remind me to tell how this came about. But even without Seagram and me, it’s doing well. But, Land Shark beer is doing even better.

The “not so good” entries I’ve come up with so far (let me know about any I’ve missed) include some that faded faster than a cold beer on a hot day:

• 901 Tequila and Justin Timberlake — run that by me again? I got it but I don’t get it.
• Sobieski Vodka and Bruce Willis — it’s the price point, dummy. It ain’t about you. Even if you’re still involved.
• Godfather Vodka — You got to be joking.
• Conjure Cognac — by Ludacris. I totally agree but ludicrous is spelled wrong.
• Armadale Vodka — by Jay Z.  Why don’t you ask P Diddy how it’s done?
• 3 Vodka — by Jermaine Dupri. Enough said.
• Mansinthe — by Marilyn Manson. I didn’t make this up, folks.

Named after a star or celebrity

My favorites by far. Do I hear a drum roll?

So far I covered the good and the bad. Here comes the ugly:

• Trump Vodka. He doesn’t even drink for heaven’s sake. Could be a pilot for Celebrity Booze.
• Willie Nelson’s Old Whiskey River Bourbon. Enough said.
• Danny Devito’s Limoncello. Close but no cigars.
• Jefferson and Sam Houston Bourbon. Not kidding; Google it.
• Frida Kahlo Tequila. I love her and her work but… who dun it?

And the winner is…

• McMahon Vodka. Would have worked with a name like, “Here’s… Johnny.”

Lessons learned:

None of the top selling brands have borrowed credentials…unless you count Captain Morgan.

I would like to meet the people behind some of these efforts, there’s a bridge they might be interested in buying.

Where would the spirits industry be without brands to pour off?

What’s next…the Lindsey Lohan Liqueur?

The last posting about Seagram and vodka neglected to point out that while there were difficulties in the category (pre Absolut) the company had phenomenal growth with Seagram’s Gin, Crown Royal and Captain Morgan.

In fact, Captain Morgan is a case study — in spirits and other businesses — about how to develop, nurture and grow a brand when all oars in the water are pulling in the same direction. I’ll go into this in more detail another time.

For now, let’s look at some numbers.

Currently, Captain Morgan Original Spiced Rum plus Parrott Bay sells over 6 million cases in the US. But, for the first time in its history, the brand had a down year in 2009. This is probably due, in part, to the economy but also a function of the growth of Rum brands like Sailor Jerry and Admiral Nelson — both brands grew by double digits from ’08 to ’09.

Further, from the birth of the brand until the close of Seagram, Captain Morgan had a Compound Annual Growth Rate of over 16%. For the past 8 or 9 years the CAGR was less than half of that.

Could be due to a number of things…a new generation of drinkers with new Rum tastes and interests, a changing competitive climate, the inevitability of brand life cycles, portfolio focus elsewhere, all of the above and other reasons.

For those who worked on the brand back in the day, I’d bet that among the most vivid recollections is hitting the million cases mark. It took well over ten years for the brand to hit that number in 1995. But it took much less time to hit two million cases.

In fact, between the planning for a million cases celebration and the event itself, the brand doubled its volume.

That, my friends, is called momentum.

Until the “acquisition” of Absolut, Seagram was not just a vodka-less company; it was an Ostrich hiding its head in whiskey pretending not to see the world of booze change.

Sam Bronfman’s aversion/reluctance to sell vodka is widely known. Perhaps for him, liquor needed to be aged or brown or have the word whiskey on the bottle. Whatever his reasons, the company was never a vodka player. In fact, when I was in market research, one of the older executives told me the story of how Mr. Sam reacted to a research project about changing consumer alcohol tastes. It may be apocryphal but it sure has the ring of truth.

One of the most notable researchers of the 50s and 60s, Alfred Politz, was an early leader in the techniques of polling and opinion analysis. He was commissioned to do a study of changing consumer alcohol tastes and attitudes. The presentation of the findings took place at an executive retreat and, in an unusual display of bonhomie, Mr. Sam suggested they review the results while sitting around the pool.

Page after page of the report pointed to the potential rise of vodka at the expense of whiskies. Politz was said to have been very clear that the evidence overwhelmingly leaned in this direction. It was also clear that Mr. Sam was getting angrier and angrier. Finally, he got up from his chaise, grabbed the report out of the researcher’s hands, threw it in the pool, muttered some obscenity and stormed off. Politz was said to have been relieved not to join his report.

So while competitors were developing Smirnoff, Popov, Stolichnaya and other brands, Seagram was struggling with entries like Wolfschmidt, Nikolai and Crown Russe.

Finally, someone decided to create a new vodka brand but, unlike most of those on the market at the time, it was to be imported vodka. In fact it was called Seagram Imported Vodka or SIV, as it was lovingly referred to. Imported all the way from Canada.

Management at the time knew that the “white goods” race was passing Seagram by and the pressure to succeed was very strong. So much so that when a presentation to a major California chain was set up to expand distribution, the “brass” decided to attend.

Picture this, a president, an owner, the head of marketing, the head of sales, brand managers…all fly off in the company plane to attend this meeting on SIV. They get to LA early with time to kill before the meeting. Since a few of them had never seen the inside of a chain store liquor department, they decide to visit a few stores.

Next thing you know there are 4 or 5 suits walking the aisles checking the shelves and watching consumers make decisions and purchases. They’re paying particular attention to the vodka section and spot a man looking at the brands and seemingly trying to make a decision.  A member of the entourage goes up to him, takes a bottle of SIV off the shelf, hands it to the man and says, “check this one…it’s imported.”

The man studies the bottle for a moment or two looks at the exec and, as he puts it back on the shelf says, “that’s not imported, it’s Seagram.

It took years to get the owners of Godiva Chocolatier to license the brand for a chocolate liqueur. It took a lot less time to learn that building the brand would not be easy.

Despite the absence of a meaningful liqueur in the portfolio, distribution was slow and since liqueurs are not a fast moving category, the turnover rate was even slower.

There’s a great story of a Seagram executive who goes to a Chinese restaurant on Long Island and, while he and his family are waiting for a table, he spots a bottle of Godiva on the back bar. This is the last type of restaurant he would expect to find the product and figures that the distributor sales rep that sold the account must be at the top of his game. What could he have said about the brand that got this small neighborhood restaurant to order it?

He goes up to the owner and says, “What did the salesman tell you to get you to take in the Godiva?” The owner, looked a bit puzzled at first, then smiled and said in a thick Cantonese accent, “Oh, he say two free vodkas if I buy the Godiva.”

After much research and thought, we came to the conclusion that despite the power of the brand name, there was a discontinuity between the expectation of the chocolate taste and the delivery of the product. When you say chocolate to people, they think, chewy, sweet and unique mouth feel. This is hard to deliver in a liquid product without ending up gloppy. So for many, the expectation was chocolate but the product delivered a Kahlua-like consistency.

We had to move out of the chocolate-only world and get closer to cream liqueurs. Two line extensions were introduced, a cappuccino/chocolate and a white chocolate, both cream products.

These strategic line extensions had a number of benefits. First, the facings went from 2 to 6 and the billboard effect on the shelf got the brand noticed and bought. Second, despite the adages not to line extend from weakness, the new forms actually benefitted the base brand (original), which started to grow. A brand that was languishing in the 10,000 cases range grew to nearly 50,000. After Diageo got it, it grew to over 100,000 cases.

I noticed that the brand dropped back to 50,000 in 2009. I also noticed that Campbell sold Godiva Chocolatier to a Turkish company called Yildiz. But I don’t know whether Diageo still has the license and distributes it. Anyone know the status of the brand?

One thing I can tell you is that if you see a bottle of Godiva on the back bar of any Chinese restaurant on Long Island, I bet it’s been there since 1995.

Sort of raises the question about spirits brands and what I like to call ‘borrowed credentials’ – also known as licensed or endorsed brands. Stay tuned…

Maurice Kanbar is among a select group of entrepreneurs who have changed the spirits industry. And, he’s still at it.

Like my earlier posting about David van de Velde, Maurice is another visionary businessman who has spent a lifetime on finding a hole and filling it. Maurice has been inventing, designing and developing a host of products ranging from films and how we watch them, to surgical instruments, to things, that when we see them, we say “now why didn’t I think of that?” The man has thirty patents and products to his credit.

I first met him in the early days of Skyy Spirits when I was sent on a fool’s errand to see if he would be willing to chat about an acquisition. This was in the late 1990s and the brand was just starting its ascendency. We were feeling the effects of its growth and one of the geniuses in Sweden thought we might be able to “buy him out.” After just a few minutes of chatting, he asked the key question – why sell while the brand is still growing. Duh. Sure got my respect.

But what I really admire about him is his judgment and intuition balanced by the tenacity of an inventive mind.

Examples:

He complains to a doctor friend that he gets headaches and a hangover from Cognac. His friend explains about congeners and tells him to drink vodka. The next thing that happens, he studies the world of spirits, makes advancements to the distillation and filtering systems and creates Skyy Vodka.

At the time, no one in the food or beverage business used blue for packaging – don’t ask me why…I once got my butt chewed for presenting a new product in blue packaging. Maurice didn’t let this narrow, stay in the box thinking confine him. I don’t know for sure, but I suppose he was thinking Skyy = blue. Another duh.

When his brand starts growing, he’s smart enough to surround himself with people who know the business like Foglio and Ruvo.

So he’s an interesting guy, to say the least.

His newest effort is Blue Angel Vodka, which he says is based on further advancements in distillation that produces an ultra smooth product. But the really cool part about it, in my opinion, is that the inventor has further increased his marketing skills. First, his signature drink is the Blue Angel Martini (BAM as he calls it) made with blue curacao. Also, I like his tongue-in-cheek slogan – “the world’s second best vodka; we’re still looking for the best.”

On second thought maybe he should stick to inventing.