“It will never sell” vs. “You never know”

I was chatting with James Espey the other day and the subject of Baileys Irish Cream came up. For those of you who don’t know him or of him, suffice to say that James is a legend in the spirits industry as a very senior manager that has successfully run companies, categories and brands. In addition to creating the Keepers of the Quaich (see Sept. 28, 2010 posting) James’ innovation history includes the invention of Malibu, significant involvement in Baileys and much more.

He is still at it with a range of new and unique ventures including Last Drop Distillers among other ventures.

Anyway, the subject turned to what it takes for a brand to withstand the naysayers (generally corporate types who are risk adverse and would rather buy than create) and the prognosticators (the self proclaimed experts at prediction of success and failure). James told me the story of a well known industry observer who took one look at the Baileys idea and proclaimed, “that s**t will never sell.” Well, the forecast was wrong but never mind, that gent went on to make millions in the industry anyhow.

The Baileys story I had heard came from the late Jerry Mann (former Seagram CEO) right after I took over new products. His advice began with a typical Jerry Mann comment. “Listen pal,” he said between puffs, “in this business, you just never know what will sell and what won’t.”

It seems that when Jerry was running a distributor operation in California a friend called and asked for a favor, which was to buy some 5,000 cases of this new cream liqueur. He thought it was doomed for failure but a friend asked a favor and Jerry complied. As he put it, “we stuck the crap in the back of the warehouse and forgot all about it.” Then one day out of the blue, a sales manager called and informed him that retailers were clamoring for “that crap at the back of the warehouse.”

7 million cases per year later, despite ups and downs, lower priced knock-offs and diet and weight concerns, Baileys is still going strong and a true global brand.

According to James, it was launched using a well thought out new product approach, a strong dedicated team, management commitment and an understanding of consumer needs and wants. Which I believe gave the brand its momentum. Once you get momentum, boys and girls, even a large bureaucratic behemoth can’t slow you down.

Just ask Seagram’s 7 Crown.

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Cuervo for Sale?

I no sooner posted the piece below on South America when my inbox lit up with stories about the possible sale of Jose Cuervo International.

(In case you don’t know, the brand(s) are owned by the Beckmann family and distributed worldwide by Diageo.)

Both Buffalo Trace Newsletter and Wine and Spirits Daily had special additions on Sunday reporting that the Beckmann family was in talks to appoint Barclays to explore a possible $2 billion sale of all or part of the Jose Cuervo brand.

I heard from a wide range of people who know the brand and the players well. Their opinions on the matter were all over the place, but very interesting.

Some wondered about the low price…

“As recently as a few years ago, they bragged about a $5 billion price tag …$2 billion must be for part and not the production or for limited worldwide distribution…seems crazy.”

The more cynical views had to do with the historic combative nature of the relationship between Cuervo and Diageo…

“I once heard a senior Diageo executive say that if Patron were available, they would gladly overpay for it in order not to have to deal with the Beckmanns any longer.”

“Diageo’s recent poor performance on the brand now looks like a strategy to keep the value low in order to buy the Beckmanns out.”

My own view is that it could be (as WSD suggests) based on a preemptive move against the possible sale of Sauza, although count me among those who think Beam Global will remain in tact and flourish in the future. Perhaps it’s a warning shot to Diageo to pick up the pace since their contract comes to an end in a few years.

What I can’t understand is where Proximo (also owned by Beckmann family members) fits in the equation. They are doing well and could easily handle the addition of Cuervo to the portfolio. But, their strength is strictly in the US. So, perhaps the low price tag is for international distribution.

One thing for sure is that the Beckmanns are shrewd and unpredictable so who knows what they have in mind.

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It Ain’t Always Carnaval

When the music stopped during the never-ending corporate version of musical chairs, he found himself with the glorious (or was it to be inglorious?) title of Executive Vice President Marketing and Strategy, Americas. A mouthful. Sounds better than it was.

From Canada to Chile, as he liked to say, he learned about the international side of the business, cultural differences, people and working style differences. In fact, Canada was a dream. Despite the business and profitability constraints, the Canadian operation was top of the game.

South America was another matter.

The Americas was run by a South American ex-pat who was smart and hard working but a micro manager with an occasional reluctance to pull the trigger. In other words, tough to work for.

But, all in all, the experience was terrific. Where else but in Latin America are the following expressions a life principle?

It’s better to apologize than ask permission.

A red traffic light is merely a suggestion.

All things are possible (said while rubbing the thumb, index and middle fingers).

But then, and even more so now, security while traveling was an important issue. On one of the first trips, for example, he was met by a driver/security person just outside of immigration who chastised him for putting his passport into the breast pocket of his jacket. He was informed that he wouldn’t get out of the building without having his pocket picked.

Big deal he thought. A friend had his wallet picked on the streets of Paris.

He heard about a French colleague mugged during daylight in Sao Paulo. Another had his computer ripped out of his hands in Mexico City. Most of his South American associates lived in gated communities but, unlike the US, the gatekeepers had machine guns.

So what, he thought, I grew up in Brownsville, Brooklyn, NYC and the world is a tough place. “Don’t rain on my ‘salad days,’”[1] was his motto.

Then one fine day he got a wake up call.

The Swedish partners decided to concentrate on expanding the business in Latin America and wanted to have a conference to discuss brand development issues in the continent.  The marketing folks wanted the meeting to be held in Bogota, Columbia. He wasn’t pleased but, whatever… never been there, how bad could it be?

To go there he needed a visa and had to go through Corporate to get things arranged. That’s where the story begins…

He comes into his office one day and Mary, his assistant, says, “You can’t go to Bogota because Leo won’t let you go.”

The scene shifts to Leo McGillicudy – the nicest and most decent person he had ever met at the company. Head of security and a former former FBI agent, Leo was a friend and someone he respected and admired.

“What the hell?” he said to Mary. “I’ll call him,” knowing full well if Leo said no, it was no.

He: “’Hi Leo. How’s the family?” (Pause) “Great…listen Leo, what’s this about my not being able to go to Bogota?”

Leo: “Are you nuts? Do you read the papers? It isn’t safe and I can’t let you go.”

He: “ Come on, it’s my job, how bad can it be?”

Leo: “Are you listening? The last thing I need at this point in my life is to go to Bogota and save your sorry ass.”

He: “What am I am suppose to tell my boss…”

Leo: “Whatever you want. You aren’t going.”

He: “But he’s from Latin America and I’m new on his staff…what’s he going to think when I tell him I’m not going?”

Leo: “I don’t give a s**t. Tell him I said he can’t go either.”

The meeting was held in Aruba.


[1] Refers to a person’s heyday when somebody was at the peak of his/her abilities

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