I have chatted with a number of people lately, both in and out of the alcohol industry, about the continued widespread use of the so-called experts who come in at eight figure fees to “advise” corporations on how to improve business performance.

I’ve had more than my share of exposure to these firms over the years and one of the reasons I enjoy the non-corporate life is not having to deal with consultants who ask for your watch so they can tell you what time it is.

My first experience while at Seagram was with a “household name” company that received tens of millions to suggest a straightforward and logical reorganization. I couldn’t help but feel that those who brought these folks in were either 1) not smart enough to figure it out for themselves or 2) needed the air cover of outside consultants, as in whom to blame to counter complaints or in the case of failure.

On another occasion, I recall the retention of a buzz-name consulting firm hired to help figure out what to do about the tequila category. They basically regurgitated strategic and other documents that the internal team had prepared. What, you don’t accept the opinions of your own people but feel comfortable taking the same advise from outsiders because you spent millions on it?

I understand the role and use of consultants for staff augmentation, discovering and applying best practice, even increased analytic capabilities. But I don’t get the use based on “external change force for political cover” or “fresh perspective.” If your own people can’t do this then get new people.

There are a few deep dark secrets of these consulting firms that should be spotlighted. The first is that the tens of millions dollar fee and resulting recommendations are often generated by straight-from-business-school neophytes with limited to no real world experience.

Second, the single most important goal of a consultant is to get the next project.

Too many choices.

Research in Motion (RIM), the makers of BlackBerrys, is having some problems. Their stock is down, the new line of products has been delayed for a year and there are rumors of corporate sharks looking to take a bite out of them.

In the view of most observers, the problem stems from too many choices. Since 2007, they have introduced 37 models including BlackBerrys that flip, slide, with touch screens, touch screens and keyboards, high and low end products. The product line is too complicated. In a recent NY Times article, a market research firm estimated that their market share slipped from almost half in 2009 to roughly 10 percent in the US.

Compare that to Apple’s iPhone. There have only been four since 2008 and all were the same but differed only in storage or capabilities from earlier models. Apple made it simple and less is more.

A marketing professor at the London Business School was quoted in the Times article as saying, “Too many options can be frightening and overwhelming.” In fact, other studies on the subject have indicated that, while people claim to like abundant choices,  too many leads to confusion, increased concern about risk (making the wrong choice) and ultimately dissatisfaction.

Let’s turn to the alcohol industry.

Budweiser has lost the #2 position in beer to Coors and is now the third largest brand. There are lots of issues at play here but the overwhelming packaging choices consumers face at the store exacerbates the situation. At my last visit to a large beer retailer, I was assaulted with a dizzying array of cans, bottles and package sizes in 6, 12, 18, 24 and 30 packs. I bought a 6 pack of a craft beer.

How about rum? Captain Morgan came in Original Spiced, Silver Spiced (for those who didn’t like amber rum), Private Stock (an upmarket extension) and Parrott Bay, a brand extension and Malibu competitor. Each product in the line up had a strategic reason for being.

At a recent visit to the CM website, I counted 15 products in the line. Seven were for the base CM brand including Tattoo, Lime Bite, 100°, and Long Island Iced Tea. Eight were line extensions in the Parrott Bay brand extension category. Talk about confusing.

Compare that to Sailor Jerry. One brand, one message and one position. The brand is growing rapidly with a compound 5-year annual growth rate of close to 50%. Captain Morgan’s growth has been sluggish over the same time frame despite the massive number of SKUs. (For those of you in the business, it sounds to me like – good for shipments not so good for depletions.)

In a recent interview with Wine and Spirits Daily, Diageo USA President, Larry Schwartz, had this to say about Captain Morgan:

“I think we got a little sophomoric at some point, and I think now we’ve brought it back. We were operating too much in the beer space…”

Larry, it’s all about consumer choices and confusion. You might want to think about Crown Royal as well.

I was always fascinated by Seagram’s Gin and at a recent lunch with a former production friend, we reminisced about the brand. I thought I would share that with my Seagram readers.

When I came to Seagram, the brand was selling at roughly the 3.3 million case levels. Thanks to Snoop Dogg’s Gin and Juice rap song, it grew to close to 4 million cases by the late 1990s. Today, the brand is still the leading gin but its sales are in the 2.5 million case range.

The product story of Seagram’s Gin epitomized the fundamental values of the company. In the commitment to quality and brand differentiation, someone way back when (perhaps Mr. Sam himself) decided that an American Dry Gin could be smoother and more tasteful if it were rested in charred oak barrels for 90 days. That resulted in a more expensive proposition and gave the product a pale straw color. Then, they decided to put it in an “ancient bottle” which evolved into the “bumpy” bottle the brand uses today.

In effect, from 1939 on, marketer after marketer pushed for the yellow tint to be removed and to figure out how best to deal with the bumpy bottle.

The consumer of the brand was, and still is, primarily Black. Many of the brand managers – regardless of their racial background – tried to change the audience composition. A small fortune was spent on marketing to the “general market” as though Beefeater Martini and Tanqueray and Tonic drinkers would suddenly switch to the yellow gin in the funny looking bottle.

Still, the hope and investment lingered on until a few things began to get through the thick skull of the brand manager in charge of Seagram’s Gin (for those of you who recall, he was a poster child for the Peter Principle).

First, among the brand’s myths, was the belief that the product had aphrodisiac capabilities. I have no idea how this happened; it must have been due to the yellow hue. As I recall, the reaction ranged from confusion to delight, mixed with concern about what to do. Finally, the ad agency came up with a campaign called “Everything they say about it is true.” Which commented on the brand’s equity and threw in a dose of confirmation. It ran for some time until the public affairs and legal folks got nervous.

Next came the game changer in the form of Mr. Dogg.

A common off premise consumption pattern was the cooperation among the drinkers, one of whom bought a bottle; another provided the cups and another brought the juice. The end product was gin and juice. And, Snoop Dogg made it famous with the song “Gin and Juice” and especially these lyrics:

Now I got me some Seagram’s gin

Everybody got they cups but they ain’t chipped in

Now this type of shit happens all the time

You gotta get yours, but fool, I gotta get mine.

The brand took off and thanks to the Tropicana relationship, a new premixed gin and fruit juice product was born called Gin & Juice.

My favorite recollection has to do with a launch meeting for the brand in the Southern region. I wasn’t there but this is how I pictured the event. The senior folks in charge went through the pitch, the brand’s reason for being and the likelihood of success. It was now time to taste the product. A bottle was removed from the case and an attempt was made to open it. The cap wouldn’t turn. No big deal, it happens. A second, third and fourth bottle was removed and tried again. None would open. The force of closing the cap at manufacturing was so great that it was impossible to open any of the bottles.

But at least we found a way to deal with the yellow hue.

Postscript:

The difference between how Seagram marketed gin to the Black consumer and how Pernod does it today can be seen by the following example. At Seagram, we spent much time and money finding emerging black artists whose work we showcased and publicized. Black history month was also a focal point.

At Pernod, some genius recently ran a program that co-packed a Du Rag on every bottle.

Très élégant.

Du rag promotion

That’s the headline in a recent online posting on the Star Tribune (Twin Cities paper) website. Here’s an excerpt:

“Upper Midwesterners drink more. Could it be our northern European roots? The weather?”

The story goes on to report that Minnesota is one of the top 5 drinking states in the US. Experts point out that part of the explanation is that many residents in the upper Midwest are descendants from countries with high alcohol consumption. Another reason given, of course, is the long cold winters and indoor activity that goes nicely with alcohol consumption.

It reminded me of a story I heard from the late Jerry Mann about the adventures of booze salesperson in the upper Midwest. (See March 25, 2010 for another tale.)

It seems this ambitious young salesman was given the territory in the Midwest that included Minnesota and Wisconsin. As a person who grew up in more moderate winter climates, he was a bit out of his element.

After a long, bitter cold day north of Minneapolis, the salesman decided to call it a day and drove to the hotel he had booked for the night. He checked in, dropped his suitcase and immediately headed for the bar. He figured it’s early, so he’ll check the brands on the back shelf, order a drink and chat with the bartender.

While he sipped on his Seagram’s Gin on the rocks, he introduced himself to the bartender and a conversation ensued. The first question the salesman asked was about the parking garage.

“Listen pal,” he starts off. “I noticed when I pulled into the garage, there are all these wires hanging from the ceiling that look like electric plugs. What’s that all about?”

“How long ago was that?” asked the barman.

“About 5 maybe 10 minutes ago,” the salesman replied.

The barman says in a very Midwest accent, “Those are for engine block heating and they connect to the engine to keep it from freezing. Most of the cars up here, especially rentals, have a plug to connect to them. I hope you used it.”

“Oh hell,” says the salesman as he gets up to leave. “I didn’t know…I’ll be right back.”

The barman stared at him, smiled and said, “Forget about it. It’s too late now.”

The salesman sits down, takes out a cigarette, lights it and takes a puff. He smiles at the barman and says, “Well, in that case, make this a double.”