Amazon, Malfy Gin, and Building a Brand

First, an Update:

Last Friday, Wine and Spirits Daily reported that Mark Teasdale, CEO of Proximo Spirits is leaving to join Biggar & Leith, the company Founded by Elwyn Gladstone that markets Malfy Gin and Spytail Rum. Mark and Elwyn have previously worked together at Proximo and William Grant and collaborated on such new brands as Kraken Rum and Hendrick’s Gin, among many others.

I learned of this development after I wrote this article and it adds immensely to the story. Both these folks are top of the game spirits industry players. And, as you will see, Elwyn has already been doing amazing things with Malfy. So, this change builds on success and gives the company an even more important presence in the industry.

Leveraging the Power of Amazon and Direct-to-Consumer Sales

Malfy Con Limone Gin (the original product) is made in Italy from the luscious lemons of the Amalfi coast under the marketing and sales guidance of Elwyn, whose background includes senior positions at large spirits companies. (The original story on Elwyn and Malfy can be found here.)

I was wondering how Elwyn, with his large company experience, was making out with his fledging startup brand. So, last month, I checked in with him. He is, after all, one of the most creative and smart marketers I know. Could he transfer his skills honed at large spirits companies to a startup? In particular, I wanted to know how the brand was received by distributors. Would he get the same attention with Malfy as he got with Hendrick’s?

Little did I know when I reached out to Elwyn, that this journey is most unusual and a case study on how to beat the system and build a brand despite obstacles.

How is Malfy Doing?

After only just a few years in the market, the brand is on track to do over 185,000 6-pack cases in the US and around the world — the UK, other European markets, South and Central America, South Africa and elsewhere. He has lots of room to grow geographically and his re-order rates are impressive.

In the US, the brand is among the top 10 Super-Premium Gin in Nielsen (brands that cost more than $25 per bottle) growing at over 300% and on track to hit a top 5 position. The brand is distributed by Infinium Spirits in the US, and based on the aforementioned, I’d say they are paying attention to the brand.

He has also introduced a range of gin products. The US has the first launched Con Limone, and recently introduced Originale, a traditional gin. Outside the US, the Malfy Gin line also includes Gin Rosa, a Sicilian pink grapefruit gin, and Con Arancia, gin made with Sicilian blood oranges. He and Infinium Spirits will introduce these other gin line extensions in July.

That’s only part of the story—enter Amazon

It is fairly common for a new brand to look to the rest of the world (especially Europe) as a way to build a brand and generate sales, while waiting for the US market to wake up. What happens is that an importer is contacted, who probably has a stable of brands, and the wait for growth traction overseas becomes another frustration.

But not for Elwyn and Malfy Gin. I asked him, “How come you’re doing so well in the UK?”

The answer? Amazon and direct-to-consumer sales.

According to Elwyn, “The absence of a mandatory 3-tier system coupled with a robust purchase and delivery system creates a strong platform for direct to drinker sales. But, more important, Amazon provides the opportunity for the brand owner to use all sorts of marketing efforts and truly remain the guardian of their brand.”

In the UK and Germany, he is selling over 1,000 bottles per month and growing.

Let’s take a closer look at Amazon and liquor sales.

But, first, let’s cover a few noteworthy things about Amazon and spirits:

  • As I’m sure you known (but for those who don’t) Amazon does not sell direct to consumers in the US. They tried to with wine but that ended when they acquired Whole Foods.
  • Outside the US, it is the importer who sells to Amazon, but in Elwyn’s case, he has been the driving force influencing importers to use Amazon.
  • The markets where Amazon is currently selling booze are limited to the UK, Germany, Spain and Italy. But they are rapidly opening other markets.

 

Amazon — distributor and retailer

If you talk to US distributors about Amazon, you’ll hear two views, a public and private one.

The expected and public view is, “Nobody ever built a brand on Amazon.” That’s currently true but, certainly, brand building overall in the US has changed and, for fledgling brands, the growth comes from the consumer themselves, more than the trade. That’s why privately, many distributors express concern about direct sales in general and Amazon in particular.

Recommendations from bartenders and store people are important but so is word-of-mouth among drinkers themselves. As to Amazon’s role here, Elwyn suggests,

“Think of Amazon’s product page as the world’s most efficient shelf-talker and neck-tag information booklet… including reviews from hundreds of consumers, press and PR, recipes, photos, and more. And, let’s not forget the simple star ratings based on thousands of people.”

Clearly, Elwyn has spent quite a bit of time trying to understand Amazon and its power to build and sell spirits brands so I asked him to further share his marketing and sales thoughts. After all, Malfy has become a top 10 best-selling gin, surpassing many household name brands including Hendrick’s.

Here is what he has learned about the power of Amazon and the role of the internet in general:

  1. The brand owner is in control. Once establishing your ownership with Amazon, you can appoint people who can manage the site/sales, but the brand is firmly in your hands.
  2. Brand sales drivers. Of course, product credentials (brand name, packaging, etc.) are important but Amazon also allows an owner to:
  • Put up consumer reviews, so that the more frequent and better the review, the higher the brand appears in searches.
  • Use key words, that also drive how well a brand does in searches on Amazon.
  • Advertise via sponsored ads.
  • The use of brand photos, which is a huge driver and there are ways to test which photographs work best.
  1. Sales data. Amazon in the UK provides easily accessible data on brand sales ranking for all brands within a given category.
  2. A level playing field. This is ideal for smaller brands inasmuch as the big boys cannot muscle them out as they can in stores with multiple facings, optimum shelf space and, well, plain old clout.
  3. More effective promotions. Amazon provides quicker and easier ways to manage and measure the impact of promotional activities.
  4. Tastings are more cost effective. The current approach at retail can easily cost $200 per session and the reach is limited. Amazon offers the opportunity to purchase sample boxes so consumers can buy a bunch of miniatures. It’s also a better use of the brand owner’s time than standing around a retail store doing tastings.
  5. Enhanced recommendations and word of mouth. According to Elwyn, the Amazon approach may just surpass a recommendation from a bartender or store-keeper. (See the earlier comment about the Amazon page strengths.)
  6. Making it easier to reach the on-premise trade. Those of you involved in the bar trade can relate what a nuisance it is to order a new brand from a startup. Amazon provides the ability to order any brand listed, including a single bottle

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In sum, the Amazon — non-USA — platform is a powerful brand building and sales device. The brand owner stays in complete control, the tools available can provide an effective means for reaching a very wide audience, all efforts and expenditures are easily tracked and effectiveness measured, and, it is amazingly cost effective.

It is, of course, interesting to speculate whether the US will eventually go this way and create the same opportunities for the small producer as in Europe. My answer is NO, we have a 3-tier system, which is unlikely to go away, and direct-to-consumer transactions remain difficult if not impossible.

Elwyn Gladstone’s approach to building his overall and global brand business is incredibly sound both strategically and tactically. While he overcomes obstacles and patiently waits for the US business to take hold, he is leveraging the available resources outside the US to provide the wherewithal to help and to build his brand in the rest of the world.

I told you he was smart.

*          *          *

Elwyn Gladstone

My thanks to Elwyn Gladstone for taking the time to share his efforts and thinking with me for this article.

I’d love to hear your thoughts in the comments section at the very end of this article or in an email to arthur@boozebusiness.com

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Bulleit Bourbon: The Birth of a Brand

The True Story of How the Brand Got its Start

I’ve known Tom Bulleit since the 1990s and it was under my watch at Seagram that Bulleit Bourbon was developed and launched. Tom is a terrific guy, a real gentleman, and a smart businessman.

I saw some Impact Databank sales information the other day and among the top 10 super-premium bourbon brands, Bulleit is second only to Maker’s Mark in case sales at 1.2 million 9-liter cases (Maker’s is at 1.5 million), but Bulleit’s growth from 2016 to 2017 was 12.7% compared to maker’s 4.7%.

What’s even more impressive is that in 2000 Bulleit sold 180,000 cases while Maker’s Mark sold 1.4 million. At this rate of growth, it is likely that Bulleit Bourbon will surpass Maker’s as the leading selling brand.

So, the brand’s remarkable achievement has been the result of Diageo’s and Tom Bulleit’s efforts. Its launch and positioning in the bourbon market was due to the folks at Seagram.

Its start has always been an enigma to me and I set out recently to get the full story and to refresh my memory.

Let’s go Down Seagram Memory Lane

If you’ve read my book (forgive the shameless self-promotion), you know that Seagram was a whisk(e)y company in a world of vodka, tequila and other non-whiskey products. Starting in the early to mid 90s, the company acquired the distribution rights to Absolut, and at the same time, Captain Morgan and Crown Royal were growing by double digits each month. By the mid to late 1990s Seagram had consolidated its whisk(e)y portfolio to Canadian Whiskies (Crown Royal, VO and its line extension), Seagram 7 Crown, and Scotch brands (Chivas Regal, The Glenlivet, and other single malt whiskies).

All other whiskey brands were sold or let out to pasture. This Included such terrific brands as Weller, Benchmark and my current favorite, Eagle Rare. The sole exception that comes to mind is Four Roses, which was doing very well as a bourbon brand in Japan but languished as a blended American whiskey in the US.

The puzzle to me as I look back on it is, with the portfolio changing and growing and many whiskies being sold, why did Seagram want a fledgling bourbon with a pretty awful package (at the time)?

The old Bulleit bottle

There’s another piece of the equation that may partially shed some light on this.

In 1995, Seagram bought 80 percent of the shares in entertainment conglomerate MCA Inc. for $8 billion. The company was now in a new business and Edgar Bronfman Jr. focused his attention there. As a result, the owner “overwatch” returned to Edgar M. Bronfman (the Chairman) assisted by John Bernbach, a long time Edgar Jr. friend, an advertising and media executive, and a Bronfman/Seagram advisor.

How Bulleit Came to Seagram

John played a crucial role. At dinner one night with an attorney friend from a prominent NYC law firm, John was told about Tom and the brand. He naturally assumed that since Seagram did not have a bourbon, Bulleit would make a strong addition to the overall portfolio. He brought the idea to both Edgar Jr. and the Chairman.

Both Bronfmans were said to have some reservations. The younger Bronfman was not happy with the packaging (see photo) while the Chairman had some reservations about the taste. But, both liked the idea of a bourbon in the House of Seagram.

But why? Bourbons had been removed from the fold, Crown Royal was on fire, Glenlivet and other single malts were doing nicely, and the company’s focus was on Absolut and the commitments to the Swedish owners.

There are lots of conjectures as to the answer. Perhaps Edgar Jr. was prescient and saw bourbon’s return as an opportunity. Maybe he wanted to show investors and the company that, despite the entertainment industry involvement, the spirits business was still top of mind. Conceivably the Chairman, now returned to the forefront of the booze business, was excited by the idea of a bourbon product that was outstanding.

My guess is that when John brought in his team (copywriter and art director), he showed the Bronfmans what the brand could become. Edgar Jr. in particular loved the work of these two gents.

Bulleit 10 year old bourbon

Chuck Cowdery—writer, blogger, historian, marketer, and arguably the most knowledgeable bourbon maven on the planet—has written more than anyone about Bulleit. So, I’ll let him provide a brief history as reported on his blog:

Bulleit bourbon was launched in 1995, the brainchild of Tom Bulleit, a Kentucky lawyer who, through his legal work, learned a lot about the growing international market for American whiskey. He contracted with the Buffalo Trace Distillery in Frankfort, Kentucky, to make it. A few years later, he moved his operation over to Seagram. They created the current bottle and reformulated the product, moving its production to the Four Roses Distillery in Lawrenceburg, Kentucky.

Tom Bulleit

From the moment Tom walked through the door, and up to the closing of the Seagram door, Tom was a key player in the development of the brand. He worked with the production folks on the recipe, with the agency on the brand’s positioning, and with marketing/packaging on the look and message of Bulleit.

To me, this was a bit unusual. While Seagram often welcomed brand acquisitions, with the exception of Absolut, the attitude was often (to paraphrase) “thanks, we love your brand, here’s your check, we’ll take it from here, and here’s the door…” But, all of us from the Bronfman’s on down, welcomed Tom’s involvement.

There’s probably a couple of reasons for that, mainly due to Tom’s personality and approach—he’s smart, has the brand in his DNA, a team player, and overall terrific person to work with. Neil Gallo, who ran the day-to-day development of the brand, told to me recently that Tom would often say to Seagram folks something like, “here’s my suggestion, use it or not as you see fit.” His ideas were almost always accepted.

From my standpoint, I loved Tom’s “outsider” views and the way he interacted with our people.

Tom Bulleit

The Bulleit Product

Whether there was a Bulleit Bourbon product on the market or otherwise available to be bought in the 19th Century, was irrelevant to us. Tom’s proposition was 1) the brand traced its origin to Augustus Bulleit (great-great-grandfather of Tom) and 2) with strong brand credentials, the brand could be a winner. We totally agreed.

The production folks were energized by the fact that they would be working on a new whiskey (a bourbon no less) and would be able to use the outstanding bourbon stocks they had. According to Art Peterson, who was VP of Quality Assurance and Technical Services, the team presented samples from mingling bond stocks from inventory. These went to Tom and the master distiller for approval. Ultimately, as was the case with all Seagram products, the final approval of the liquid came from the Chairman.

Tom, for his part, had his ancestors recipe in mind—a high rye content bourbon. What was produced was two-thirds corn and one-third rye. (The bourbon corn requirement is 51%). Today the brand’s recipe is very similar—68% corn, 28% rye, and 4% malted barley.

Here’s how the Bulleit website describes the product:

Inspired by his great-great-grandfather Augustus Bulleit, who made a high-rye whiskey between 1830-1860…

The Concept and the Packaging

John’s Bernbach’s team (with Tom and Neil’s involvement), came up with a simple yet powerful message. This isn’t just a bourbon, this is a Frontier Whiskey. A powerful slogan followed— “When men were men and whiskey was bourbon.” I loved it, approved it immediately then brought it to Edgar Jr. for his final okay.

The slogan is gone but the Frontier Whiskey is still prominent in the current Bulleit packaging.

To me, the Bulleit packaging that was developed by Sandstrom Partners in Portland Oregon captured the concept perfectly. All the elements were there—a flask shaped, apothecary-like bottle, embossed branding, cork closure and, a minimal wraparound label that is slightly askew as though it was hand applied.

About that label… It was put on deliberately misaligned because it fit the imagery and positioning of the brand. It is part of the brand’s personality. However, in almost all operating committee meetings someone from production would invariably say something like this: “Great news Arthur, we fixed the label. It’s now perfectly straight.” This “great news” was always met with a groan and a request to leave it alone.

The Reactions

Not everyone in the organization loved or cared about Bulleit. Most of those in sales welcomed the brand since it had the backing of the owners or because they saw an opportunity in the bourbon business. At the same time, there were many who felt that Bulleit detracted focus and attention from the phenomenal growth of Crown Royal—a known winner vs. an upstart. Besides, there were other brands in need of focus such as Absolut and Captain Morgan, both recognized winners.

The brand limped along from the mid-1990s until the end of the decade. Then the lights went out as Seagram was sold to Pernod-Ricard and Diageo. The brands were split up and Diageo acquired Bulleit Bourbon.

The situation for the brand changed appreciably. According to data I’ve seen, the returning growth of bourbon began in the mid-2000s. Unlike Seagram, Diageo, while strong in scotch, did not have much going for it in American whiskies, particularly bourbon. Dickel and Rebel Yell hardly fit the bill to compete with the rapidly growing brands. As a result, Diageo had nothing to lose and much to gain by pushing Bulleit and its unique package and positioning. I’m told that Diageo’s sales folks loved the brand and strongly focused on it.

Today

In 2017, to meet the demand of Bulleit, Diageo built a distillery in Shelbyville, Kentucky which will produce 1.8 million proof gallons annually, with the opportunity to expand further over time. It’s on a 300-acre campus with barrel houses at a cost $115 million.

At the current rate of growth of the brand, I wouldn’t be surprised if the expansion were to happen very soon.

*          *          *

Lessons Learned

1. The role of focus

Seagram had strong and rapidly growing brands requiring concerted and sustained effort. Bulleit would have had to push itself to the forefront of the portfolio at the company. Even if Seagram had survived, I have my doubts as to whether Bulleit would be where it is today.

2. Managing a portfolio of brands

Diageo, seeing the emergence of a return to bourbon, had the good sense to back Bulleit at the expense of George Dickel (a Tennessee whiskey) and Rebel Yell (which was ultimately sold to Luxco in 1999). In short, Seagram’s roster of brands had no real room for Bulleit while Diageo did.

3. Hey marketing folks—don’t overthink it

I think there is a temptation among marketers to show relevance and authenticity by claiming a brand’s recipe dates back to 1830. It was smart to go a different route—just being inspired by Augustus Bulleit is sufficient. As a consumer, I care less about a brand’s history and background and more about what it is today.

*          *          *

I’d like to thank the following people who helped refresh my memory or otherwise corrected my recollection in writing this article. These included Neil Gallo, Rob Warren, John Bernbach, Greg Leonard, Sam Ellias, Art Peterson, and, of course, Tom Bulleit.

The Bulleit portfolio of brands
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On the Road to Success

Checking in with Bom Bom Brands

A little over a year ago I wrote about the launch of this interesting new product and Kevin Mowers, the person behind it. You can find the story here.

I caught up with Kevin recently and asked him how it was going and what his experiences were as a startup brand.

What I did not mention in the original story is that the Bom Bom team consists of Kevin and his wife Eva Maria. Both bring different skills to the brand and, it turns out, that she played a crucial role in the brand’s development, as you will see. So, this interview was with both of them.

Kevin and Eva Maria

 

BB: How is it going? What were the highlights of 2016?

Kevin: Great – keeping busy!  We launched mid-year in CT and then branched out into MA, DC and NY (Westchester County and Long Island). Our distributors did a great job getting BOM BOM into retailers while we were focused on getting BOM BOM into consumer’s hands. We did this through a lot of in-store and in-bar sampling promotions as well as showing the product at larger tasting and charity events. One of the most important things for us was to make sure we keep having fun and celebrating every victory and every milestone, however small.

BB: What are the biggest obstacles or challenges you face? What have you done about them?

Eva Maria: The biggest challenge for us, like for any new brand, has been awareness. Since we are not national, the typical PR and marketing playbooks were not relevant for us, as we needed a more market-by-market, grassroots approach. We have pushed ourselves to really think outside the box, leave our corporate models behind, and leverage local PR, especially bartender contests, magazine profiles and social media. There is still much, much more to do. As we grow into more markets, we’ll be able to expand our PR outreach accordingly and that’s a top priority for 2017.

BB: Many new product entrepreneurs have told me that the single most important element in developing their brands has been in-store tastings, as you’ve just mentioned. I’m not surprised that this would be particularly true for Bom Bom.

Kevin: Indeed. We love doing in-store tastings as it allows us to engage with consumers. For us it has been just as much about getting feedback (and new drink recipes!) from consumers as sharing the BOM BOM story. BOM BOM Coco Mochanut recently received 94 points by the International Review of Spirits, which means it is the highest in its category. As such, we love seeing the excited look on people’s faces after they’ve tried it, especially when they themselves start selling it to complete strangers in the stores for us!

BB: I’ve known you for a few years and watched the development and launch. But I never wrote about how Bom Bom came about in the first place. What’s the brand’s back-story?

Eva Maria: Like a lot of today’s modern romances we were introduced by a common friend — Tracy — Who to this day takes credit for our awesome relationship and by association, BOM BOM.

Kevin had spent the better part of his career designing great tasting products for the industry’s top players and so of course tried to impress me with his extensive knowledge of luxury spirits. But it wasn’t really doing it for me as I was never really into alcohol…. this was both a disappointment and a challenge to Kevin… and good thing for me (and our BOM BOM fans) that Kevin happens to love a good challenge.

After a few dates, Kevin changed his game and mixed up something special just for me, made with my favorite flavors — coffee, coconut and of course CHOCOLATE! And BOM BOM was born!

I loved it so much that I started asking him to make it for friends and with time it was a standing order from friends and friends of friends…. We were making it all of the time and decided to go for it and formed the company “BOM BOM Brands” to share our fun with the world!

BOM BOM is all about the right mix of flavors, having fun and being authentic.  Our business partnership really is the same idea…. we have very different skill sets and so together we’re able to accomplish what neither of us would be able to do on our own.

And, to make the deal even sweeter, Kevin’s wooing is still going strong after three wonderful years of marriage….

BB: What does the future hold for the brand – line extensions, geographic expansion, etc. What do you think will be coming down the road? 

Kevin: BOM BOM is all about having fun and being authentic. As all small companies, we are excited to bring this fun to additional markets but also cautious not to dilute our efforts and grow too fast. From a new product perspective, we have a few new innovations in the mix. As with Coco Mochanut, all of our new products will be great tasting and in fun, fashion-forward packaging.

Kevin making cocktails at an event/tasting
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