The Captain has left the building

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.

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Godiva Liqueur

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…

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The Inventor

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.

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