Tom Jago: The Passing of an Industry Icon

The Dean Of Global Spirits

This is from The Last Drop Distillers, a company that Tom co-founded:

It is with profound and heartfelt sadness that we announce the death of our co-founder and inspirational president, Tom Jago, aged 93. Beloved by us all, we give thanks for his brilliance, his incisive humour and, above all, his deep affection for the team and the industry he so loved. Rest in peace, Tom.

Tom Jago. 21st July 1925 – 12th October 2018

There is no one I have met in my booze business journey that I respected more than Tom. He was a true gentleman, a creative genius, and a warm, fun, person. I wrote his story in this blog and in my book and I thought it would be worth re-telling as my personal tribute to a terrific man and friend.

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I first met Tom Jago in the early 1990s when he was part of James Espey’s scotch and cognac team at Seagram. My immediate reaction was, here is a man who is gifted in product development and marketing. He’s also affable and fun to be with. I’m not sure he’s really British.

Over the years he taught me a great deal about the spirits business, above all, how to choose and enjoy good Claret (Bordeaux).

Together with Dr. Espey and Mr. Peter Fleck, he is a principal in the Last Drop Distillers Ltd. (The full story of the company is here.)

Here’s how their website describes Tom:

From a village school in the remote countryside, via a scholarship to Oxford and service in the Royal Navy during WWII, Tom Jago found his niche in the wine and spirits trade.  He led the team that developed new ideas on old themes, like Croft Original Pale Cream Sherry and Le Piat D’Or brands, which revolutionised British drinking habits forever. He cooperated with the ‘gang of three’ in the invention of Bailey’s Irish Cream and Malibu.

But wait, there’s more. Tom was instrumental (as in the driving force) in such brands as Johnnie Walker Blue Label, Hennessy, Chivas Regal 18 Year Old, Martell, The Classic Malts and many others.

If that’s not enough, while at Seagram, Tom helped in the creation of Imperial Blue and Royal Stag, now an important part of Pernod India.

In preparation for this article, I’ve spent some time talking and emailing with Tom on a range of topics and his thoughts on the industry.

Tom’s Career

After the war, Tom “slipped accidentally into advertising.” He applied for a job as a photographer but was mistaken for someone else and got a job as a copywriter. He later became an account director at an ad agency that ultimately became Ogilvy & Mather. Among his accounts was a small company that hired him, called Gilbeys. Through mergers and acquisitions, Gilbeys became IDV and finally Diageo.

Next came four years at Moet-Hennessy, followed by United Distillers (with James) and later Seagram.

The area of focus throughout his career was innovation and new products. As Tom puts it, “I was not very good at being a marketing director (at Gilbeys) so they gave me a small budget, an office and secretary and said try and think of some new drinks we might profitably sell.” The string of successes mentioned earlier, attest to the accomplishments.

Product Development Philosophy

Tom Jago’s focus over the years has been simple, and straightforward, guiding principles.

First, “Make the drink agreeable to the palate, the eye and the nose. Baileys and Malibu are good examples of this.”

The other principle was to develop products that inherently persuade drinkers that there is virtue in drinking them and in learning to appreciate their quality. Interestingly, it’s the same motivations of palate, eyes and nose but applied to whisky, cognac and even tequila.

But above all, Tom has a powerful way of looking at the acceptance and growth of a brand – patience.

“It is clear to me that the motivation to drink alcohol is very deeply buried in the human subconscious… therefore, attempts to market distilled spirits must be subtle too. A spirits brand is bound to be slow growing, so promotions must be long, steady and consistent.”

In my experience, new products and brands often fail because the companies behind them, particularly the global ones, lack the fortitude to see them through to fruition. That’s why the successes in the US (e.g., Grey Goose, Tito’s, and Patron) have come from entrepreneurs.

Another interesting and worthwhile notion from Tom is not to let drinker research get in the way. “It is of course useful, but in the specific case of alcohol drinks, not to be relied on, given the essential illogical responses of people to alcohol,” says Tom. He goes on to say, “No one will tell you the truth about their feelings regarding drinks – mainly because they don’t know what they are themselves.”

I tend to put it another way. Consumer research is like a lamppost, some people lean on it while others are illuminated by it.

Whisky

Despite the drink inventions that favor light, sweet and palatable drinks, Tom is an unabashed devotee of Malts.

“These are, I must confess, my favourite of all the alcoholic drinks… I admire them partly because of their enormous variety of nose and taste (cognac, no matter how fine, all tastes much the same – compared with the vast difference between a malt from Islay and one from the Spey). Much of their appeal, of course, lies in their relative rarity – the amateur can ‘discover’ them for himself, so he feels that he owns a part of the brand. It is interesting that when a malt gets as big (in volume sales) as for instance Glenfiddich or the Glenlivet, people stop thinking of it as a malt, rather as just another Scotch brand.

His focus on whisky over the years has been extraordinary. Johnnie Walker Blue Label was created in 1987 to reassert the perceived value of the Johnnie Walker brand in Asia, where grey market discounting had damaged it. He also developed Classic Malts, a collection of outstanding products from individual malt distilleries, which became brands.

At his current venture, Last Drop Distillers Ltd, he and his partners are using 70 single malts in their blend. Some are from distilleries long since closed. It’s truly an amazing venture and you might want to look it up. (Today, The Last Drop Distillers is owned by Sazerac Limited.)

Throughout his career, Tom helped to define and advance product quality. While at Hennessy, for example, he learned about the sophisticated use of oak in spirit maturation. No one in the scotch business knew about this at the time and one can only imagine the battles that ensued between this young upstart and the tough and crusty old timers who ran the whisky production.

Perhaps based on these battles or just plain good common sense, Tom taught me to be wary of production managers.

“A word of caution concerning those splendid fellows…Don’t let them ruin a great luxury brand by economy measures unrelated to the essential perceived value of the pack; I have seen a production man try to save less than a penny by spoiling the closure of Johnnie Walker Blue Label – this on a brand that sells for £100.”

India

In the late nineties, while at Seagram, Tom was called to Seagram India to help with new product development. One of the chemists, had the idea of making a good admix whisky by using both imported scotch malt and local grain spirit. The resulting products were successful and have stood the test of time – Royal Stag and Imperial Blue. As Tom puts its it, a number of factors accounted for the success – branding, packaging, price (above the competition) and the unique use of TV advertising outside of India.

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Tom Jago was indeed a man for all seasons and the most extraordinary spirits marketer I’ve ever met.

Industry executives, both young and old, can learn a great deal from his business strengths and skills – innovation and outside the box thinking; patience and tenacity; an understanding of people; how to build brands and the price/value relationship in marketing. Above all, Tom has a skill set all executives need, but not all have – a sense of humor.

Side Bar

What I love about the spirits and wine business is that it’s an industry of people, relationships and stories. No one I’ve met has better industry tales than Tom Jago.

Vodka

Real change began in 1949 when a Mr. Kunett, a Russian émigré in the USA, sold his tiny Smirnoff distillery to Heublein. At the time he was making about 5,000 cases a year. He and Heublein began seriously to promote vodka as the spirit with negligible taste, which mixed with fruit juice, tomato juice, or even ginger beer, to give a drink that was actually NICE. So vodka drinking spread to the civilised world (in Russia, it was never that civilised, the vodka was always sold in 50cl bottles with an aluminum capsule – non-reclosable!)

I was closely involved in this period of change. From 1957 I had been helping an old drinks merchant called Gilbeys with their advertising.

Gilbeys had been smart enough to get the rights to Smirnoff vodka for a large part of the world, so we were engaged in promoting vodka – which was entirely unknown in Britain. We began to understand the revolution that was taking place, although research produced some unexpected results: we used an ad showing young men in their digs preparing for a party. One of them was cleaning his teeth; the advertisement was badly understood, and it emerged after a few enquiries that only some 12% of young English males owned a toothbrush!

And when we claimed that Smirnoff doesn’t give you a hangover, we got the response “What’s the point of having a drink if you don’t get a hangover?” Binge drinking is nothing new, it seems.

About Gilbeys:

There was lots of fun to be had at Gilbeys. In the first place they owned a beautiful chateau in the Medoc (Chateau Loudenne), which I used as a cool place to plot things with co-workers. The cellar had first growths from 1875 on.

And board meeting were delightful on occasion. Walter Gilbey said one day, “Tom, I just got a lift back on Hennessy’s little jet – ever so nice. Do you think we might get one?” I said I thought it unlikely but would search and report back. Next week I said “we can’t afford it; costs £2m and that’s about our overdraft. And anyway, you would have two pilots to feed and clothe.”

“Oh,” said young Walter, “Couldn’t Hawkins learn to drive it?”

The joy of this was that Hawkins, an old family retainer, was 56, a serious drunk, and only worked one day a year when he drove the Gilbeys to Royal Ascot race meeting in the coach and four.

Product Placement in Films:

James Bond was in part my baby. I was with Gilbeys in the ‘60s and they had the franchise for Smirnoff in what used to be the British Empire. When Cubby Broccoli (Albert Broccoli, the producer of the Bond films) was rounding up funds for Dr. No he approached Gilbeys and got a flea in his ear; they were broke, in fact. But one of them told me and I persuaded them to let me give him two cases (one blue label 100 proof, the other red, 37.5) I said I hoped that they could include both in the film, and they agreed, with the great scene where Bond rejects the red and makes his martini with the stronger vodka. When I asked for a few more cases for their wind-up party to which I was told to get lost – no more money. So we lost the chance to be in all the Bond films. No money changed hands.  Times change, huh?

And when I was down at Pinewood negotiating this, I lunched in the canteen with Terence Young (director); at the next table was Ava Gardner. She took a mouthful of steak and salad, drew deeply on her Camel, and started chewing. Never forgot that.

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A National Drink is Born

Mahua, The Traditional Tribal Drink from India, Enters the Mainstream

The US has Bourbon, Mexico has Tequila and Mezcal, Scotland has Scotch, Brazil has Cachaça, and the list goes on and on. But what about India? It’s among the top five alcohol consuming countries in the world and there is a robust spirits/whisky manufacturing industry. Colonial India invented the gin and tonic, but has had no serious candidate for national liquor, until now.

This is the story of the emergence of a national drink, led by one man’s innovativeness and tenacity. An alcohol product with a long history and exclusively Indian heritage, surrounded by legends, and spanning centuries. A historic product from the many tribes in the Central Indian Forest belt.

The products (there are two) are called DJ Mahua and DJ Mahua Liqueur. The man is Desmond Nazareth and we have met him before in this blog. (You will find them here, here, and here.)

Desmond Nazareth, Founder and Managing Director, Agave India.

The Product

Mahua (pr. Ma-hu-a) is a flower that Indian tribes have been fermenting, distilling, and drinking. The Mahua tree has been considered sacred for centuries. Desmond and his Agave India Company have begun marketing the product under the DJ (DesmondJi) brand in liquor and liqueur formats and selling these products as Indian Made Liquor (IML) since June of this year. But his real challenge is to get the widespread liquor authorities to recognize Mahua as an official, potentially national drink.

Here’s how he describes Mahua:

“Mahua is a nectar rich flower of the Madhuca longifolia tree, which grows in the Central Indian Forest belt, historically inhabited by indigenous people of India, so called ‘Adivasis’, or ‘Tribals’. The nectar rich flowers mature and drop for a month or so in the Mar-April-May timeframe. These edible sundried flowers retain a significant part of their sugars, with a pleasant, complex taste akin to a hybrid of sun-dried raisin, fig and date… For centuries, Central Indian tribes have been collecting and storing Mahua flowers, and consuming single distilled Mahua spirit made from the flowers in traditional clay, wood-fired potstills.”

He depicts the products as “forest-to-bottle” and both are 40% Alcohol by Volume (AbV). The DJ Mahua liqueur is blended with honey and spices and there are plans for a DJ sparkling product. I’ve tried both the liquor and liqueur and found them to be very enjoyable products, with unique and pleasant tastes. The DJ Mahua Liqueur product in particular, was most enjoyable both straight and in cocktails.

Desmond describes Mahua as “the only spirit in the world that is fermented and distilled from naturally sweet flowers.” ‘What about St Germain?” I asked. According to Desmond, St Germain is made by macerating and steeping Elder Flower in alcohol; DJ Mahua is naturally fermented and distilled directly.

The Mahua Mystique

Mahua Tree

What fascinates me about Mahua is its colorful history. Spend a few minutes here and you’ll see what I mean.

As legend has it, Mahua is “An indigenous drink rumored to be the elixir of the Gods and the weakness of deities, the tribals tell tales of how it is coveted by deer, birds, and humans alike.”

According to Desmond, Mahua is more than a drink, it’s a reflection of India’s colorful tribal history. The legends and stories abound with tales of hard-working villagers saved from the messengers of death by Mahua; of animals cavorting while tipsy on the flowers. Desmond writes:

“From bark to fruit, leaf to root, every part of the Madhuca Longifolia (botanical name) earmarks our heritage in a way few other elements of our long cultural history do.”

A well-respected English anthropologist working with tribes in Central India named Felix Padel, a descendent of Charles Darwin, tasted Mahua and was surprised that the government did not develop it as an industry. He is quoted as saying, “I wonder why people in India would prefer French wine and English scotch when something fresh and rejuvenating like Mahua is available.”

And that leads us to Desmond Nazareth’s journey to make Mahua the Indian national drink.

The Challenges and Obstacles

Mahua is currently made in over a third of India’s 29 states and getting Mahua recognized all over India is a daunting task, particularly when you’re a niche, craft distiller with limited resources.

The Indian alcohol market is very complex and, to me at least, somewhat confusing. As I mentioned, its alcohol volume consumption is among the highest in the world but its per capita consumption is low. There is a love-hate relationship with alcohol, dating back to Gandhi’s aversion to it and at least four states and one territory practice prohibition. Yet, Indians love to drink and the worldwide cocktail enthusiasm is alive and well in the major cities.

Indian Made Liquor (IML) consists of two types. One is Indian Made Foreign Liquor (IMFL) and is the official term used by governments, businesses and media in India to refer to all types of liquor manufactured in the country other than indigenous alcoholic beverages. The other type is Country products such as Feni and Mahua.

Desmond is trying to get a new Excise category established countrywide. It would be known as Heritage alcohol products and strictly governed by international standards. It would be taxed lower than ‘IMFL/IML’ and higher than ‘Country’. He feels that this would encourage entrepreneurs to explore and exploit the huge treasure trove of Indian alcoholic beverages.

To get Mahua recognized as a national drink means a state by state campaign since there is no central national regulatory body equivalent to the USA’s TTB. “It is a crying shame that there currently is no simple Excise/ Revenue/ Customs mechanism for proudly made in India alcoholic beverages to be placed in Travel Retail (Duty Free) outlets in India,” says Desmond.

Nevertheless, an important step forward has emerged, thanks to Desmond’s efforts so far. The Food Safety and Standards Authority of India (FSSAI) is roughly equivalent to the USA’s FDA and is working to standardized the manufacture of Mahua and the use of its ingredients.

What’s Next?

As you read this, know that Desmond is hard at work on a number of levels. The manufacture and sale of DJ Mahua and DJ Mahua Liqueur in his home state of Goa and elsewhere in India; working on a sparkling Mahua product; and pushing for recognition as a national drink.

My own view of this situation is that it represents a unique and powerful opportunity for a global player to enter the fray. The “size of prize” of the Indian market and overcoming the obstacles for global brands, suggests that the Diageos, Pernods, and others might want to take a close look at Mahua. I think it represents a real opportunity to participate in the development of a new national brand with Indian and global potential. (If I were still at Seagram, I’d be doing just that.)

For a brand to succeed on the global stage, it needs to be good tasting, backed by an entrepreneurial effort, and a have compelling story. DJ Mahua and its variants has all that and more.

It’s time for the product to come out of the woods and reflect its heritage the same way as bourbon, scotch, tequila, and all the other national drinks. I hope that the Indian authorities would grant a type of AOC (protected designation of origin) or Geographic Indication (GI) for Mahua along the same lines as those for cognac, tequila, champagne, and others.

DJ Mahua Liqueur
DJ Mahua
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Marijuana: A Store Visit

A Trip to a Retail Store in the LA Area

At the end of January, I visited some folks in LA and, since the sale of recreational marijuana is legal in that state, I thought I would visit one of the stores and check it out.

A friend who lives there and had purchased medical marijuana in the past, agreed to go with me and serve as a guide—a ganja guide.

Before I get into the fascinating and (dare I say) fun shopping spree, let’s take a look at the current marijuana situation in the US.

MedMen Venice store. Courtesy of MedMen

Some Facts and Figures

As of 2018 there will be eight states that have legalized marijuana for recreational use. Over twenty other states allow marijuana for medical use. And, both lists keep growing.

It shouldn’t come as a surprise considering the following polling results on the subject from the Gallup people:

  • 64% of Americans support legalization and this represents the highest number recorded since Gallup started asking the question in 1969. (Jan 4, 2018)
  • 45% report having tried marijuana, also the highest since 1969, and 12% claim to currently use it. (July 19, 2017)

In a study on its use by DIG Insights (a global research firm) few people are concerned about harmful effects (16%) and a majority believe consumption can be beneficial (51%). (April 14, 2017)

What About the Effect on Alcohol Sales?

Well, here the data is currently less clear, but signs point to more impact on beer than wine and spirits.

But it seems to me that just as there is “share of stomach” that beer, wine and spirits compete for, the advent of widespread availability of marijuana has to create a fight for “share of buzz.”

A Cowen Insight report (via Mark Brown’s Industry News Update on Jan 15, 2018) indicated that a study using scanner data showed, “that counties located in states that legalized medical marijuana saw a reduction in alcohol sales of 13%.” Further, the Cannabiz Consumer Group (C2G) predicted in March, 2017: “Legal marijuana will take away 7.1% of revenues from the existing retail beer industry.

With this information in mind, I set out with my friend to visit a store, see what the shopping experience was like, get an understanding of who the customers are, and learn first-hand about this product and its future.

MedMen Enterprises

The store we went to is owned by MedMen Enterprises, who currently own 18 facilities in 3 states and has over 700 employees. Unlike other retailers/dispensaries, MedMen is vertically integrated and has licenses to own cultivation facilities, retail stores, and distribution. (In the cannabis industry, distribution involves a “watch dog” and oversight function whereby quality, record keeping, compliance, and related matters are scrutinized.)

The company both owns and manages various aspects of the marijuana trade. It will be listed on the Canadian Securities Exchange in the second quarter of this year. (By the way, here is the list of marijuana companies on the CSE—around 60. You might also find this of interest.)

This is how MedMen describes themselves:

MedMen is writing the book on the modern cannabis industry, from how facilities are designed and constructed to setting the bar on quality and excellence. We are also helping shape the laws that make this industry viable.

These are true professionals with a serious set of business criteria and mission:

MedMen operates scalable, highly-efficient growing facilities using the latest in agronomic technology and sustainable techniques, and our manufacturing facilities use standards comparable to those in the biotech and pharmaceutical industries.

They are not the first company to enter this emerging business, but from what I witnessed by talking to their management and visiting a store, I think they’re top of the game and will grow.

Sun Valley cultivation workers
Courtesy of MedMen
Plants
Courtesy of MedMen

 

The Shopping Spree

We went to their Venice store on Lincoln Blvd. It was at 1:00 on a weekday and the place was mobbed. I was told that it’s always busy and fairly common to see people waiting to come in. The Venice store is small (perhaps 700 square feet of selling space) with shelves of products and showcases on the floor.

To enter, you must stop at a registration area and show proof of age (driver’s license or passport) and register, which allows you to buy. They sell cannabis in different formats including—cannabis buds, of course (various strains and potencies), edibles such as gummies and other sweets (chocolate, cookies, etc.). There is even medicated cannabis rubs (salves) meant to help with aching joints, uh, body joints.

There is a limit to the amount of product you can buy on any one visit.

What really struck me was the caliber and knowledgeability of the sales people. My friend described them as akin to the sales people at the Apple store and Daniel Yi, the Medmen spokesperson, told me that many customers come to the same analogy. These folks were friendly, happy to answer questions and serve as a cannabis escort—what you might be interested in, how much to use, etc.

I learned, for example, the difference between THC and CBD and their role in health matters as well as in “mood change.” Also, the difference between Sativa, Indica and Hybrid strains. I was kind of envious of their retail skills and how the booze business might benefit from similar selling approaches—low key on sales persuasion and primarily focused on educating and guiding the customer.

What about the customers? Good question. It was everyone—young and old; men and women; from all walks of life; all socioeconomic levels. I couldn’t help but ask some of the shoppers about the comparison between alcohol and marijuana. One person said they were just looking for something different from alcohol. Another told me that sometimes they like a drink and sometimes a joint. Still another told me that they preferred cannabis because alcohol was chemical and marijuana was botanical. Ouch.

Here’s the interesting kicker that can serve as a predictor of marijuana legalization and potential growth—taxes.

The Tax Situation

My friend spent $517 that day. Of that amount, $411 was for various products and $62 was for state excise tax (15%) and $45 was for local sales tax (11%). That’s over 25% in taxes. The tax revenue from marijuana sales are attractive to State governments and taxpayers as well, for that matter.

Here’s an interesting article on the California tax situation. It points out that the sales tax on alcohol and marijuana are fairly similar (7.5 to 9.5 percent) but the state excise tax for cannabis is 15%, while wine is 0.25% on average and beer is 1.5%.

But it’s not totally a rosy picture. From my understanding, people in California are skeptical as to how these taxes will be used and whether they will go to where it was intended. A few states can’t seem to figure out how to proceed despite the vote for legalization. And, of course, the federal government repealed an Obama-era policy of leaving law-abiding marijuana businesses alone in those states that have legalized it.

Those of us in the booze business know firsthand that prohibition doesn’t work and that the single most important reason for the end of the “noble experiment” was the absence of taxes from booze.

Further Thoughts and the Future

As to what the alcohol industry should be doing, I found it very interesting that Constellation Brands made a play in the marijuana business last year, investing $191 million in a Canadian company. At the recent Wine and Spirits Daily Annual Summit at which COO Bill Newlands spoke, he said they believe marijuana is an emerging trend that they need to tap into because it’s going to be a big business.

A recent article from Rolling Stone had some interesting predictions for 2018 and what to expect from the marijuana situation in the US.

Let’s start with this quote: “State-legal pot markets seem poised to match or exceed the value of black market pot by 2020.” The friendly, neighborhood dealer could soon be looking for work.

They also predict that there will be legal marijuana lounges in some places, probably Las Vegas for starters and Canada will continue to benefit financially and otherwise from their role in the business.

But the most interesting of all is that the possibility of legalization of recreational marijuana in New Jersey will mean increased pressure on New York—where medical marijuana is legal—to do the same. You can get to Jersey City from Manhattan in 15 minutes or less. Also, let’s not forget that much of New England has approved medical and/or recreational sales already.

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My takeaway is that the marijuana industry will have growing pains but, in the long run, it is here to stay and will flourish. The question for us, dear readers, is how the alcohol industry can or will adapt.

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