Don Mateo Wines started with three global entrepreneurs, a passion for wine making and a vision to become world class.

So, what’s so special, you ask, lots of aspiring winemakers out there.

Yes, but how many have won four awards at the recent Wine and Spirits Wholesalers of America (WSWA) convention? And, how many have had a journey that began in China?

I first met the partners running Don Mateo Wines in late 2010 and was immediately struck by their business acumen, gained in global trading, and applied to the wine world. Their story is interesting.

Andy Lam and his brother Matthew were successful exporters of various products and commodities to Chile from China. Over the years, the currency exchange swings hurt their business and so they turned the ship around and began importing wine from Chile. Their passion about wine helped, and they began buying vineyards and wineries. Added to that was the patience and tenacity to develop top quality wines. They hit the Chinese wine market at the right point in time and the business flourished.

You can’t be a global wine player without the US market, so a third partner, Peter Loucks, entered the picture and applied his overall business skills to the wine business. Peter is smart and a quick learner so it’s not surprising that he soon realized that, unlike China, the supply of wine (Chilean and others) exceeded the demand. Consequently, growth here would be an uphill battle. Further, the mandatory wholesaler tier has become more and more difficult to deal with, as in “take on another wine brand, are you kidding?”

But, he knew that despite the hurdles, he had some key brand equities and assets. For one thing, Don Mateo is a memorable brand name for a Chilean wine and the brand symbol is both interesting and notable to consumers.

As you can see, the symbol/logo is the Moai (pr. mo-eye). These Moai are the monolithic statues of Easter Island, off the coast of Chile. According to their website “they reflect our commitment to discovery, craftsmanship and passion. These three elements have been the guiding principles for Don Mateo wines from Chile.” Might even stand for the three partners behind the venture. You never know.

If you asked the brand owners what is the single most important asset of their wines, their answer is most likely to be, the wine. Trust me folks, these are outstanding wines. But, in case you don’t believe it, think about the medals they won at the WSWA – three silver and a double gold.

Here’s the irony. Despite the entrepreneurial approach, despite their marketing and branding and, despite the high quality and good value, you would think wholesalers would be beating a path to their door. Instead, getting wholesalers to take on the line has been slow and difficult. Such is the state of the booze business and the plethora of brands on the market.

But, hey, the Moai on Easter Island have stood the test of time, so why shouldn’t Don Mateo Wines.

For you former Seagram folks out there… It might interest you to know that Jim Reichardt introduced me to them and their New Jersey wholesaler is Sam Ellias.

Single malts have driven the Scotch category for more than a decade with steady and consistent growth. Brands like The Glenlivet, The Macallan, Glenfiddich and Glenmorangie seem to drive malts and, in turn, malts drive US scotches.

Blended whisky is still the backbone of scotch, but even brands like Johnnie Walker, Dewar’s and Chivas Regal can’t seem to stop the hemorrhaging of this segment.

What does this have to do with your father?

Well, back in the day, those in the booze business felt that given 1) the difficulty of overcoming the taste hurdle of scotch and 2) it’s lack of mixability — if you found a scotch drinker, then you can be sure that his/her father introduced them to it.

That’s a problem today since most fathers stopped (or never started) drinking scotch in the first place. Besides, “my father’s scotch” is right up there with Oldsmobile. So much for modern day mentorship as a motivator for drinking scotch.

Enter Dewar’s Highlander Honey, the subject of my last posting.

I gave many reasons why I see this as a success so I won’t repeat them. Scroll down and see for yourself.

However, since writing that post, I’ve had occasion to speak with Arvind Krishnan, VP Brand Managing Director, Dewar’s and to taste the product along with some friends and scotch aficionados.

First, the Dewar’s people have done a great job of blending the taste of Dewar’s with fantastic notes of honey. This stuff is not artificial tasting and, the honey and scotch combine to provide a whole new flavor. As a result, they have also combined experience and exploration – as in the experience of enjoying scotch and the discovery of how pleasant and desirable it can be.

Here are two thoughts on the flavored spirits world. The Huffington Post wrote this week about flavored vodka under the heading, Flavored Vodka Companies Continue To Debut New Flavors, But Why? You can find it here.

When you get away from the kiddie flavors in vodka, you come across serious flavored American whiskies that are growing rapidly. Just this week I read that Jack Daniel’s Tennessee Honey has sold close to 500,000 cases in just two years.

I predict that not only will Dewar’s Highlander Honey succeed but also there will be a host of others on the market in the not too distant future. You can bet on it.

Oh, and that taste test?

It’s best summed up by the statement one non-scotch drinker made, “I had no idea scotch could taste so good.”

Wine and Spirits Daily had two announcements about new spirits product recently. One makes sense and the other, well, you decide.

Good Idea

The flavored whiskey category has been on fire with brands like Wild Turkey American Honey, Jack Daniel’s Tennessee Honey, and Jim Beam Red Stag among others. Now the folks from Dewar’s Scotch (owned by Bacardi) are entering the flavored whisk(e)y category with Highlander Honey, a scotch infused with honey.

Imagine, they have the audacity to try to break down the stuffiness and out-of-date sacred walls of the blended scotch category. Never mind that blended scotch growth has been declining to flat in the past decade while other whiskies (including malts) have been growing. It’s not about adapting to changing tastes, it’s about a stiff upper lip refusing to swallow change.

Check this out. The Diageo head of whisky outreach (huh? I think that’s a way of saying, ‘can I buy you a drink?’), was quoted as saying Scotch has too much “integrity” and “authenticity” to get into flavors. Diageo and integrity in the same sentence? My word! Also, the Scotch Whiskey Association is not very happy about it. Better to go down with the ship, eh, what?

Hey, it’s a good idea for the reasons I shared with Wine and Spirits Daily,

“It’s a terrific idea and well worth trying,” long-time industry exec Arthur Shapiro told WSD. ” First, the blended scotch market is declining and this could be a shot in the arm. Second, the flavored whiskey (US) brands have ‘greased the skids’ so consumer acceptance would be easier than it might have been before these brands came on the market. Third, it adds contemporariness to the scotch area and removes the stuffiness. Fourth, probably makes for a good mixed drink. Finally, I like the ‘seriousness’ of scotch and the fun of a flavored scotch product.”

Put that in your copper still and cook it.

You gotta be kidding me

Pernod Ricard, who until recently earned my respect for terrific innovations and new products, has launched what seems to be an April Fool’s joke.

They are introducing a line of new products under the Hiram Walker name called Mama Walker’s breakfast liqueurs. Apparently it’s intended to “tap into the comfort food, sweet and savory flavor combinations” trend (or is it fad?) not to mention the confectionary/cake vodka flavors. This breakfast of champions is available in Maple Bacon, Blueberry Pancake and Glazed Donut.

Come on folks, are you serious? Next thing you’re going to tell us is that they hardly taste artificial.

Can’t you just see the ad campaign?

“A bit hung over from a hard night of drinking? Looking for something to smooth out the rough edges? Forget about the all night diner and the bacon, eggs and pancake special. Try some of Mama Walker’s breakfast liqueurs… we’ll perk you right up with our original comfort booze. Just remember… your Mama knows best.”

Or:

“Tired of the same old breakfast? Cereal, eggs or fruit can be soooo boring… Start you day off right with Mama Walker’s breakfast liqueurs. What a great way to face the stress of what awaits you. Boss on your back? Kids on your nerves? Mama can help…Comes with or without a brown paper bag… But, remember, don’t eat breakfast and drive!”

Any thoughts on either product?

Dale DeGoff is a booze business entrepreneur and somewhat of a renaissance man. His latest endeavor moves him from behind the bar into the realm of a manufacturer. He’s been credited as the inventor of the Cosmo and, more important, is a really nice guy.

I first met Dale back in the day when he was tending bar at some great places, most notably the Rainbow Room. From that point on, he was at the forefront of what’s been described as the gourmet (or mixologist) approach toward cocktails, particularly the classics.

I suppose that’s why he’s known as King Cocktail, although I think of him as a booze business equivalent of Wolfgang Puck – a celebrity barman (but without an accent).

The man has a list of awards, including the James Beard Award for Wine & Spirits and has written a number of books about cocktails. But wait, there’s more – he’s a partner in the bar training program called Beverage Alcohol Resource (BAR, get it?) and founding president of The Museum of the American Cocktail. He also tours the country with a one-man show called “ON THE TOWN! A Tribute to Bars, Speaks, & Legendary Saloons.”

You’d think that would be enough to keep him busy, right? Wrong. Dale has recently launched his own brand of bitters called Dale DeGoff’s Pimento Aromatic Bitters. It’s designed to be very similar to Pimento Dram, an ingredient Dale often used, but is no longer available. He joined forces with Ted Breaux, of recent Absinthe fame, to produce it.

I think that before I go any further, we should talk about bitters and their use in cocktails. If you’re a booze maven, you probably know this but indulge me anyhow.

According to Wikipedia (my go to information resource), bitters is an alcohol beverage (DeGoff’s is 90 proof) flavored with a range of herbs and spices. He uses select botanicals and allspice, which is made from the pimento berry (not to be confused with the little red things stuffed in olives). Adding a little bit of bitters to cocktails and you won’t believe how it enhances the flavor and taste.

Check out these recipes from his website .

So, Mr. DeGoff jumps over the bar and joins the ranks of other bar personalities and companies making commercial bitters, including Gary Regan (Regan’s Orange Bitters No. 6), Angostura, Peychaud and others.

Welcome to the producer’s side of the bar, Dale.

Celebrity endorsed or owned liquor products, with a few notable exceptions, nearly always fail. So why do these products keep coming out?

This subject was first covered in an August 21, 2010 posting but the line up of recent new efforts makes it worth re-exploring.

Let’s start with those that seem to have made it.

Top of the list is P Diddy and Ciroc. The brand started life without him but, with him, it has gone through the roof. He has a following and, with an interest in the brand, his marketing has paid off. Next up is Sobieski, with a Bruce Willis connection. He licensed his image for which he received shares in the parent company. Is it Willis or the attractive price point that has made the brand strong?

Then there is Bethenny Frankle and Skinny Girl. And, let’s not forget Dan Akroyd and Crystal Head. Read more…

Bevlog, the blog run by my favorite alcohol industry attorney Robert Lehrman, has an interesting posting about a new vodka product. It’s called “Chokin’ Chicken.” The TTB approved the label in early Oct. You can find the blog here.

Is it a new direction in vodka? Are we moving from candy, cake, bacon and other flavors to nomenclature designed to get attention by being over the top. You know, like the guy who thinks he can get a laugh by putting a lampshade on his head.

Probably not. This most recent example of branding “excellence” joins the ranks of other previously approved sexual innuendo brands like – Spank My Ass and Call me Sally, a red wine from California; Well Hung Vineyard, a red blend from Virginia; and Vas Deferens Ale. (You’re just going to have to Google that one.)

Fortunately, none of these brands have seen the light of day, so far as I know. Which, I suspect, will be the chicken’s fate.

I don’t know about you but I’m glad the TTB approved these names. Their job is to regulate, not act as censors. Besides, they probably didn’t get the double entendre of chokin’ chicken.

It’s your tax dollars at work.

Sorel is a startup spirits venture from a company called Jack From Brooklyn. Jack Summers and his partners, Alan Camet and Rich Nazario, run it.

If you are a regular reader of Booze Business, you know that I’ve been following the adventures of Jack and his associates and have written about their efforts on a number of occasions (see April 27, June 5 and June 13^th postings this year). It’s a blog meets startup meets reality show.

Well, the summer has gone by and I spoke with Jack Summers about what they have been doing. Here’s the conversation:
Read more…

Buffalo Trace Newsletter had an article last week with the headline, “Shakers Vodka Brand and Equipment to be Auctioned Online Through June 26.”

Infinite Spirits Inc., the makers of Shakers Vodka, filed for bankruptcy in early 2012 and now the assets are being liquidated. If you go to the auction website you learn that you can bid on the brand, the equipment and a host of other items. The bankruptcy filing shows the company has under $200,000 in assets and liabilities of over $2.3 million.

To me this represents a case study of a start up gone wrong. Got me wondering, what happened and why did it fail?

The story starts in 2003 when a group of entrepreneurs who had created Pete’s Wicked Ale decided to enter the spirits industry. They had sold Pete’s for $69 million to the Gambrinus Company in 1998 and I suppose wanted to parley the money into “the first high-end American vodka.” Their marketing concept was to replicate the elegant 1920s with frosted bottles shaped like Martini shakers.

Shakers Vodka

From what I’ve read, in less than three months from intro, Shakers was number one in their home production state of Minnesota and quickly expanded to 19 other states. They were loved by vodka mavens, received a perfect 100 score from Wine Enthusiast and were Best of Show in the San Francisco Spirit Competition. At one point they marketed five products – wheat and rye based vodkas plus seasonal versions known as rose, violet and summer. The bankruptcy records indicate that they grew quickly from the launch and had annual sales over $1 million. Read more…

Readers of Booze Business may recall that I began following this startup company a month ago (see April 27 posting) with the promise that I would periodically update their journey to brand development. (Their website is here.)

Their first product is Sorel (pronounced sore-el). It’s a drink that those from the Caribbean islands have been making for centuries and serve on festive occasions. Each island, and even families, has their own concoctions. Made from a variety of spices, herbs, horticulture and neutral grain spirit (NGS), JFB has overcome barriers and produced a market-ready product with a shelf price of $26.99. (Wait until you hear what retailers are saying.)

Since I first met the owners (Jack Summers, Tim Kealey and Alan Camlet) they’ve moved from planning and laying the ground work to implementation. Not, as it turns out, without some hiccups.

After months of work on perfecting the recipe to their satisfaction, the day arrives when 330 gallons of NGS appears at their facility. The “factory” is the former site of Red Hook Winery; the blending and bottling equipment is set and ready to go. Figuring out how to unload the alcohol is only part of the problem. The alcohol itself is the real concern.

Read more…

Why do large companies suck at new products?

I get this question all the time and the answers are really quite simple. At the top of the list, it’s easier to buy than build. Why invest the time and effort and divert attention from the existing portfolio just to dig a dry hole?

More important is the simple arithmetic throughout the food chain. “How am I going to make my bonus/meet management’s expectations/reach my sales quota – you fill in the rest – if I divert my attention to a start up brand?”

So, if you’re a major player, you have a number of options when it comes to new products and brands.

First, you can bite the bullet and say, as I did at the outset of this posting, why bother? Let someone else build it, I’ll make an offer they can’t refuse. Mainly Diageo, but also others, fit this mode.

If you’re aggressive and smart, chances are, you’re also attuned to the marketplace (consumers and trade) and know how to create demand or capitalize on an opportunity. Just look at White Rock, Proximo, Beam, Campari and others.

Read more…

My friend and fellow blogger Robert Lehrman, knowing of my interest in matters dealing with Brooklyn and Booze, introduced me to Jack Summers. Jack and his partners, Tim Kealey and Alan Camlet, own a startup business called Jack From Brooklyn. You can find them here.

Just another start up, you say. That’s right, but unlike most, these guys have the street smarts and entrepreneurial drive to break away from the pack and become real winners. For those of you who doubt it, as we used to say in Brooklyn, “Wanna bet?”

Read more…

I came across an article in USA Today indicating that US alcohol consumption hit a 25-yeat high. Americans drank the most wine on record (2.3 gallons per person). Spirits grew by 18% to 1.5 gallons. But, beer dropped 7 percent to 20.7 gallons according to the Beer Institute.

The report brought to mind an article in Wine & Spirits Daily back in October. Speaking to the National Beer Wholesalers Association, Tom Long of MillerCoors, indicated that the beer industry could learn a thing or two from spirits marketing.

To further illustrate the problem, according to Ad Age, AB InBev spent $555 million in measured media last year and still managed to lose a full share point. MillerCoors spent just under $400 million and lost half a share point. How does that work? Together they spent nearly a billion and lost market share. Is it the creative? Is it the media? Is it that consumer alcohol tastes are shifting to craft beers and spirits/wine? Probably all of the above.

Read more…

This week’s issue of Advertising Age has a story about flavored whiskey with the headline “Brown liquors get shot of flavor as distillers look to broaden audience.” The sub headline – “Can cherry bourbon and Tabasco SoCo woo women without scaring off men?”

Right off the bat, a few things bothered me. Brown liquors? Careful Ad Age, your bias is showing.

As to the appeal to women, I suppose that’s correct but the real story is innovating the whiskey category to broaden its appeal – to all audiences, not just women – and to expand usage occasions as well.

Ad Age also forgot the brand that created the category in the first place – Wild Turkey American Honey that was launched in 2006 and has been a big seller since then.

Here’s my view on the flavored whiskey category.

When Beam introduced Red Stag by Jim Beam (Black Cherry), many people (myself included) didn’t think it would work. But I at least gave them credit for a brand extension rather than a line extension. What’s the difference? As my friends at Absolut used to say, if you add an extension, it must feed the brand not eat the brand. Extend usage and consumers without cannibalizing the core franchise.

Launched in 2009, Red Stag sold 100,000 cases that year and 190,000 in 2010. I’m told that by the end of 2011 the brand will have sold 500,000 cases since the launch. Further, according to Nielsen data, Red Stag accounted for 15% of all the growth in the Bourbon category in 2010. That, my friends, is feeding the brand.

The attractive thing about Red Stag is that it’s “Kentucky Straight Bourbon Whiskey Infused with Natural Flavors.” At 80 proof, it’s whiskey not a liqueur. It’s the only one on the market that’s whiskey according to the regulations.

Based on the success, the race is on.

Brown Forman has two entries in the market both interesting, but more whiskey specialty and liqueur than Beam’s entry. Jack Daniel’s Tennessee Honey is a 70 proof product, has great reviews and is more expensive than Red Stag. Gutsy pricing move.

Even gutsier is the Southern Comfort entry – Southern Comfort Fiery Pepper. It’s a liqueur (like the base brand and the Lime extension) at 70 proof. As the name suggests, it’s certainly not fruity and is co-branded with Tabasco hot sauce.

The Evan Williams folks (Heaven Hill) introduced Evan Williams Honey Reserve and are launching a Cherry Reserve. Both at 70 proof, they are classified as liqueurs.

In addition to brands, the race seems to be between cherry and honey.

Which brings me to the Seagram’s 7 Crown entries – Dark Honey and Stone Cherry. (Can someone tell me what a stone cherry is? How is it different from a cherry without a stone? Sounds like a brand manager hoping consumers will add a “d” to the word stone.)

This one is worthy of some further comments, as though I could resist.

First, it’s probably a good idea – what do they have to lose and 7 Crown could use the face-lift. Second, the brands are 71 proof, not 70. That’s probably because the flavorings have alcohol and those amounts are not taxable. I think it’s called draw back credit. Third, it sells for $19.99 or about the same price as Red Stag. That’s more than gutsy — that’s chutzpah.

Flavored whiskeys could be just the ticket to revise and grow the whiskey market. It changes perceptions, increases usage and brings non-whiskey drinkers into the mix.

Somewhere, Mr. Sam (founder of Seagram) is spinning in his grave.

In my constant search for interesting/entertaining news about the business of alcohol, I came across a posting titled World’s Weirdest Spirits at The Daily meal. You can find it here.

The list includes a mishmash of strange booze where “logic” caused the creation of a bottled concoction. For example, people love bacon so there is Bakon Vodka; how about smoked salmon flavored vodka? The logic applies to a Yogurt liqueur as well, called Yogurito.

What would a viable spirits brand be without a story, a legend or an “inspiration?” There is Copil Licor de Tuna – no, not fish tasting, that’s the salmon vodka. This one is distilled from cactus pears and has something to do with an Aztec legend about blood and the creation of the cactus. (I couldn’t make that up, folks.)

There is also a spirit called Root that includes botanicals, birch bark, wintergreen and a bunch of other stuff. The story is that the recipe was Native American, passed down to colonial settlers and was served to Pennsylvania coal miners. Might have to take this one seriously – it’s gotten some hype and seems to have a potential following.

Now we come to my two favorites… drumroll please… Products I like to call “purposive” – spirits with a purpose and that help to “make things happen.”

One of them is Mamajuana, apparently also known as Dominican Viagra. It’s made from herbs, sticks, wood, honey, wine, rum and who-knows-what else. All the ingredients are steeped together for a few weeks. Don’t ask me how you drink it but I suspect it comes with tweezers to remove the splinters. But hey, it’s an aphrodisiac.

The other is a product called Kierewiet Liqueur – billed as a digestif, it has a green color, a bold marijuana leaf on the label and is said to be a Cannabis Liqueur. I’m told it’s served in many places in Amsterdam, of course. This was bound to have happened but I would have suggested a bit more subtlety in packaging execution.

Well, there you have it. In an industry where such products as dessert and cake vodkas, spiked chocolate milk, chocolate and cabernet products are on the ascendancy – these may well be the trends of the future.

(I’m kind of hoping the cannabis one makes it – I have a concept and marketing plan already laid out.)

No, there’s no such thing. But the idea almost got me fired.

I read in Drink Spirits that they selected a Scottish gin among the best new spirits introduced at Tales of the Cocktail. Caorunn Small Batch Scottish Gin joins Hendricks as Scottish made. The brand is made from the traditional botanical mix plus distinctly Scottish botanicals.

So here’s the Chivas gin story.

When I ran new products at Seagram, as I’m sure you’ve noticed from the tequila postings, filling gaps in the portfolio was a top item on the agenda. Oh sure, we had the top seller in domestic gin but with the exception of Boodles, we did not have an imported brand to compete with Beefeater’s, Tanqueray, Bombay and others.

Our research revealed that a strong overlap in preferences existed among scotch and gin drinkers. A scotch drinker was most likely to drink gin as a second choice and vice versa.

Based on this insight and lots of concept development work, my friend Sam Ellias recommended a Chivas Gin. Before I could say a word, he quickly added that it would not be Chivas Regal Gin, but rather, a gin from Chivas Brothers. The brand would use the Chivas heritage of distilling expertise and skill and apply it to a “white goods” product. Further, his research showed that attitudes toward Chivas Regal Scotch itself improved as a result of the more contemporary gin brand idea. Trust me, at that time, Chivas Regal could use all the help it could get.

I was convinced.

At the next new products review meeting we put the idea on the table for discussion and approval to proceed to the next development stage. There was strong support but something wasn’t right. Those in the room with doctorate degrees in “Owner Anger Detection” (OAD) became uneasy. I couldn’t understand it but knew enough to drop the subject based on instinct.

But not Sam Ellias.

A number of years later when I was running marketing and he was in charge of new products, he brought up the subject of a gin by Chivas Brothers once again. Not only was the research even more compelling but he also found a name that made the product clearly by Chivas. All he wanted was a real world test market with an action standard that if this gin product failed to improve Chivas’ sales, the idea would be dropped. Reasonable.

While I still didn’t have a PHD in OAD, I had a Master’s and strong survival instincts. I approached the subject gingerly and discussed it with a family confidante/consultant to gauge the reaction. Instead of debating the merits or concerns, he must have gone to the head owner complaining about the idea.

The next thing I know, I get a poison pen email from the owner, the content of which I will never forget:

“If I ever hear the words Chivas and gin used again in the same sentence, heads will roll, starting with yours.”

This missive came from the same office that had pushed such brilliant new product ideas as Von Konig Silberwasser (I think it was supposed to be a vodka), Bourbon Street Bourbon (billed as a New Orleans style bourbon, whatever that is), and my personal favorite, Chivas Danu, whose relationship to scotch continues to elude me.

Despite the amused reaction from my management, who assured me not to be concerned, the dispatch rankled me and I avoided new products and Sam for some time afterward.

At lunch the other day with an old friend, who worked on Seagram new products and packaging design, I was reminded of the Coyote Tequila story and the supremacy of product over imagery. It is also a story of how logic and formulae don’t work in new product development.

When I was running new products, the single-minded goal was to fill holes in the overall portfolio. There was no larger hole than the absence of tequila.

Oh sure, there were 2 wannabe brands in the company’s history. One was Olmeca and the other was Mariachi, both now owned by Pernod Ricard. Not sure how well or poorly they are doing now, but at the time they were in the “brand hospice” division of the company. So the mission was to create a tequila brand that could compete with the dominant Jose Cuervo in a category that at the time showed the promise that has since come to fruition. (This was pre-Patron.)

The project was launched with gusto, intensity and with the best team and intentions. No effort was spared; no resource (in or out of the company) was held back; it was full steam ahead.

First step on the journey was to develop a concept. One that could make the new brand stand out from the others on the market and perhaps do for tequila what Captain Morgan did for rum. After all, it was argued, Bacardi dominates rum much the same way as Cuervo does in tequila and the extra-added attraction of a flavored product could separate the new tequila from the rest. Hmmm, sounded logical to me.

But what’s the name and imagery? Coyote, of course… as in southwest, as in rough and tough, as in sneaks up on you and steals your cattle, as in – you get the picture.

To further borrow a page from the Captain Morgan playbook, a howling pedestal was conceived and produced for bars. Each time a bottle was taken off the pedestal a button was released and activated the sound of a howling Coyote. The trade loved it. It reminded all of us of the highly successful Captain mirrors that bars clamored for. It cost a bloody fortune but who cared, this was Seagram and we’re taking on tequila. We’ll make it up on volume, as the saying goes. (See Nov. 30, 2010 posting Great Tchotchkes (Swag) I Have Known.)

Now for the formulation. What we learned was that most people at the time thought the taste of tequila was awful and that’s why the Margarita was invented. For the rest, the awful taste was a badge of courage that would be forgotten after a few rounds of shots by the machismo.

As a result, someone in R&D came up with the notion that Coyote needed to be harsh, even harsher that Cuervo – a taste that replicated the southwest concept and was truly macho, as in fiery. So this ‘tequila with natural flavors’ was “spiced” with hot peppers. Might have been a billion on the Scoville chili peppers heat scale for all I know. Whatever, it was doomed from the outset. I can’t blame R&D as much as the marketing team and myself for jumping to the wrong conclusion and letting this happen.

On the one hand we had consumers and the trade loving the idea and the brand. That is, until they tasted it. No matter how hard we tried to get the heat down, it still tasted like crap and over time the damage was done.

Lessons learned: What works in one instance doesn’t necessarily work in another. There are no formulas to success in spirits marketing or in any category. Further, no matter how good the packaging, name and proposition is, if it tastes awful – remember the expression “lipstick on a pig.” Unless, of course, an awful taste is the concept.

By the way, Seagram never really got tequila right. In addition to Olmeca, Mariachi and Coyote, there were ill-fated efforts with Herradura and Patron. Margaritaville, the last attempt, ended when the lights went out.

But that’s another story.

Call it Pig Swig.

Ad Age reported last week that the Piggly Wiggly supermarket chain is launching a line of store brand beers under the umbrella name of Pig Swig. The line up consists of “craft style” beers – Pig Tail Ale and Pig Pen Pilsner. I suppose if your company is called Piggly Wiggly you might as well go “whole hog” (sorry about that) and name your store brands accordingly.

But I must say that charging $6.99 for a 6-pack is more than a bit piggish. (Okay I’ll stop.)

A number of retailers have launched private labels/store brands but managed to name the products intelligently if not creatively. Supervalu has Buck Range Light selling at Albertson’s and other stores in the chain; Walgreen sells Big Flats; and 7-Eleven sells Game Day beer. Costco uses the Kirkland name as it does on spirits and Kroger calls its beers Tap Room No 21 and Port Republic.

The Ad Age article also reports (via Nielsen) that private label beers account for only $23.6 million out of the total beer category of $27.4 billion. But, store brand sales are up 41% the past year versus 2.3% drop in branded sales.

That must be the inspiration for Piggly Wiggly to come up with ads and slogans telling consumers to “get your swig on,” “put some pink in your cheeks” and my favorite – “toast of the trough.”

I don’t know if it’s still around but there was a Malt Scotch Whisky called Sheep Dip. Think of the name applied to the Pig Swig line. I even have the slogan – “come wallow in our beer.”

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.

I’ve been thinking about expanding the Absolut Tales that you see in the Categories section to the right. So as I was gathering my notes and recollections, I was reminded of two attempts at trying to launch vodka as the category was beginning to show its strength.

Both attempts failed.

I was running marketing for the Asia Pacific/Global Duty Free division and like the rest of Seagram we needed a vodka brand. By the time I got there plans were well underway — a concept, package, manufacturing, sales and marketing plans and an interesting name, Bolshoi. The brand was made in an eastern European city and the idea was to ship it through Siberia to the port city of Vladivostok and then on to markets in Asia.

When I got to the group, I was greeted with the marketing plan and budget. As I went over the materials to acquaint myself with what was going on, I noticed something peculiar in the shipping costs. There was an invoice for close to or over $50,000 (I can’t recall the exact amount) that was over and above the actual transportation costs. It was marked, “Transport Support.”

I asked about it and was told it was for a company of security guards (probably soldiers) who would accompany the initial shipment through Russia, the Urals and Siberia. The guards were needed to make sure the shipment got there safely.

The brand did well in Asia but was discontinued when Absolut came along. Good thing because the cost of goods would have killed it anyway.

The other attempt involved Wyborowa from Poland. The W’s are pronounced as V’s and therein lies part of the tale.

Imported vodkas in the US were just beginning to make their move and somehow we got a shot at getting the distribution of this brand with a long pedigree. It dated back to 1823 where it sold domestically, became a strong export brand throughout Europe and the first vodka brand to get an international trademark in 1927. Best of all, the Soviet Union dissolved and the Poles were eager to go capitalist.

A group of us went over and quickly learned what it takes to deal with a country emerging from the shadows of communism. We were at a conference table and there were many different liquids for us to drink, as you would expect, while we discussed the prospects of doing business. Mineral water, sparkling water, spring water even tonic. The bottles were in all different colors, some were brown, some clear, some tinted. So when you poured a liquid from a particular colored bottle (none had labels) thinking that this one was the sparkling water, it would turn out to be tonic. Our hosts made it clear that the economic difficulties meant that all bottles were reused and did not allow the “luxury” of dedicated glass.

Okay, I thought, these folks are doing the best they can, making do and trying to move forward despite the obstacles. Good for them.

As the discussions progressed, the issue of package size came up. They had a litre size but the next size down was a 700ml, which is the required size in Europe. Unfortunately, that size is not legal in the US, which requires a 750ml. We explained that in order to sell in the off-premise trade, we needed them to produce that glass. After much whispered conversation and heated exchanges in Polish, the managing director said that they had found an answer. He informed us that rather than go to the expense of new molds and glass manufacture, they would use the litre bottles and simply fill them three quarters full.

None of us laughed nor revealed our amusement. It was, after all, a creative solution stemming from a difficult economic environment. We merely pointed out that the US government wouldn’t allow that and joked about the interference of bureaucrats — east and west.

Turns out that the production problems were solved, a new contemporary package was developed and the brand was launched. Nothing, however, could overcome the brand name and call issue. No one wants to stand in a bar and call for a brand they can’t pronounce. Ad campaigns and on-premise programming couldn’t counter the verbal stumble of saying Wyborowa.

The brand does under 2 million cases around the world — most of it in Poland. The rest is in Italy, France and Mexico. Proper pronunciation is not required.

Wine and Spirits Daily had a story last week entitled, IS TEQUILA THE NEW VODKA?

Good question.

The article quoted a writer at the Washington Post who said… “A new trend emerges: the proliferation of ‘ultra-premium’ tequilas targeted at a club crowd that slowly has begun to trade in Grey Goose for Patron.” The article goes on to point out that “various social indicators, such as Al Roker claiming on the Today Show that Tequila is the new Vodka.” (I must have missed the announcement about Al Roker as social forecaster. I thought he did the weather.)

A few observations:

Drinking Patron at clubs at the expense of Vodka brands like Grey Goose is not a new concept. They are often interchangeable depending on the mood and occasion. Both brands are at the top of the heap in terms of being icons.

Further, it’s not Tequila, it’s Patron. Generally speaking, among most consumers, the Tequila category has three brands…Patron, Cuervo and all others. Remember the old adage? Consumers drink brands not categories.

Tequila will grow as it continues to be the focus of new product introductions and in that regard, it will be the new Vodka. I don’t have the actual data but I’d bet there have been more new Tequilas introduced in the last few years than Vodka. The shifts in Vodka preferences from the high end to mid-priced and value brands make new Tequila entries more enticing.

So, among most consumers, Vodka will continue to rule. Whether Al Roker thinks so or not.

Borrowed credentials is a term I like to use when a brand “borrows” something or someone to identify with, such as a brand name or a person as the endorser.

The intent is the “approval” or “license” to give a brand some prominence. But, more often than not, it doesn’t seem to work.

Three categories will help you to see where I’m going:

1. A brand that has licensed the name from another business or category. Godiva, for example.
2. A brand closely identified with a star or celebrity. Such as, Ciroc.
3. (My favorite) A brand named after a star or celebrity.

So here we go…

Licensed Brand Name

The two that come most readily to mind are Godiva and Starbuck’s, both in the liqueur category. I gotta tell you that I thought Godiva would be a crack-of-the-bat homerun. And, I wanted to license Starbuck’s so badly, I could taste it. Alas, neither has set the world on fire.

Association with a star or celebrity

This is a mixed bag best characterized by the nursery rhyme… “There once was a girl with a curl in the middle of her forehead. When she was good she was very, very good but when she was bad she was horrid.”

So in the “good” category we have (not necessarily in order of goodness):

• Ciroc and P Diddy (forgive me if I have the wrong name; who can keep up?). Probably the gold standard in celebrity links.
• Crystal Head Vodka and Dan Aykroyd — talk about chutzpah.
• Cabo and Sammy Hagar — (notice I didn’t say Cabo Wabo) good for you Skyy, it’s about the product not the star.
• Red Stag and Kid Rock — the brand is a homerun with or without him. But he sure does help.
• Margaritaville and Jimmy Buffett — remind me to tell how this came about. But even without Seagram and me, it’s doing well. But, Land Shark beer is doing even better.

The “not so good” entries I’ve come up with so far (let me know about any I’ve missed) include some that faded faster than a cold beer on a hot day:

• 901 Tequila and Justin Timberlake — run that by me again? I got it but I don’t get it.
• Sobieski Vodka and Bruce Willis — it’s the price point, dummy. It ain’t about you. Even if you’re still involved.
• Godfather Vodka — You got to be joking.
• Conjure Cognac — by Ludacris. I totally agree but ludicrous is spelled wrong.
• Armadale Vodka — by Jay Z.  Why don’t you ask P Diddy how it’s done?
• 3 Vodka — by Jermaine Dupri. Enough said.
• Mansinthe — by Marilyn Manson. I didn’t make this up, folks.

Named after a star or celebrity

My favorites by far. Do I hear a drum roll?

So far I covered the good and the bad. Here comes the ugly:

• Trump Vodka. He doesn’t even drink for heaven’s sake. Could be a pilot for Celebrity Booze.
• Willie Nelson’s Old Whiskey River Bourbon. Enough said.
• Danny Devito’s Limoncello. Close but no cigars.
• Jefferson and Sam Houston Bourbon. Not kidding; Google it.
• Frida Kahlo Tequila. I love her and her work but… who dun it?

And the winner is…

• McMahon Vodka. Would have worked with a name like, “Here’s… Johnny.”

Lessons learned:

None of the top selling brands have borrowed credentials…unless you count Captain Morgan.

I would like to meet the people behind some of these efforts, there’s a bridge they might be interested in buying.

Where would the spirits industry be without brands to pour off?

What’s next…the Lindsey Lohan Liqueur?

Until the “acquisition” of Absolut, Seagram was not just a vodka-less company; it was an Ostrich hiding its head in whiskey pretending not to see the world of booze change.

Sam Bronfman’s aversion/reluctance to sell vodka is widely known. Perhaps for him, liquor needed to be aged or brown or have the word whiskey on the bottle. Whatever his reasons, the company was never a vodka player. In fact, when I was in market research, one of the older executives told me the story of how Mr. Sam reacted to a research project about changing consumer alcohol tastes. It may be apocryphal but it sure has the ring of truth.

One of the most notable researchers of the 50s and 60s, Alfred Politz, was an early leader in the techniques of polling and opinion analysis. He was commissioned to do a study of changing consumer alcohol tastes and attitudes. The presentation of the findings took place at an executive retreat and, in an unusual display of bonhomie, Mr. Sam suggested they review the results while sitting around the pool.

Page after page of the report pointed to the potential rise of vodka at the expense of whiskies. Politz was said to have been very clear that the evidence overwhelmingly leaned in this direction. It was also clear that Mr. Sam was getting angrier and angrier. Finally, he got up from his chaise, grabbed the report out of the researcher’s hands, threw it in the pool, muttered some obscenity and stormed off. Politz was said to have been relieved not to join his report.

So while competitors were developing Smirnoff, Popov, Stolichnaya and other brands, Seagram was struggling with entries like Wolfschmidt, Nikolai and Crown Russe.

Finally, someone decided to create a new vodka brand but, unlike most of those on the market at the time, it was to be imported vodka. In fact it was called Seagram Imported Vodka or SIV, as it was lovingly referred to. Imported all the way from Canada.

Management at the time knew that the “white goods” race was passing Seagram by and the pressure to succeed was very strong. So much so that when a presentation to a major California chain was set up to expand distribution, the “brass” decided to attend.

Picture this, a president, an owner, the head of marketing, the head of sales, brand managers…all fly off in the company plane to attend this meeting on SIV. They get to LA early with time to kill before the meeting. Since a few of them had never seen the inside of a chain store liquor department, they decide to visit a few stores.

Next thing you know there are 4 or 5 suits walking the aisles checking the shelves and watching consumers make decisions and purchases. They’re paying particular attention to the vodka section and spot a man looking at the brands and seemingly trying to make a decision.  A member of the entourage goes up to him, takes a bottle of SIV off the shelf, hands it to the man and says, “check this one…it’s imported.”

The man studies the bottle for a moment or two looks at the exec and, as he puts it back on the shelf says, “that’s not imported, it’s Seagram.

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…

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.

This blog has given me the opportunity to re-connect with friends and to make new ones like David van de Velde whose business motto is the headline for this posting.

In addition to being a very smart and affable fellow, David is an interesting entrepreneur and created Ketel One and Van Gogh Vodkas. In that regard, he changed the spirits industry.

I hope one day to write his full story but here are a few things that make him so interesting.

Let’s start with the motto. In an age of me-tooism, finding a hole and filling it speaks volumes about brand development strategies.

Not long after Seagram got Absolut Vodka, I kept hearing about this new brand, Ketel One, which was unique in its packaging, name, underlying concept and one other “outrageous” factor… a price at a significant premium to the category.

In addition, they concentrated on bartenders and servers and used videos and events to tell the story and even special olives for a martini. Everywhere I went at the time, all I heard was how we needed to learn from the Ketel One folks.

Many people think that the ultra premium vodka market was created by Grey Goose when, in fact, by the time Grey Goose came along, Ketel was already doing 200,000 cases.

David’s understanding of consumers is very impressive. He describes the target customer for high-end vodkas at that time as someone who wears Armani suits without pockets. Someone who walks into a bar and is holding the following – car keys with a Mercedes or BMW logo, an expensive cell phone and a wallet chocked full of goodies. No pockets. The question he asked himself is – would this person drink anything but a top shelf brand?

After Ketel One, he created Van Gogh vodka and brought the flavored category to new levels.

A little birdie told me he will be celebrating a milestone birthday this week so congratulations and keep finding and filling those holes.