Jameson, Diageo and Seagram…

Having just returned from a holiday in the Emerald Isle, I thought I would share some thoughts, especially about my favorite topic.

Jameson

Seagram had the distribution rights to this Irish whiskey for quite some time and, frankly, didn’t do much with it. With the exception of St. Patrick’s Day promotions and pushing the Irish Coffee drink, the brand went nowhere for years. I suppose it’s understandable, with millions of scotch sales at the heart of the portfolio, there was little room for this great brand. Read more…

Then…

By the time I got to Seagram, Boodles British Gin was an idea whose time never came.  As the saying goes, “She was dead when I got there, Officer.”

The brand was developed in the 1950s or 60s under a license from the Boodles Club in London, founded in 1762 by the Earl of Shelburne, later the Marquess of Lansdowne and Prime Minister. The club, which is 250 years old this year, was named after its headwaiter, Edward Boodle.

Get this — the licensing fee was the gin; use of the name in exchange for free goods.

To say that the brand languished at Seagram is an understatement. The fact is, while some gin aficionados felt it was a great tasting gin, Boodles spent many years in and out of the Seagram hospice companies. The problems – real or perceived – included concerns about the square package (too wide for a back bar) and loss of identity when placed sideways. The “oodles” of Boodles taunt by some consumers added to the death rattle, particularly in light of the awful marketing on behalf of the brand.

Read more…

Buffalo Trace Newsletter reprinted a story from the Daily Beast headlined, “Marijuana-Laced Wine Grows More Fashionable in California Wine Country.”

Apparently, it’s quite common for winemakers to produce cannabis cuvées with bold reds such as Cabernet and Syrah.  The recipe is a pound of marijuana dropped into a cask of wine, which yields about 1.5 grams of weed per bottle. The article quotes the president of the Napa Valley Marijuana Growers who says the combination of alcohol and marijuana produces “an interesting little buzz.” “People love wine,” he goes on the say, “and they love weed.”

I think there are a number of good reasons for marijuana infused wine to be more readily available.

Read more…

I write a monthly column for Spiritz magazine in India, which is the most widely read alcohol-related magazine in the country. My column is called Booze Abroad and the March issue contained a story on how the broadcast advertising (voluntary) ban for spirits was ended in the US.

While TV advertising for spirits has become widespread, it came about through the leadership of Seagram, but not without some ups and downs along the way.

The article is available on this blog with the permission of Bishan Kumar the publisher of Spiritz. To read it, simply click on the words, “Spirits Ads on TV” at the top of the column on the right.

Read more…

Like many companies in the food, beverage and hospitality industry, Seagram cocktail receptions and meals were somewhere between elaborate and over the top. A long list of third world countries could feed their people from the leftovers of a cocktail reception.

A good friend and former colleague had a wonderful way of putting it, “At Seagram, you didn’t become a millionaire but you sure lived like one.” Or, at least, ate like one.

Two stories come to mind.

Read more…

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

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

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

Read more…

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

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

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

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

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.

I came across an article from The Guardian (via Mark Brown’s Buffalo Trace Newsletter) with the headline – The Rise of Binge Drinking in China. The sub-headline was even more intriguing:

Binge drinking is increasingly common for Chinese professionals – often it’s even in the job description.

We’re not talking about people in the booze business either.

It reminded me of my brief sojourn as head of marketing for Asia Pacific/ Global Duty Free.

The assignment was, as they say, good news and bad news. On the one hand, it was my first head of marketing position, global in scope and in a new frontier – Asia. A dream come true, what’s not to like?

Plenty.

While there were offices throughout Asia, headquarters was in New York. No relocation, but when you travel to the markets you’re not going for a week at a time. No… more like 2 to 3 weeks (and weekends) a month away from home.

The guy running the operation was a smart executive but very strange. Let’s leave it at that, for now.

Two strikes but easily offset, at least initially, by the terrific people and the excitement of the new frontier. The drinking was another matter. Let’s go back to the article:

Drinking to develop and cement relationships has a long history in China. “When one drinks with a friend, a thousand cups are not enough,” runs one traditional saying.

I would not have put it so elegantly when I was there. For me it was fear of the words Yam Sing that literally mean, “Dry your cup” or “Bottoms up.” Oh, how I hated those words!

The big push in China at the time was Martell Cognac recently acquired by Seagram. The presence of Cognac in the portfolio, then as now, is important for business development in China. And, man oh man; our people loved their Cognac. At dinners, we had Cognac as cocktails (straight) with dinner (no wine) and of course after dinner. Every glass was accompanied by those two dreaded words – Yam Sing. Someone would stand up, raise a glass, say some words in Mandarin or Cantonese and end with the fearful Yam Sing. It was bad face not to drain your glass/tumbler even if it had been filled to the brim. No sniffing, no swirling, no gazing at the golden hues – just down the hatch.

Don’t get me wrong, I like Cognac in small amounts, in a snifter, maybe by a fireplace on a cold winter night after an exceptional meal. Down the hatch or bottoms up are not the ways in which I enjoy it. After a few weeks of this, the migraines set in.

I asked my colleagues in the region why Cognac before and with meals. The answers were not helpful. They ranged from “strong food needs a strong drink,” or “Cognac is very western and very masculine,” and the all time favorite (said with a wink of the eye) “excellent aphrodisiac.” All the time I was thinking in response to each reason 1) Chinese food is best with good beer 2) western and macho means cowboys and whiskey and 3) what good is an aphrodisiac when you have a throbbing headache.

Finally one day the solution occurred to me.

At most dinners I made it a point to sit near a potted plant, pretend to take a drink when no one seemed to be looking and down the hatch was the plant’s problem. Must have destroyed more plants than any disease had ever done. Hey, I’m not proud of it, but it was either a headache or the plant.

Fortunately, a few months later, the US head of marketing position came up and it was Joi gin from this Gwailo.

Last week most of the advertising industry trade magazines had articles about Bernbach on the centennial of his birthday. I thought I would contribute by relating the story of him, Edgar M. Bronfman and Chivas Regal.

Before I do, however, for those of you who are unfamiliar with him, here is some background on the man who revolutionized creativity in advertising – no, make that brand and product selling.

Bill Bernbach’s style of advertising changed brand communication. He was the anti “Mad Men” focusing on compelling messages that broke through the clutter and resonated with consumers. “The difference between the forgettable and the endurable is artistry,” was how he put it. So think about such ads as Avis “We Try Harder” or Volkswagen “Think Small” or “You don’t have to be Jewish to love Levy’s real Jewish rye bread.”

His effort on behalf of Chivas Regal is an interesting story as described by Edgar M. Bronfman in his book Good Spirits, and by Paul Pacult in A Double Scotch – How Chivas Regal and The Glenlivet Became Global Icons.

In the 1960’s after the acquisition of Chivas, the brand began to languish in the face of competition from such lighter scotches as Cutty Sark and J&B Rare. Edgar managed to convince his father that changes needed to be made to stem the sales declines. These included product reformulation, new packaging and a new ad campaign. Enter Bill Bernbach.

As the story goes, when Bernbach showed the new ads to Edgar there was one ad at the bottom of the pile that he kept hiding. When pushed by Bronfman to reveal it, Bernbach pointed out that it was intended as an introductory ad for the new package and that he was concerned that Edgar wouldn’t dare run it.

The headline read “What Idiot Changed the Chivas Regal Package?” To his credit, Bronfman saw the benefits of the brashness and self-mocking tone and, to make a long story short, the ad ran.

The team at Doyle, Dane and Bernbach went on to change the brand’s fortune by understanding consumers and reaching them through challenges and taunts that were fun and resonated well. My favorite – “If you can’t taste the difference in Chivas Regal, save the extra two dollars.” And, the classic, “The Chivas Regal of Scotches.”

In addition to the central print campaign, the agency created a cartoon campaign, which picked up on the theme. A particularly memorable one showed a ship leaving the dock with a case of Chivas left behind. The caption read, “They’ll be back. They forgot the Chivas.”

Did the creativity translate into brand sell? According to the Pacult book, when DDB took over in 1962, the brand was selling around 135,000 cases. By 1979, sales had risen to 1.1 million.

All I can close with is a rewording of another great Bernbach ad – “Mama Mia, that’s effective advertising.”

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.

The caller was annoyed and had a threatening tone in his voice. He got right to the point and informed me that he was a business manager for Jimmy Buffett. He quickly added that we had infringed on trademark and other intellectual property rights – I can’t recall the full extent of our alleged/supposed violations but I was intrigued.

When I politely asked, “What the hell are you talking about?” he explained that Parrot Bay Rum by Captain Morgan, which had recently been introduced, infringed on their established use of the term Parrott Head, the commonly used nickname for fans of Jimmy Buffett. (I remember thinking, “Is he nuts?” How do you trademark the term parrot?)

I knew who Buffett was and associated him with the song Margaritaville, but I was far from a fan, much less an aficionado. I knew he had a strong and loyal following but that was about it.

Instinct told me this gentleman had more on his mind than a lawsuit so I pushed back.

“I don’t know what you’re talking about,” I countered. “Two floors below there are offices chocked full of lawyers who spend their time dealing with real and frivolous issues, so I suggest you take your best shot and do what you need to do.” There was silence but I could hear him blink. “Now, do you want to tell me why you’re really calling?”

He went on to explain that they’d like to have private label tequila for their restaurants and, since we didn’t have a viable brand (that hurt), would we be interested in producing one for them.

“Listen… private label tequila is not a good idea … you’ll make a nickel and we’ll make a dime. It won’t be anything more than a well brand… Tell you what … let’s talk about licensing Jimmy Buffett’s name for a tequila.”

The glee in his voice told me that I had just been played but, no matter, we needed a tequila brand and this might just be the ticket.

He informed me that they would prefer to use the name Margaritaville but the look and feel would be totally Buffett.

It didn’t take long to consider, particularly since a friend and wholesaler, one of the best and smartest in the business, recommended him to us. The deal was done, so far as I was concerned. Getting approval from management (not the owners this time) was another matter. It took a while.

Buffett’s man lived up to his end of the deal – wouldn’t you if you got a hefty royalty off the top? As for me, I became whatever the word is that goes beyond an admirer of Buffett, his music (made my kids so crazy by playing it constantly that they refused to ride in the car with me), his business and, of course, going to his concerts.

The biggest issue in the development was to capture the essence of the Jimmy Buffett brand. The next thing I know, the man himself appears at the office and lets us know that he is there to help with the back label copy. In twenty minutes, he produced the most incredible story that was totally Buffett. He is an amazing guy, top of the game performer, highly recognized and accomplished author and a decent, down to earth person.

In the few years that Seagram had it before the lights went out, the brand went from 5,000 to 50,000 cases. Afterward, it continued to grow but was bounced from company to company without, in my opinion, any significant focus or direction.

There is a happy ending however. Margaritaville is now part of the Sazarac Company and in good hands. In addition to the original tequila brands, they have rum and prepared cocktails including a skinny margarita mix.

Reminds me of his song, Changes in Latitude, Changes in Attitude – nothing remains quite the same.

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.

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.

There have been lots of conversations among Seagram alumni since it was announced on Friday that Edgar Bronfman Jr. was convicted of insider trading in a French court.

The news reports I read raised a number of questions. According to Crain’s NY Business, “The conviction came even though the prosecutor had recommended acquittal…” That’s curious.

The report went on to say that “the prosecutor felt the executives did not have enough information themselves about the company’s health.” What? Are we talking Edgar Jr. here? Didn’t have enough information after having bet the heritage and fortune on a guy who referred to himself as Master of the Universe?

I wonder what the judge heard and saw that the prosecutor missed.

Edgar Jr. sometimes referred to the ease and depth with which people in Hollywood were capable of lying. He described studio executives as people who can swear on their mother’s life that it is raining outside when you and they know it’s a beautiful sunny day. Yet, he couldn’t wait to do business there.

Every year since the 1950’s, Seagram ran the Seagram Family Association (SFA) meeting, an annual session for senior managers and distributor principals. At what turned out to be the last SFA, while it wasn’t known at the time, the deal to sell the company was in the works. Rumors were widespread and felt to have more than the ring of truth. Every conversation, among distributors and management alike, dealt with the speculation. Junior was at the event but hardly visible. Stayed in his suite the entire time, and based on subsequent events, was probably cutting the deals.

He showed up at the last session where customarily the owner addressed the distributors to remind them that Seagram was a family in both the literal and figurative sense of the word and to provide remarks on the state of the business and the future.

When he walked into the back of the room, he stopped and asked what we thought he should touch on in his remarks. What was the tempo, what were the top issues, what’s on their minds?

The answer was candid. “What’s on everyone’s mind is — are we going to be sold?” “The concerns are palpable…they, we, all want to know what’s going on.”

He just looked at us and went on the stage. Immediately, he began to address the topic of a sale in no uncertain terms. He said emphatically and repeatedly that Seagram was not for sale. He didn’t say this — but it was almost as though he swore on his grandfather that would not happen. Less than a month later the announcement of a sale was made.

It was a sunny, beautiful day in southern California but inside the meeting room the rain was pouring down.

In a previous blog on the Bronfman’s I wrote about pity or scorn. This is another occasion for pity. Junior orchestrated the end of his family’s spirits and wine business in favor of the idea of integrating media, entertainment, information and communications in one hand held device. The Smartphone. The idea he had was ahead of its time and with the wrong people.

Quel dommage.

This is the time of year when we used to meet with distributor management to discuss the previous year and how we looked over the holidays. It reminded me of a story about a candid assessment of a new vodka product from V&S (Absolut owners at the time) called Sundsvall.

Let me set the stage for you.

In the late 90’s it was clear that high end, connoisseur and, for some, “badge” vodka products were on the ascendency. From a day-to-day marketing and sales standpoint, it was also clear that Absolut was becoming a middle brand, flanked by the top shelf entries above and the value priced vodkas below.

We requested, pleaded and ultimately begged our Swedish partner to supply a brand that would compete with Ketel and Grey Goose. Unfortunately, the gentleman who ran the brand at V&S was totally disinterested. His intractable position was that Absolut was the best and to have a more expensive and presumably higher quality entry would belie their proposition.

No amount of cajoling could change his mind. We tried to explain that the analogy was in the scotch market — single malts are not better than blended scotches, they’re different. He ignored his own people, those of us in the trenches and even the owner.

Finally, out of the blue, we were informed that a top shelf vodka brand would soon be available. I suspect that the owner went to the top of the V&S feeding chain or, for all I know, the King of Sweden to get it done. We didn’t care so long as we had a viable brand.

Ah, viable, what a good word. Like the cliché, it’s in the eye of the beholder.

The good news was that the proposition made good sense and was indeed viable including differences from Absolut in ingredients and distillation process. The up charge of $3 to $4 higher than the other super premiums was well justified in terms of the resulting taste and initial reactions.

There were two main problems. First, V&S wanted no association between Sundsvall and Absolut, even going so far as to bypass Absolut’s longtime agency (TBWA) in favor of an agency in Boston. There was no reference to Absolut anywhere in the marketing material. No opportunity for synergy or leverage.

The bigger problem was that the package did not live up to the super premium expectation or price point. It was, at best, blah. I couldn’t find a photo on the Internet so you’ll have to take my word for it. But I remember research that indicated that servers and distributors liked the taste but felt the packaging “too plain” and “too discreet vs. competition.” Someone described it as “a clear barrel with an orange shrink wrapped top.” Those are the most positive things we heard.

No surprise that after a strong initial push the brand just languished.

The scene now shifts to the Seagram Advisory Council at some offsite location and serious winter watering hole. Don’t be fooled, the invitees were the best and brightest distributor management people in the business. While the afternoon and evenings were fun, the 5 or 6 hour work sessions were grueling. This was an occasion where the supplier was on the chopping block and got to hear about strengths and weaknesses versus competition. No BS, no holds barred, all straightforward and candid remarks.

Occasionally, there would be moments of reticence where the distributors kind of hemmed and hawed, not wanting to offend. That’s what happened when the subject of Sundsvall came up. Lots of looking at the floor.

I knew why but needed my management to hear the problems first hand from our customers who obviously didn’t want to offend or appear negative.

Question after question was lobbed and the answers were platitudes and fluff. Finally, I pushed and said, “Why is Sundsvall doing so poorly?”

One very senior manager from a very large wholesaler operation had the courage to call it like it was. He told the Absolut Truth and said, “Arthur … it’s simple —  the baby is ugly.”

A few months later the brand was gone. What a relief.

To this day I believe that the V&S senior manager who never wanted an up market brand in the first place, did all he could to sabotage the effort. It wasn’t the only mistake he made.

Two different worlds, right?

Maybe not.

Like most people I’m on the Internet constantly — learning, exploring, researching, being entertained, buying stuff and on and on. More often than not, I get to a website and wonder, “What the hell were they thinking when they put this up? Why is it so hard to move around and find what I want?”

It’s fairly obvious that the problem lies in the “manufacturing” of some websites. They are either over designed or put up on the fly with low cost as the driving force. That’s part of the reason.

I think a more important factor is that the webmasters or designers are thinking of the “product” or what it takes to make it happen and don’t consider the user or the “consumer.”

They’re thinking manufacturing not marketing.

I once paid a visit to one of our main plants and spent a day or two explaining what marketing was up to and why our needs can sometimes be difficult to execute. At the same time, I wanted to learn how the products were made and “walk in the shoes” of the manufacturing people.

At lunch one day I got into a conversation with the plant manager. “You know, if you got rid of the embossed seven with the crown on top (Seagram’s 7 bottle), we could produce a hell of a lot more per day. Those things on the back sometimes knock up against each other, break and we have to stop the line to clean up.”

I pointed out that the brand was falling badly and the last thing we wanted was to mess with the heritage, identity and packaging. He explained that his mission was to provide the best quality product while keeping the cost of goods in line.

We got to understand each other’s agenda and from that day on, we worked in partnership matching consumer expectations with manufacturing excellence.

Above all, he was a consumer himself and understood brand equity from an end user’s standpoint. The same is true for many web designers. But, I believe there are also many who probably never visit the site they create after it’s up.

Maybe it’s just the ones I go to.

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.

I can’t tell you how many times I’ve heard or even used the expression — “It’s all about what’s in the bottle” — when referring to the appeal of a spirits brand.

It’s homage to the intrinsic appeal of the product and recognition that image alone is not sufficient.

Couple of interesting questions…

If that’s the case why do some awful tasting brands of booze sell well? To maintain my friendships in the industry I won’t cite any examples but lets just say there are brands that sell more on image than product taste.

The more important question is, who decides if it’s “in the bottle?” For the smart marketer it’s based on consumer taste tests, sensory panels and research of that nature. Generally there are benchmarks, action standards and criteria or hurdles of acceptability.

Except when the owner or senior executive decides that he/she knows better than the consumer.

At Seagram there were the owners who made the decisions and their deputies who established the criteria.

I once asked the head of quality control who had been trained by Mr. Sam about Jack Daniels and got a 20-minute lecture on what was wrong with the quality of the brand. I protested that his view of the product was counter its performance in the market place and consumer appeal. Good thing Mr. Sam was long gone by this time or my head would have been rolled down the building plaza.

A good friend who was there when Seagram introduced a Scotch called 100 Pipers recently told me a story that illustrates the point.

Despite the fact that the company owned Chivas Regal, the leadership at the time, from Mr. Sam on down, was Canadian whiskey driven. So when the idea of 100 Pipers came along the QC folks, led by the owner, kept rejecting the formulation until it reached their notion of acceptability. Research was ignored; R&D and production was ignored; they kept fiddling with it until it tasted the way they thought it should. They felt that no one wants to drink Scotch so take the Scotch taste out.

The result — a good tasting Canadian whiskey that Scotch drinkers hated and Canadian whiskey drinkers wouldn’t consider. It never clicked.

Guess what? According to data I recently saw, it sells over 2 million cases today with more than half of that in Thailand. Who knew?

Still made by Chivas Brothers and owned by Pernod Ricard. Bet it tastes like Scotch too.

I first heard this expression when I was running Seagram America’s marketing and went with the CEO to visit markets in South America.

His view of senior management market visits can best be summed up as follows: “What a waste of time. Everything we will see in the stores will be staged for our visit. It’s a tunnel of love tour but we need to do it.”

I felt he kind of missed the point a bit. Market visits were, and still are, designed to “see how we look” and in that regard it’s in the human condition to put your best foot forward. But you can’t stage how the competition looks and what they are up to at point of sale and who can control what Mr. Retailer has to say.

My favorite tunnel of love anecdote took place in a large, important US market known more for its on-premise business than retail stores. Nevertheless, the distributor wanted to show us how good he and our local marketing and sales reps were doing and how our floor programs stood out.

The entourage — a better description might be the sheriff and the posse — went off on the visit/tour and once inside a store, some spoke to the owner or manager while others checked the displays and floor programs.

A member of the group was fascinated by a multi-case display of one of our brands and the very attractive and large case card that accompanied it. Never having seen it before, but still admiring it, he called others over to have a look. Someone touched the case card and to his surprise, smudged it. It was hand painted… and still wet. We all smiled at what appeared to be a permanent holiday display that obviously had just been put up for our visit. “That’s okay,” someone said, “maybe it’ll stay up and look how much real estate the brands have.”

Smiles turned to laughter at the next stop, also a large store with a massive display right at the entrance.

There was the same case card with the same smudge in the same spot.

I have no idea how they moved that thing so quickly.

Nearly all the business executives I know who use car services for travel avoid limousines in favor of sedans. One exception I can think of, is when there is a large group so a limousine is more cost-effective. The other is the old school types  (now few and far between) who think they are impressing suppliers by picking them up in a block long vehicle.

However, the car service companies sometimes feel they are rewarding a good client by “upgrading” them to a limousine from a town car.

I remember an occasion at the end of a long trip that culminated in an offsite meeting in the New York area and the concern I felt when I was told, “Oh, and since you are such a good customer, we are sending a limo.” “Please don’t; it’s not necessary.” The reply — “It’s on us, no extra charge.”

“You don’t understand,” I said. “My associates will be picked up in sedans or drive their own cars and there is no way I want them to think that I use limos … which I don’t.”

“I’m sorry,” the dispatcher said, “but the car is on the way and should be there in 10 minutes.”

In a near panic I replied, “Listen, call him and tell him to stay at the entrance and I’ll come down the hill to him. No way I want to be picked up at the main entrance.”

So my luggage and me walked half a mile and, like someone who is on the run or has something to hide, I looked left and right a dozen times before I got in the limo. If I could disguise myself, I would have. I got away undetected.

Someone else I knew was not so lucky.

The company plane came back from a trip. It could have been the retreat at Ivy Creek or a Tunnel of Love tour to the regions. I can’t remember which.  It was raining, no, make that teeming. The plane — Whiskey 7 — pulled up to the hanger at Westchester Airport and stopped. The tarmac was full of car service vehicles waiting to pick us up.

When the crew opened the door and dropped the stairs, a driver from the limousine at the head of the line ran up the stairs with an umbrella. We all thought it was for Edgar Jr. But, in a loud voice he declared, “ Mr. A please?”

Out of the back of the plane, more than a bit sheepish, Mr. A said (in a very low voice) “Be right there.”

Mr. A was known as someone who did a great job for the company but also liked his creature comforts. His favorite expression was “The best revenge is a good meal.”

As he walked down the stairs, as the rest of us waited, Junior said, “See you tomorrow… Stretch.”

He was known as Stretch evermore.

To this day I don’t know if he was a victim of an over zealous car company or a guy who got caught.

Lots of readers have commented on the last posting about the Bronfman sisters and their $150 million problem with what has been described in the press as a cult. If you didn’t work there and experience the good, bad and ugly, it’s unimportant. But for those of us who were at Seagram it’s at least interesting to try to figure it out. (The rest of you can hit the back button.)

Comments I received ranged from glee at the 3^rd generation’s continued problems, with many references to “shirt sleeves to shirt sleeves”. (See March 13, 2010 posting.)

One reader took me to task for passing the article along:

Unnecessary to kick them now after all the years they were the Liquor business…it’s not news it’s GOSSIP!

The most interesting comment was this one:

The third generation Bronfmans seems to have a spectacularly pathological need to piss away their fortune. Amazing.

So, after much thought and consideration, I’ve come to the conclusion that what they have done with their inheritance — the company or their personal fortunes — is their business and probably more to pity than to scorn. I found this online in an article from the New York Observer (Aug 10, 2010):

Inherited millions are often fraught with an array of pathologies and dysfunctions. In 1987, Joanie Bronfman, then a Brandeis philosophy doctoral candidate and the daughter of Edgar Bronfman Sr.’s cousin Gerald, investigated the peculiar psychoses of the rich in her dissertation The Experience of Inherited Wealth: A Social-Psychological Perspective. In the course of her research, she attended “wealth conferences” and interviewed heirs and heiresses. Drawing from her own experience of growing up “visibly wealthy” and full of “shame” as a result of it, Ms. Bronfman argued that inheritors of massive wealth tend to be emotionally stunted. They adopt paranoid worldviews and come to see humans as radically selfish. They perceive relationships to be transactional. Their misanthropy derives from the attempts of absentee parents to buy their affections as compensation for outsourcing their rearing to hired professionals. These feelings are reinforced when they interact with the world outside their class and are alternately solicited for donations or mocked as dilettantes by the media. It was that last many-tentacled villain she accused of promulgating a destructive bias toward inheritors, one that she termed “wealthism.”

Could also explain the Busch family.

Maybe it should be called the un-lucky sperm club but I don’t think so.

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.

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.

At a recent visit to a Mets game (sorry I can’t bring myself to call it anything other than Shea Stadium) I was reminded of a story about baseball tickets.

Like many companies that entertain customers and clients, Seagram had a designated employee that handled customer/trade events and trips, national sales incentive programs and – the big prize – season tickets to sporting events in the NYC area.

One of these individuals, who I will call Mr. Keeper, was a nice and friendly guy until the subject of tickets came up. He didn’t see himself merely as the guardian or custodian of the coveted seats. Oh no, he was the protector, the de facto owner. Requests for tickets to a game were more often than not subjected to interrogation as to the identity of the intended customer and the rationale behind the request. And, invariably, unless the requestor was of significant ‘rank’ the request was denied outright or “someone else already got them.”

The management of the US operation passed to a new team and Mr. Keeper got an assignment outside of the US operation but still based in NYC.

The team that took over had its own designated employee to handle the customer relations, events and incentive trips. But when the first need for ballgame tickets arose, Mr. Keeper informed the new designate that the seats will be staying with Mr. Keeper and will be doled out as he saw fit.

Needless to say the new team was incensed and a (gentle) management skirmish erupted. But, with bigger issues to be addressed, the matter was set aside — not forgotten, just temporarily tabled.

One day, a senior executive asked for and grudgingly received tickets to a top notch Mets game.

While he knew the general vicinity on the field level where the seats were located, he wasn’t sure as to the exact location. He stopped an usher at the top of the section and handed the tickets to him. The usher looked at the tickets, looked at the executive, then back at the tickets, then at the executive again.

“Anything wrong?” asked the executive.

“Oh no,” said the usher. “I’m just surprised that you’re sitting in Mr. Keeper’s seats.”

For all I know he still has those seats.