Alcohol vs. Cannabis Marketing

Seth Godin on the Differences Between the Two

I have followed Seth Godin for many years and have found him to be among the most insightful marketers I know. Here’s a bit about him — he’s an author (18 bestselling books), an entrepreneur (founded two companies, one of which was sold to Yahoo), a speaker/teacher, and a member of both the Direct Marketing Hall of Fame and the Marketing Hall of Fame (probably the only person to be in both). Above all, his views and ideas on effective marketing have inspired, motivated, and changed people and ways of looking at things.

One of his blog posts last week dealt with the differences between marijuana and alcohol marketing. Considering the close scrutiny of the pot business by the booze industry, I asked and received his permission to share most of his blog post with you.

Let’s look at Seth’s views followed by my comments.

(By the way, as I write this, it was just announced that Constellation Brands has increased its investment in a Canadian cannabis company by $4 billion.) 

US prohibition ended in 1933. After that, there was a gold rush that led to the creation of dozens of billion dollar brands.

80 years later, the prohibition against pot is ending in various places throughout North America and then, probably, worldwide.

The question some professional marketers are asking is: Will there be worldwide profitable brands for pot that are similar to Bacardi, Johnnie Walker and Smirnoff for alcohol?

Both industries are regulated. Both have products that are sold in specialty stores. Both use non-proprietary manufacturing techniques.

Here’s the big difference:

When alcohol marketing became legal, it coincided with the glory days of magazines, radio and then TV. The mass marketing phenomenon happened at exactly the same time as these brands were being rolled out—and along with cigarettes, alcohol brands were major advertisers, particularly in magazines (liquor) and TV (beer). The ads supported the media in a fundamental way (and vice versa–Rick’s Cafe anyone?).

But when cannabis marketing arrives, it’s the internet that’s dominant. And the internet isn’t a mass medium.

It seems like one. It’s used by billions of people.

But it’s a micro medium. A direct marketing medium. There are 3 billion people online, but they’re busy looking at 3,000,000 web pages (that’s only a thousand a page).

The other difference is that there’s a thousand-year tradition of the pub and the bar. And those facilities offer status games, word of mouth and significant margins that created another marketing engine for alcohol that won’t exist for cannabis.

Sure, it’s possible that the huge demand and profit margins will fund a winner-take-all advertising movement for pot. But it’s more likely to be more like local espresso or high-end chocolate or whiskey (word of mouth) and less like vodka.

*          *          *

My Comments and Observations

  1. Seth is obviously on target; the overall world of marketing has steadily been moving from macro to micro — away from mass media toward direct to consumer media. To a large extent this is happening in the booze business today. Brand building and communication has left mass approaches (print as well as broadcast) in favor of word-of-mouth, bartender influence, publicity and event marketing.
  2. Let’s not forget that currently, the cannabis industry is totally on a state by state basis. There are no national brands and there will not be until such time as the federal government approves its sale. Marketing, therefore, is regional, at best.
  3. The notion that the absence of bars and restaurants for cannabis will inhibit marketing is true now but will it be in the future? In many of the legal recreation use states, weed cafes are springing up and it’s a topic that will grow in the future. Think Bulldog Café in Amsterdam.
  4. As to branding, that too is emerging. Consider this:
  • For many cannabis consumers, the content and type are surrogates for brands. They talk about Indica vs. Sativa. For others, it’s the amount of CBD vs THC that becomes the brand.
  • For those introduced to weed medicinally, they think of the brand the same way as branding in prescription drugs — by function.
  • In this regard, recreational users have the function/purpose of the cannabis as an identifier, such as “sleep,” “arouse,” “harmony,” “awake,” etc. These are clearly labeled and provide a kind of branding function.
  • There are brands like Dompen, LuxLyte and others. But the function/purpose is the main factor.
  1. At this stage, it’s the retailer that becomes the brand. Check out the list of retailers in Colorado. A company I wrote about recently, MedMen, has stores all over the country, both dispensing medicinal cannabis as well as recreational. The dispensary is the source of quality and other reassurances.
  2. Interestingly, the beer folks are getting into alcohol infused cannabis, partly leveraging their own brand’s influence. There’s even a brand of wine made with THC.

#          #          #

As of June, of this year, 30 states have legalized medical marijuana and 9 have approved recreational use. New Jersey and New York are expected to legalize recreational use soon. So, clearly, legalization of cannabis is here to stay and will grow in acceptance.

The key marketing issue will be, as Seth points out, the difficulty in mimicking branding (and reach) of the alcohol world. Perhaps that means that no one brand will predominate; perhaps the function/purpose will be the brand; or the retailer. But, it’s still earlier days for the fledgling legal business.

He’s also correct that the marketing of cannabis, despite other similarities with booze, will have its own model and pattern.

Like the man says, more like whisk(e)y and less like vodka.

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The Seagram Heiress and the Company Plane

A Seagram Story of Yesterday and Today

From the NY Times, July 25th

Clare Bronfman, an heiress to the Seagram’s liquor fortune, pleaded not guilty on Tuesday in federal court in Brooklyn after her arrest on conspiracy and racketeering charges in connection with her role at Nxivm, (pronounced Nex-e-um) a self-help group that prosecutors call a pyramid scheme and former members say is a cult.

The article concluded with:

The hearing for Ms. Bronfman revealed few new details about Nxivm’s inner workings, but gave a glimpse of her considerable wealth. Ms. Necheles (her lawyer) said Ms. Bronfman was worth around $200 million, with about half tied up in trusts supervised by Goldman Sachs, and the remainder in real estate in New York, California and Fiji, where she bought an island for $47 million.

She was charged with identity theft and was released on a $100 million bail bond. It is part of an ongoing investigation of the group which, according to the indictment, was allegedly engaged in money laundering, extortion, obstruction of justice, forced labor, sex trafficking, identity theft and more.

Ms. Bronfman and her sister Sara are children of Rita Webb, also known as Georgiana, who was the daughter of an English pub owner. After their parents’ divorce (they were divorced twice), she and her sister lived in England. Keep that in mind, when we get to the second part of the story.

I didn’t know her but knew how much her father Edgar M. Bronfman (Edgar Sr) cared about her. I recall a phone call from his office with the instruction for us to sponsor equestrian events inasmuch as she was a world class rider and competitor. Believe me, there weren’t any brands for whom this made any sense at all. So, with a stretch of the strategy and an intense desire to keep my job, Crown Royal was selected.

The Company Airplane

Gulfstream IV (Haute Living photo)

The days surrounding the news brought a deluge of emails from ex-Seagram friends with questions and observations. But none were as interesting as the one from Tony Rodriguez. Tony joined Seagram in the early 1980s and held a number of important senior positions in business strategy and finance. He related the following story.

Edgar traveled often to and from London in the mid 80s to visit his daughters. The presence of Seagram employees was often desired in order to qualify for a tax-deductible trip. Of course, the Bronfmans flew on the Gulfstream IV whenever they chose but wanted traveling employees when possible.

Here’s how Tony began his story:

“One of my first business trips around 1985, as Budget Dept. bean counter, was to Seagram’s European HQ in London (where I would eventually work as CFO for 3 years). On one particular trip and at the last minute, they (Seagram Travel Department) cancelled my Pan Am flight reservations because Mr. Edgar wanted a “mule” to be his excuse for a company-paid corporate jet flight with his family, including wife and two daughters, to London. What ensued was a very uncomfortable cross-Atlantic flight…”

As you might imagine the flight was operated with aviation fuel for the airplane and lots of alcohol fuel for the passengers. That’s when the fun began.

Allow me to interject a thought or two at this point. While the trip on the Gulfstream was a wonderful way to fly, it was not without its own special peril. Especially when traveling with Edgar Sr, one was often cautioned to control the alcohol intake and to avoid career ending conversations when Mr. Bronfman had been, ahem, over-served. Unfortunately, the plane only held a dozen or so people and there was no place to hide.

Nevertheless, on this trip, the booze flowed, especially the Sandeman’s Port. Tony was invited to join the meal aboard the plane and to join in the booze and conversation.

There were seven passengers on the flight — Edgar Sr, Georgiana, a British friend of Edgar’s, the Seagram doctor, Tony, and the daughters. They all had lunch (except for the children) and fit nicely around a table on the plane.

Gulfstream IV interior. (Libertyjet.com)

The Seagram Doctor

Yes, that’s right, Seagram had a full-fledged and fully equipped medical office in the NYC headquarters with a full-time doctor and a few nurses. The physician was quite a character — part pedophile and part poster child for #MeToo, but his interest was men. Let’s call him Dr. G, since many of us referred to him as Dr. Goldfinger. One Seagram friend told me recently that if he went to the medical office for a Band-Aid for a paper cut, the doc would tell him to drop his pants.

Anyway, Tony, in his late 20s at the time, found himself in a very uncomfortable trans-Atlantic flight sitting next to Dr. G who kept trying to stroke his thigh during the meal.

Knowing what was happening, Edgar engaged Tony in conversation, including his upper crust British crony. The topic was shooting grouse and the conversation went something like this:

British Crony: Your name is Rodriguez, where is your family from?

Tony: Spain.

British Crony: Ah, I love Spain… I often go grouse hunting on the Costa Del Sol. Have you ever been there? Did your family ever shoot grouse?

Tony: No sir. My family were peasant farmers and didn’t partake in such activities.

Edgar Sr: Have you ever gone grouse hunting when you were growing up? Where did you grow up, anyway?

Tony: No sir, I never went grouse hunting. I grew up in Newark… there were no grouse. But, there were lots of pigeons we shot with BB guns.

British Crony: Well then, tell me, us — what sports did you play in New Ark?

Tony: Street games…

British Crony: Such as…?

Tony: Well, stickball for one. It’s like baseball except, among other things, for a bat we used our mother’s cut off broom.

Edgar: That’s hysterical. Tell me Nigel, have you ever played with your mother’s broom?

British Crony: I can’t say that I have.

Tony went on to tell me that he was sure that neither of them ever saw their mothers use a broom, or even knew if they had one.

He ended his email to me with the following:

“So now we fast forward some 30+ years later to hear that Edgar’s cute little girl is involved in an international sexual trafficking ring.  I’m glad my family is much more boring even if none of us own an island in Fiji.”

 

*        *        *

Thank you, Tony.

For more stories about the Seagram plane see elsewhere on my blog such as here. Also, you might enjoy this one from my book:

Where to sit?

The protocol on where to sit on the company plane was well known. The owner, either Edgar Sr. or Edgar Jr., had the last seat on the right as you faced the rear of the plane (aft). If they weren’t on it, the most senior executive had that seat. Other plush seats were taken by rank, and the couches (we’re talking Gulfstream jets), were left to the more junior or lower ranking execs.           

As the story goes, while waiting for one of the Bronfmans to board the plane, a company president was talking to a colleague while seated in the Bronfman seat, when suddenly Bronfman appeared. Startled, the executive shot up, moved away, and said, “Sorry Mr. Bronfman, here’s your seat.” To which the Bronfman in question replied, “They’re all my seats.”

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Seagram’s 7 Crown: Then and Now

An iconic brand still alive and kicking

Seagram’s 7 Crown launched an interesting event last week — the first official National Dive Bar Day. No surprise that the launch date was 7/7. So, there’s lots to tell about the brand and this event. Let’s start with the event.

Dive Bars

Here’s how the folks at Diageo described this brand promotion:

“The Dive Bar is an American institution: where long-lasting memories are created, where people-watching is imperative, and where the greatest stories and a come-as-you-are attitude, live. Seagram’s 7 Crown will raise a glass to these historic hidden gems found across America, marking the first official National Dive Bar Day, fittingly taking place on July 7th, 2018 – in celebration of the quintessential Dive Bar drink, the 7&7.”

There are lots of definitions of a Dive Bar, some negative like this one in the Urban Dictionary: “A well-worn, unglamorous bar, often serving a cheap, simple selection of drinks to a regular clientele.” Whew, that’s mean.

The one that comes closest to what I think, is from my friend, Gaz Regan:

“Dive bars …. are bare bones joints where guests are treated equally whether they arrived wearing greasy overalls, or tuxedos … when the guest wants a quick shot and a beer before heading out to some swank affair. These places are great equalizers. The filing clerk can tell the CEO how to run the company better in a dive bar.  And in a real dive, the CEO will actually listen.”

Linking Seagram’s 7 and Dive Bars makes sense on many levels. First, the brand is an icon and an important part of America’s drinking history. It’s a natural link and since the purpose of Dive Bar Day is to support these places through the National Trust for Historic Preservation, it makes sense.

In addition, Dive Bars suggest fun, camaraderie, and good times. According to Jason Sorley, Diageo Brand Director for Seagram’s 7, both the brand and Dive Bars have a storied past and have been an important part of the American drinking culture. (Here’s a list of the best dive bars in every state from Thrillist.)

Seagram’s 7 Crown

As I was doing my homework for this article, I walked into my favorite neighborhood package store and asked for a bottle. (Yeah, it’s been a long time since I bought one.) The owner, who’s a friend, looked at me as though I had lost my mind. “Seriously?” he said, “You come in for all kinds of fancy shmantzy whiskies and gins and now you want Seagram’s 7? I don’t carry that. I remember it but who drinks that these days?”

I grumbled something about how any store can fail to stock an American liquor icon and one that millions of folks remember as their drinking “training wheels.” In fact, for decades, the 7&7 (Seagram’s 7 and 7 Up) was the drink of choice for entry level drinkers. It tastes great and is easy to drink. But, alas, many other booze products have usurped that esteemed rite of drinking passage.

So, I for one am delighted that Diageo is working to bring that brand back.

Let’s Look at Some Numbers

One of the things that I’ve learned about the booze business is that it’s hard, if not impossible, to kill a brand based on its sales. Sure, a manufacturer can end the life of a brand, but, the marketplace itself will rarely if ever kill a brand.

According to the ex-Seagram people I spoke with who worked on the brand, at its peak, Seagram 7 Crown reached well over 8 million (9-litre) cases in the late 1970s. Even by 1990, when whiskies were losing dramatically to vodka, the brand sold close to 4 million cases. As to my retailer friend’s view that the brand is dead, guess what? Today Seagram’s 7 still sells in the 2 million case range. In fact, according to Shanken’s Impact, the brand is in the top 30 leading spirit brands in the US. So there, Mr. Retailer!

The Brand’s History

To stay with the numbers for a moment…

Seagram’s 7 was the 1st brand ever to reach 1 million cases. The 1st to sell 100 million cases. And, over the years sold over 300 million cases in 1983. (See close up photo below.) We’re talking a multi-billion-dollar brand, boys and girls.

The back label of the commemorative bottle from the 300 million case celebration

As the story goes, after prohibition and before WWII, Seagram introduced two blended American Whiskies — Seagram 5 Crown and 7 Crown. Why the name Seagram 7? The apocryphal story is that Sam Bronfman (the Seagram patriarch, known as Mr. Sam) was presented with a range of candidate products for a blended whiskey and ended up choosing the one he liked — the 7th one presented to him.

Whatever happened to Seagram’s 5? During the Second World War the government asked distillers to cut back on alcohol production to aid the war effort. Seagram’s 5 was not doing as well as 7, so it was discontinued. Also, Seagram’s 5 was higher in alcohol at 86.8 proof.

How did the 7&7 come to be? (Another apocryphal story.) Well, those were the days when distributor sales reps tried to build brands rather than just fill orders. So, an aggressive sales rep thought it would be clever to link the 7 in 7up with Seagram’s 7. Much to his surprise it was great and the 7&7 was born.

Here’s What Else I Can Tell You

  1. At Seagram and since then, I’ve heard it referred to differently. Internally, we referred to the brand as 7 Crown. Among consumers and generally outside of Seagram it was called Seagram 7 or just plain ‘7.’
  2. The event linking the brand to Dive Bar Day was organized and run by Greg Leonard and his company Proof Media Mix. Greg is a former Seagram and Diageo PR and activation executive and, for my money, the best in the business at making ideas and events come alive,
  3. Did you know that Seagram’s 7 — a blended American Whiskey contains a large percentage of grain neutral spirits? Check the packaging, right on the front label it says “75 per cent Grain Neutral Spirits.” Even back in the day, GNS was a significant proportion of Seagram’s 7. In fact, the US regulations for blended whiskey allows a blend of straight whiskies and up to 80 percent neutral spirits.
  4. I’ve often heard it said that brands have a life cycle — from creation to maturity to decline, and ultimately gone. Maybe. Here’s a brand that had its heyday in the 1960s and 70s and is still alive and kicking. Like I said, manufacturers kill brands, consumers don’t.

*          *          *

I wish to thank the following people whose thoughts and experiences helped shape this article… Rob Warren, Greg Leonard, and John Hartrey. Special thanks to John for sharing his collection of Seagram memorabilia and photos. In fact, John has the dubious distinction of being the last Seagram’s 7 brand director at Seagram.

Diageo activation at the 2018 Firefly Music Festival  (Photo by Jack Dempsey)
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