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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Amazon, Malfy Gin, and Building a Brand

First, an Update:

Last Friday, Wine and Spirits Daily reported that Mark Teasdale, CEO of Proximo Spirits is leaving to join Biggar & Leith, the company Founded by Elwyn Gladstone that markets Malfy Gin and Spytail Rum. Mark and Elwyn have previously worked together at Proximo and William Grant and collaborated on such new brands as Kraken Rum and Hendrick’s Gin, among many others.

I learned of this development after I wrote this article and it adds immensely to the story. Both these folks are top of the game spirits industry players. And, as you will see, Elwyn has already been doing amazing things with Malfy. So, this change builds on success and gives the company an even more important presence in the industry.

Leveraging the Power of Amazon and Direct-to-Consumer Sales

Malfy Con Limone Gin (the original product) is made in Italy from the luscious lemons of the Amalfi coast under the marketing and sales guidance of Elwyn, whose background includes senior positions at large spirits companies. (The original story on Elwyn and Malfy can be found here.)

I was wondering how Elwyn, with his large company experience, was making out with his fledging startup brand. So, last month, I checked in with him. He is, after all, one of the most creative and smart marketers I know. Could he transfer his skills honed at large spirits companies to a startup? In particular, I wanted to know how the brand was received by distributors. Would he get the same attention with Malfy as he got with Hendrick’s?

Little did I know when I reached out to Elwyn, that this journey is most unusual and a case study on how to beat the system and build a brand despite obstacles.

How is Malfy Doing?

After only just a few years in the market, the brand is on track to do over 185,000 6-pack cases in the US and around the world — the UK, other European markets, South and Central America, South Africa and elsewhere. He has lots of room to grow geographically and his re-order rates are impressive.

In the US, the brand is among the top 10 Super-Premium Gin in Nielsen (brands that cost more than $25 per bottle) growing at over 300% and on track to hit a top 5 position. The brand is distributed by Infinium Spirits in the US, and based on the aforementioned, I’d say they are paying attention to the brand.

He has also introduced a range of gin products. The US has the first launched Con Limone, and recently introduced Originale, a traditional gin. Outside the US, the Malfy Gin line also includes Gin Rosa, a Sicilian pink grapefruit gin, and Con Arancia, gin made with Sicilian blood oranges. He and Infinium Spirits will introduce these other gin line extensions in July.

That’s only part of the story—enter Amazon

It is fairly common for a new brand to look to the rest of the world (especially Europe) as a way to build a brand and generate sales, while waiting for the US market to wake up. What happens is that an importer is contacted, who probably has a stable of brands, and the wait for growth traction overseas becomes another frustration.

But not for Elwyn and Malfy Gin. I asked him, “How come you’re doing so well in the UK?”

The answer? Amazon and direct-to-consumer sales.

According to Elwyn, “The absence of a mandatory 3-tier system coupled with a robust purchase and delivery system creates a strong platform for direct to drinker sales. But, more important, Amazon provides the opportunity for the brand owner to use all sorts of marketing efforts and truly remain the guardian of their brand.”

In the UK and Germany, he is selling over 1,000 bottles per month and growing.

Let’s take a closer look at Amazon and liquor sales.

But, first, let’s cover a few noteworthy things about Amazon and spirits:

  • As I’m sure you known (but for those who don’t) Amazon does not sell direct to consumers in the US. They tried to with wine but that ended when they acquired Whole Foods.
  • Outside the US, it is the importer who sells to Amazon, but in Elwyn’s case, he has been the driving force influencing importers to use Amazon.
  • The markets where Amazon is currently selling booze are limited to the UK, Germany, Spain and Italy. But they are rapidly opening other markets.

 

Amazon — distributor and retailer

If you talk to US distributors about Amazon, you’ll hear two views, a public and private one.

The expected and public view is, “Nobody ever built a brand on Amazon.” That’s currently true but, certainly, brand building overall in the US has changed and, for fledgling brands, the growth comes from the consumer themselves, more than the trade. That’s why privately, many distributors express concern about direct sales in general and Amazon in particular.

Recommendations from bartenders and store people are important but so is word-of-mouth among drinkers themselves. As to Amazon’s role here, Elwyn suggests,

“Think of Amazon’s product page as the world’s most efficient shelf-talker and neck-tag information booklet… including reviews from hundreds of consumers, press and PR, recipes, photos, and more. And, let’s not forget the simple star ratings based on thousands of people.”

Clearly, Elwyn has spent quite a bit of time trying to understand Amazon and its power to build and sell spirits brands so I asked him to further share his marketing and sales thoughts. After all, Malfy has become a top 10 best-selling gin, surpassing many household name brands including Hendrick’s.

Here is what he has learned about the power of Amazon and the role of the internet in general:

  1. The brand owner is in control. Once establishing your ownership with Amazon, you can appoint people who can manage the site/sales, but the brand is firmly in your hands.
  2. Brand sales drivers. Of course, product credentials (brand name, packaging, etc.) are important but Amazon also allows an owner to:
  • Put up consumer reviews, so that the more frequent and better the review, the higher the brand appears in searches.
  • Use key words, that also drive how well a brand does in searches on Amazon.
  • Advertise via sponsored ads.
  • The use of brand photos, which is a huge driver and there are ways to test which photographs work best.
  1. Sales data. Amazon in the UK provides easily accessible data on brand sales ranking for all brands within a given category.
  2. A level playing field. This is ideal for smaller brands inasmuch as the big boys cannot muscle them out as they can in stores with multiple facings, optimum shelf space and, well, plain old clout.
  3. More effective promotions. Amazon provides quicker and easier ways to manage and measure the impact of promotional activities.
  4. Tastings are more cost effective. The current approach at retail can easily cost $200 per session and the reach is limited. Amazon offers the opportunity to purchase sample boxes so consumers can buy a bunch of miniatures. It’s also a better use of the brand owner’s time than standing around a retail store doing tastings.
  5. Enhanced recommendations and word of mouth. According to Elwyn, the Amazon approach may just surpass a recommendation from a bartender or store-keeper. (See the earlier comment about the Amazon page strengths.)
  6. Making it easier to reach the on-premise trade. Those of you involved in the bar trade can relate what a nuisance it is to order a new brand from a startup. Amazon provides the ability to order any brand listed, including a single bottle

*          *          *

In sum, the Amazon — non-USA — platform is a powerful brand building and sales device. The brand owner stays in complete control, the tools available can provide an effective means for reaching a very wide audience, all efforts and expenditures are easily tracked and effectiveness measured, and, it is amazingly cost effective.

It is, of course, interesting to speculate whether the US will eventually go this way and create the same opportunities for the small producer as in Europe. My answer is NO, we have a 3-tier system, which is unlikely to go away, and direct-to-consumer transactions remain difficult if not impossible.

Elwyn Gladstone’s approach to building his overall and global brand business is incredibly sound both strategically and tactically. While he overcomes obstacles and patiently waits for the US business to take hold, he is leveraging the available resources outside the US to provide the wherewithal to help and to build his brand in the rest of the world.

I told you he was smart.

*          *          *

Elwyn Gladstone

My thanks to Elwyn Gladstone for taking the time to share his efforts and thinking with me for this article.

I’d love to hear your thoughts in the comments section at the very end of this article or in an email to arthur@boozebusiness.com

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