What do BlackBerrys and Booze Have in Common?

Too many choices.

Research in Motion (RIM), the makers of BlackBerrys, is having some problems. Their stock is down, the new line of products has been delayed for a year and there are rumors of corporate sharks looking to take a bite out of them.

In the view of most observers, the problem stems from too many choices. Since 2007, they have introduced 37 models including BlackBerrys that flip, slide, with touch screens, touch screens and keyboards, high and low end products. The product line is too complicated. In a recent NY Times article, a market research firm estimated that their market share slipped from almost half in 2009 to roughly 10 percent in the US.

Compare that to Apple’s iPhone. There have only been four since 2008 and all were the same but differed only in storage or capabilities from earlier models. Apple made it simple and less is more.

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Diageo in the News

If you’ve been a Booze Business follower, you know that I like to keep close tabs on Diageo and follow the good, the bad and the “close but no cigars” assessment of their actions.

This past week or so provided lots of press worth commenting upon.

India

As part of their global strategy, Diageo seems to be concentrating on gaining a presence in emerging markets. To do that, they have developed relationships in various countries, focusing on local spirits, at least initially. They have ventures or are selling such locally made products as Raki in Turkey, Baiju in China and local vodka in Vietnam.

This week brought the news that they are launching a local Indian whisky aimed at the country’s middle-income drinkers. Considering the fact that the spirits market in India is 234 million 9-liter cases (2nd only to china and Russia in volume) and growing at a compounded rate of 20% the last five years – I’d say it’s a good move.

But it won’t be easy, given the tough advertising rules for liquor. According to my friend and publisher Bishan Kumar (I write a monthly column for his magazine in India called Spiritz), the pathway to promotion of liquor is centered on point of sale and event sponsorship.

Diageo will also have to confront other past issues. It had a local product (Gilbey’s Green Label) but sold it in 2002 to concentrate on global brands. Now it wants to go back to concentrating on local brands. I suppose time and management changes allow for course adjustments.

Also, in July the US SEC charged the company with violating the Corrupt Practices Act in part for illicit payments made to Indian officials between 2003 and 2009. I read that Diageo agreed to pay more than $16 million to settle the charges. I guess they figured point of sale and event promotions are more effective brand building tools.

ESPN

In another recent move, Diageo signed a deal to become “presenting sponsor” on two shows and – get this – on both the English and Spanish versions of the broadcasts. It’s a smart move to reach different types of audiences with a consistent message.

On the other hand, their initial choice of brands includes Captain Morgan. That made me smile. Some time ago in doing some research on brand potential among Latino consumers, a focus group moderator asked a group of consumers with a Caribbean background how they felt about the brand. One respondent said something like, “Captain Morgan… wasn’t he the dude that sailed all over the Caribbean burning and pillaging? You want me to buy his rum? For all I know he destroyed my great-great-great grandfather’s village.”

Talk about dumb

Diageo announced last week that they are moving production of the US supply of Red Stripe beer from Jamaica to the US.

One of my readers sent me an email on the subject that just about sums it up. “They’ve got to be kidding! They’re not just moving bottling, but production itself. Do they think that consumers are stupid?”

I wrote back and told him not to get too excited. They thought it would be okay since the new facility will also be in Jamaica… Queens.

Besides, if you’re going to take a chance on moving the production of Captain Morgan from one place to another when the brand faces stiff competition, changing Red Stripe production is a trifling matter.

I have a new slogan for them – At Diageo, Our Accountants Rule.

My favorite event of the week

I don’t know how much Diageo’s deal with P Diddy is worth – some give the number in 8 digits or even 9 digit millions – but he sure has done good things for the brand.

Last week, however, he lost it in a club in Atlanta and had to spend much of his time apologizing for what some have referred to as a “foul-mouthed vodka rant.”

Apparently he saw some guy drinking Grey Goose rather than Ciroc and decided to defend his brand by 1) throwing ice at him 2) calling him the “N” word and 3) maligning the guy’s sexual persuasion.

An online blog called Hollywood Gossip quoted him as tweeting, “I’m sorry for the ignorant way I represented myself … I have backslid and regressed. Forgive me for my ignorance. Pray for me pls.”

Don’t apologize Mr. Diddy, Diageo could care less. Your contract is safe. As for me, I just want you to know that you’re my kind of brand ambassador.

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Coyote Tequila

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.

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