That S*it Will Never Sell

A fascinating book on innovation in the alcohol industry

David Gluckman has spent 45 years in the drinks industry (the British phrase for the Booze Business) creating such outstanding products as Bailey’s Irish Cream (along with Tom Jago), Tanqueray Ten, Cîroc and scores of others. His book, whose title is the heading of this article, is a fascinating guide to what it takes to innovate and launch new products in this industry.

David was born in South Africa and came to the UK and began working in advertising. His accounts included such companies and brands as Procter & Gamble, Kerrygold butter, and several Unilever brands. In the late 1960s, he became a consultant to IDV (International Distillers and Vintners—a company that ultimately became Diageo), and entered the world of brand development.

As a new products/innovation toiler myself, I found the book to be captivating and a joyful ride on the sometimes-turbulent road of brand development.

A review by Paul Walsh (ex CEO of Diageo) put it nicely, “David Gluckman has a ‘one-of-a-kind’ approach to new brand development, but amazingly, it works. You will enjoy this book.”

I sat down (virtually) with David and asked him about his experiences.

You’ve spent most of your career on innovation and product development, what are the biggest obstacles you’ve encountered over the course of your career? Who are the innovation villains?

Somebody once asked me why we had such a high strike rate getting brands onto the market at IDV.  My answer “No marketing people.” No middle managers asking to see alternative ideas to go into massive research programmes.  I can’t imagine major players like Sidney Frank or Abe Rosenberg doing concept testing.  We had a very small team of like-minded individuals and the beauty was that we reported to top management.  I sold the idea of Smirnoff Black to Denis Malamatinas in under 10 minutes. And Aqua Libra to Tim Ambler in 5 minutes.  Well, that’s because I knew him better.

After leaving Diageo I did a project for a large drinks company.  The budget was huge and I worked in parallel with a global innovation giant.  I delivered my work a month ahead of schedule and I thought the solutions were really good.  I think it was a case of ‘budget allocated, budget spent, end of story’.  Nothing happened. I would be happy to go and re-pitch the ideas to the company tomorrow.  At no charge. I am confident the ideas would work.

Which companies (or individuals) that you’ve worked with were most welcoming or encouraging to new ideas?

IDV was a ‘one-and-only’ when it came to fostering new brand development.  Baileys took about 5 years to become significant and yet the company tolerated us (Tom Jago and me) even with the odd expensive failure. Adventure seemed to be built into the IDV culture.  When Jago left and Tim Ambler took over the rate of development accelerated.  I think of all the people I worked with, Tim was the most inspiring.  He really knew the business and he was on the main board and could make things happen.  IDV also formally introduced Tom Peters’ ‘brand champion’ idea so top management from all over the company were taking leadership on new ventures.

What’s the biggest regret of your career? What have you done or worked on that you wished you hadn’t?

When I parted company with Diageo in 2005 I got together with two ex-colleagues to develop Coole Swan, a super-premium cream liqueur.  The category made sense because there was nothing above Baileys and we felt there was an opportunity for a product with lower sweetness and more modern, sophisticated packaging which broke with the Baileys’ template. I was as proud of that brand as with any I developed for IDV/Diageo.  The problem for me personally was that it took me out of my comfort zone and into marketing and finance – not part of my skill set. I still firmly believe that it will be a great buy for a company out there with muscle and resources. But I should have negotiated a brand development fee and a small piece of the action and left it at that.

Thinking about all the new products or innovations you’ve worked on, which are you most proud and why?

It would be easy to say Baileys or Cîroc because they were so successful. But for me the two intellectual challenges which were most satisfying were Smirnoff Black and Distilled Guinness.  In the Smirnoff case, the brand was on its knees in the US.  The idea of a premium version to compete with Absolut and Stoli was scarcely credible. The solution came from a word more familiar in the brown spirits sector—we set out to achieve and perfected ‘the world’s smoothest vodka.’ And the product delivered. Hard-nosed New York 40-somethings really could taste the difference.  And even when I told them it was from Smirnoff they said they preferred it.

Distilled Guinness never got off the drawing board but the way the idea came together in my head was incredibly exciting. If you can have Jewish epiphanies, this was one. The discussion was about a Guinness Whiskey.  Should we take the brand into a new category?  On the surface, the only way was Irish and at the time (1998), Pernod-Ricard owned the market.  So, Guinness Irish Whiskey didn’t seem to make commercial sense.  Then out it popped.  The fruit of all those lengthy distillery visits.  Whisky starts life as a fermented product. A beer.  Then it’s distilled.  Why not simply distill Guinness? And call it that.  Distilled Guinness.  No SWA {Scotch Whisky Association}, no barrel-ageing, make it where you like and make it taste the way you choose.  We designed the pack the same evening and I was in a couple of focus groups a few days later. But it never happened.

What do you make of the craft (or small batch) product movement in the US and UK?

I never liked claims like ‘small batch’, ‘hand crafted’ which are all over the place these days. They are hollow claims, just hype. They don’t really mean anything.  I always liked brand claims that led to real benefits not stories. It was my advertising training working for Unilever and P&G.  Smirnoff Black was a palpably smoother vodka and Tanqueray Ten is made from fresh botanicals and has a fresher, cleaner gin taste. These are real product benefits. They could get drinkers to change their minds.

I’m not sure I agree with David on this last point inasmuch as the back story of a new brand must answer the trade’s question as to “why this and why now.” I think it’s the mix of what’s in the bottle together with the brand’s reason for being that often yields success.

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David Gluckman (L) and Joel Garner, a famous cricketer.

You can learn more about his book and buy a copy at this website.

It’s my second favorite book about the Booze Business. Can you guess which is the first? 😀

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The Captain Morgan Story

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How a Seagram orphan brand became an icon

Despite the problems the brand has encountered in recent years, Captain Morgan Original Spiced Rum changed the spirits industry in a number of ways. It was the first brand that managed to put a dent in the rum category powerhouse by the strategic use of flavoring. Further, the brand pioneered the important role of flavors, a phenomenon we take for granted today.

But it didn’t start out that way.

In the early 1980s, the new products group at Seagram was charged with filling gaps in the company’s portfolio. At the time, spirits sales were languishing in general and, unlike more recent times, whiskies were on the decline. So the gaps to be filled were in the so-called white goods arena with rum at the top of the list. The brands already in the stable were either price driven (Ron Rico) or weak and on life support (Palo Viejo). Myers’s rum, the upmarket brand, was (and still is) a small volume brand, limited to special occasion usage. In addition, the product is outside the traditional white, light rum taste profile.

Enter a consultant

The new products group engaged Kahn Associates, headed by Bernie Kahn, a former creative director at Grey. Mr. Kahn’s claim to fame was the slogan, Choosy Mom’s Choose Jif, a slogan that propelled the brand to number one in peanut butter.

The key issue behind the assignment: How do you go up against an 800-pound gorilla like Bacardi, which had an overwhelming share of the rum category?

Consequently, it was clear to everyone that the only viable pathway was a “value added” proposition. Unless you have a boatload of money to go “head to head” with a dominant market leader, go for an end run and outflank them. Even with a ton of marketing funding, taking on Bacardi was, more than likely, a losing proposition.

Based on the views of the new products people, insights from marketing research and the advice of Kahn Associates, it was decided that the new rum entry would be a flavored product.

But, what flavor and what to call it?

The flavor decision

While there is some ambivalence about how the decision to go with spice came about, it was clear that two hurdles needed to be overcome. First, since the vast majority of rum drinks are mixed (and at the time, predominantly with cola), the flavor had to accommodate a mixed drink such as rum and coke. Second, flavoring and tastes can be polarizing (love it or hate it), so the flavor to be chosen had to have the widest appeal.

The decision was reached to add vanilla and call it “Spiced Rum.” Vanilla and the other ingredients delivered a pleasant and desirable taste and the ubiquitous word “spiced” added mystery and avoided automatic rejection. Not only that, the word spiced allowed consumer to project what they thought it might taste like and the flavorings lived up to the promise. A winning formula was born.

Branding

captain morgan rum 3Here is where Seagram’s corporate culture entered the picture. Everyone had an opinion and thought everyone else’s stank (to paraphrase an old, off-color expression). So the brand name fell into one of those corporate vicious cycles whereby a proposal goes round and round and no decision emerges. To compound matters, names that had broad management support turned out to be already trademarked and not available.

At last, someone realized that the company owned a brand in the UK called Captain Morgan. A star was born.

Who will manage it?

At the time, Seagram had four operating divisions handling the spirits business. They consisted of Seagram (Seagram named brands), General Wine and Spirits (the upmarket brands), Calvert (price and push brands) and Summit (the brand hospice). Both the Seagram and General Wine and Spirits divisions were out because they already had rums and there is no way a newborn brand could go to Summit.

That left Calvert Distillers, the home of Calvert Gin, Lord Calvert Canadian, among others. (People at Seagram used to joke that Lord Calvert Canadian’s popularity was it’s square bottle. That meant it wouldn’t fall off the truck.)

Lord Calvert Canadian whiskey
Lord Calvert Canadian whiskey

In retrospect, putting Captain Morgan into Calvert was a gutsy decision. After all, the Calvert marketing and sales people were used to pushing their brands with little consumer pull and relied on pricing and point of sale promotions to move the goods. In fact, the people who worked at Calvert were looked down upon by others at the Seagram Corporation and were paid less than their counterparts at the other divisions.

Maybe putting the new brand into Calvert was a magnanimous gesture on the part of management, or maybe it was a plot to kill the brand, or even a cruel joke. But, I think that the single most important factor in the success of the brand, while at Seagram, was due to the Calvert people.

Success factors

So picture this… You’re a sales person at the Calvert Distillers Division of Seagram and, to put it bluntly, you’re viewed as the runt of the litter and always sucking hind tit. The brands you’re selling are a challenge, you’re making less money than your counterpart two floors above you in the same Seagram Building and, to quote Rodney Dangerfield, “You get no respect.”

Suddenly, a new rum product falls in your lap. The product tastes great, there’s a story behind the branding and above all, it’s a fun brand with lots of room for promotion other than on the basis of price. There is the potential for great drink night promotion at bars (the Captain and the Morganettes) and outstanding retail POS items (see the mirror).

The Calvert people go to work with strong motivation, with zest and zeal and with something to prove to their colleagues in other divisions. Their

The famous Captain Morgan mirror
The famous Captain Morgan mirror

sales philosophy departed from the usual and, instead of loading up retailers, all initial orders were limited, thereby encouraging reorders. They went aggressively after sampling opportunities with drink nights and co-packing small sizes with Coke.

The rest is history. The test marketing (1982) was a huge success and by 1983 the brand went national.

The line extensions

By the early 1990s (under my watch), while the brand was a winner, there were some hurdles in the way of further growth. Captain Morgan was amber rum and the preponderance of consumption was light/clear. Further, Malibu had come on the scene with a coconut flavor. Above all, Bacardi gave up waiting for the brand to fail, woke up and came after us by introducing their version of spiced rum. Their proposition was that CM was for younger drinkers and their product was for the mature and serious rum aficionado.

The response was line and brand extensions with specific strategic roles. Each of the three extensions had an objective, which went beyond shelf space acquisition and copycat products. A silver version was introduced and replaced Captain Morgan Coconut, which was a feeble previous attempt to take on Malibu. Instead, that coconut product became Parrott Bay by Captain Morgan with it’s own imagery. Finally, Captain Morgan Private Stock was the upmarket entry designed to deal directly with the new Bacardi product.

Captain Morgan today

The overall Captain Morgan franchise, as managed by Diageo, is doing poorly. Their efforts seem to me to be all over the place with a range of line extensions that well, frankly, make little sense. Meanwhile, the base brand languishes.

From what I’ve seen, over the last ten years, Captain Morgan franchise grew at 3-4% compound annual growth rate but in the past five years it’s been flat to down. Further, the overall growth has been a function of line extensions at the expense of Original Spiced.

In fairness to Diageo, the marketplace has changed appreciably. There are a number of spiced rum brands and a few powerhouse new players, including Sailor Jerry and Kraken. Both these brands have strong taste profiles and imagery in tune with today’s drinker.

Yet, if you go to the Captain Morgan web page, you’ll find such peculiar and tactical line extensions like 100 proof, Black Spiced rum (a blatant Kraken lookalike), Lime Bite, Tattoo Spiced, Long Island Iced Tea and even plain old White Rum. Most of the line extensions (9 of them) appear to me to be declining and even hurting the original product. I’ve mentioned this a number of times on this blog – a line extension should feed the base brand, not eat it.

Perhaps Diageo should try to hire former Calvert people.

(I was not at Seagram when Captain Morgan was conceived and launched. So, I’m grateful to two people who were there and were kind enough to be interviewed for this posting. One is Alan Feldman who was in new products as the brand was born and who nurtured it in the beginning. The other is Sam Ellias, the first brand manager of Captain Morgan and the person widely recognized as the driver of its success in his Calvert Distiller days.)

(For other posting on Captain Morgan please use the search box at the top of this blog. Start with this one.)

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Smirnoff Ad: The Deconstructed Martini – What do you think?

Bartender or Mixologist

Well, it was bound to happen. For some industry pundits and aficionados, the term ‘mixologist’ is another term for a bartender or, as some put it, a bar chef. But, for many in the industry, the term mixologist is off-putting and the preference is for bartender.

Ray Foley, founder and publisher of Bartender Magazine  has this to say about the different terminology:  “A mixologist is a person who really doesn’t know how to tend bar but has the money to get a PR agent.” Whew, that Ray, such a kidder, always holds back his opinions.

The Smirnoff Ad

A friend in the industry alerted me to the Smirnoff ad that seems to agree with Mr. Foley. According to Adweek, “With the tagline ‘Exclusively for everybody,’ Smirnoff spends most of the ad mocking all things VIP, while also taking quite a few digs at the mixology movement, represented by a Stockholm-educated neckbeard who curates his herbs and deconstructs martinis.” (Neckbeard?)

Here is a link to the Smirnoff Vodka Deconstructed Martini ad, in case you can’t view it below.

So, I have two questions:

For Diageo (owner of Smirnoff) – the ad is clever and very well done. But, you’re poking fun at pretentiousness (which is very cool) so aren’t you biting the hand that feeds you? Aren’t you the people who’ve been pushing the term mixology? If the answer is yes, good for you.

And now dear reader – what do you think of the ad?

(My thanks to Robert Lehrman and John Messinger of Bevlaw.com for bringing this to my attention.)

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