Wine and Spirits Daily had an interview with the global head honcho of Cutty sark, which is owned by The Edrington Group (Macallan, Famous Grouse, others). In the interview and a previous story, he talks of the turnaround of the brand. In fact, he predicts 5% or higher growth over the next five to ten years.

Is this hype or real?

Let’s take a close look. After all, this is a brand that has had 25 years of decline from 2 million cases in the 1950s and 60s to less than 150,000 recently.

What the brand has going for it is the recent movement to Remy Cointreau and their knowledge and focus on scotch. They should be able to push the brand as part of their scotch portfolio and have a vested interest in keeping the Edrington people happy. So check the box on leverage and clout.

A number of side benefits also come with the move to Remy. As a new brand with a full, strong portfolio behind them, they will fill distribution gaps and move into important brand building accounts.

But, wait a minute, isn’t it a bit early to declare victory on the path to a turnaround? From the data I saw, for the four-week’s performance to Feb 24, the brand grew in SymphonyIRI data by 3.2% compared to a -5% for the year.

1967 ad

What about the consumer? What are the motivations that Cutty Sark provides to get a call for it? WSD suggest that its occasional presence on Mad Men, and the retro drinking influence may be helping. That could be, but is it enough?

As I read the article, I became more and more puzzled by the empty pronouncements of success just over the horizon. I can’t figure out the basis on which young consumers are discovering Cutty Sark. Is there a cocktail or signature drink that’s driving the brand? We’re told that Cutty “was created to be easy-drinking, easy-mixing and not particularly challenging.” So is water.

Here’s my favorite quote and an example of world-class marketing BS – “For me, I’m not looking to take business {from} the Scotch category, I’m already seeing us take business in bars from the Irish category.” Really? Cutty Sark is taking business from brands like Jameson that is among the fastest growing brands in the country?

Cutty Sark is an excellent brand with an interesting history. Legend has it that it was Cutty Sark that helped to create the expression the Real McCoy. The story goes back to prohibition and I found it here.

“One man who regularly sailed between Nassau and Rum Row was Captain William McCoy, of Scots origin and living in Florida, who began running liquor in 1921 using a schooner named Arethusa. By this time suppliers and distillers were often meeting the immense consumer demand with very poor quality liquor, and McCoy decided to make his reputation by supplying high quality products, chiefly Scotch whisky. This strategy worked well, to the considerable financial benefit of McCoy, whose name entered the English language as a result of the reputation he acquired.”

“In particular, McCoy ran large quantities of Cutty Sark…”

So there you have it. A brand built on authenticity and known as the Real McCoy
 is the subject of hype and marketing BS today.

Hey, Mr. Global Head Honcho of Cutty Sark: you have a brand with a great story. Why not try to leverage that provenance instead of making empty claims?

Wine and Spirits Daily had two announcements about new spirits product recently. One makes sense and the other, well, you decide.

Good Idea

The flavored whiskey category has been on fire with brands like Wild Turkey American Honey, Jack Daniel’s Tennessee Honey, and Jim Beam Red Stag among others. Now the folks from Dewar’s Scotch (owned by Bacardi) are entering the flavored whisk(e)y category with Highlander Honey, a scotch infused with honey.

Imagine, they have the audacity to try to break down the stuffiness and out-of-date sacred walls of the blended scotch category. Never mind that blended scotch growth has been declining to flat in the past decade while other whiskies (including malts) have been growing. It’s not about adapting to changing tastes, it’s about a stiff upper lip refusing to swallow change.

Check this out. The Diageo head of whisky outreach (huh? I think that’s a way of saying, ‘can I buy you a drink?’), was quoted as saying Scotch has too much “integrity” and “authenticity” to get into flavors. Diageo and integrity in the same sentence? My word! Also, the Scotch Whiskey Association is not very happy about it. Better to go down with the ship, eh, what?

Hey, it’s a good idea for the reasons I shared with Wine and Spirits Daily,

“It’s a terrific idea and well worth trying,” long-time industry exec Arthur Shapiro told WSD. ” First, the blended scotch market is declining and this could be a shot in the arm. Second, the flavored whiskey (US) brands have ‘greased the skids’ so consumer acceptance would be easier than it might have been before these brands came on the market. Third, it adds contemporariness to the scotch area and removes the stuffiness. Fourth, probably makes for a good mixed drink. Finally, I like the ‘seriousness’ of scotch and the fun of a flavored scotch product.”

Put that in your copper still and cook it.

You gotta be kidding me

Pernod Ricard, who until recently earned my respect for terrific innovations and new products, has launched what seems to be an April Fool’s joke.

They are introducing a line of new products under the Hiram Walker name called Mama Walker’s breakfast liqueurs. Apparently it’s intended to “tap into the comfort food, sweet and savory flavor combinations” trend (or is it fad?) not to mention the confectionary/cake vodka flavors. This breakfast of champions is available in Maple Bacon, Blueberry Pancake and Glazed Donut.

Come on folks, are you serious? Next thing you’re going to tell us is that they hardly taste artificial.

Can’t you just see the ad campaign?

“A bit hung over from a hard night of drinking? Looking for something to smooth out the rough edges? Forget about the all night diner and the bacon, eggs and pancake special. Try some of Mama Walker’s breakfast liqueurs… we’ll perk you right up with our original comfort booze. Just remember… your Mama knows best.”

Or:

“Tired of the same old breakfast? Cereal, eggs or fruit can be soooo boring… Start you day off right with Mama Walker’s breakfast liqueurs. What a great way to face the stress of what awaits you. Boss on your back? Kids on your nerves? Mama can help…Comes with or without a brown paper bag… But, remember, don’t eat breakfast and drive!”

Any thoughts on either product?

Maker’s Mark is an iconic brand with fiercely loyal consumers and, thanks to social media, they’re not afraid to speak up (make that holler) when the company decided to mess with the brand.

Last week, the company announced that, to “meet demand” they would lower the alcohol content. They explained it to Wine and Spirits Daily by saying that the brand is encountering shortages and among the solutions (including lowering the age, raising the price) they chose lowering the proof from 90 to 84. The outcry among their consumers was deafening with “watered down” the rallying point.

This week they announced that the decision would be reversed.

Maker’s and Beam made a number of errors. First, their explanation of lowering the proof to meet demand was seen as BS, with industry cynics shouting that their real motive was taking the tax savings (approximately $1.5 million) to the bottom line. I don’t buy that. It’s not worth it for a million case brand to take the “goodness” out for a buck. They either should have had a better rationale or spent more time than they did talking to their consumers about the decision.

So, they made a PR mistake. Read more…

An advertising campaign that actually works?

Wine and Spirits Daily reported recently that the Southern Comfort ad campaign seems to have paid off.

If you’re a regular reader of this blog, you won’t be surprised to learn that. (See Aug 4, 2012 and Dec 19, 2012.)

The brand’s net sales had been in decline for years but turned around in 2012. While 3% growth isn’t necessarily a big deal, for a brand that was hemorrhaging, it’s a road to recovery.

Judging from the emails and comments I received, I’m not surprised at all that the brand turned around.

Read more…

Wine and Spirits Daily and Shanken Daily News have each had stories on
Hiro Sake and its co-founder, Carlos Arana. In fact, there’s been quite a bit
of press about them lately.

Since I’ve known Carlos for most of my booze business days, I thought I would chime in.

At Seagram, Carlos and I suffered through the foibles of our Latin American boss and managed to survive the adventures of Patron in the early days. Carlos went on to run the Asia-Pacific whiskey business.

Next came an 8-year stint with the Beckmann family running the tequila business with impressive results and literally put Jose Cuervo on the global map. He managed to double sales and triple profits and increased market share by five percentage points. Not shabby.

A brief tour of duty as President of the Arnell Group was enough to convince him that doing your own thing is far more rewarding than working in a corporate setting.

So, enter Broadway and Hiro Sake.

Read more…

Ad Age, Buffalo Trace Newsletter, Wine and Spirits Daily, Shanken News Daily and others have all had stories about Cider and its potential as the next “craft” brew.

At first I thought – no way. Cider (Hard Cider that is) has been around for centuries and never caught on. Most people I know who have come here from the UK, sooner or later miss Cider and wonder why Americans don’t drink it. I don’t know why that is – no acquired taste for it; perceptions that it’s too sweet; dislike of apple juice; confusion about what it is; just because it’s not in consumers’ frame of reference. There are lots of reasons.

Read more…

I came across an article in USA Today indicating that US alcohol consumption hit a 25-yeat high. Americans drank the most wine on record (2.3 gallons per person). Spirits grew by 18% to 1.5 gallons. But, beer dropped 7 percent to 20.7 gallons according to the Beer Institute.

The report brought to mind an article in Wine & Spirits Daily back in October. Speaking to the National Beer Wholesalers Association, Tom Long of MillerCoors, indicated that the beer industry could learn a thing or two from spirits marketing.

To further illustrate the problem, according to Ad Age, AB InBev spent $555 million in measured media last year and still managed to lose a full share point. MillerCoors spent just under $400 million and lost half a share point. How does that work? Together they spent nearly a billion and lost market share. Is it the creative? Is it the media? Is it that consumer alcohol tastes are shifting to craft beers and spirits/wine? Probably all of the above.

Read more…

And now, on to the foremost industry show of the year, at least in my opinion. The Wine and Spirits Wholesalers of America (WSWA) 68^th annual convention is in Orlando at the beginning of April. Once upon a time this was a key meeting point between suppliers and wholesalers. Speakers, exhibitors, award presentations were all a sideshow to the supplier-wholesaler hospitality suite meetings and dinners. Brands and lines were awarded and lost at this event. Friendships were made and solidified. Animosities were seeded and blossomed. All in all, it was one of the events that drove the business.

But there may be problems this year.

Last week, Wine and Spirits Daily reported as follows:

“WSD had heard rumblings that some DISCUS members will not be attending the WSWA’s annual convention this year. Initially we supposed this was due to disagreements over the CARE Act, but a number of distiller sources we have spoken to say the issues are unrelated and that it is a commercial decision.”

A commercial decision?  WSD closed the piece with:

“Our conclusion?  While we don’t doubt DISCUS’ reasoning for bowing out, it’s likely that disagreements over the CARE Act sped up the process.”

Ah, the CARE Act (aka H.R. 5034) – let me see if I can simplify the issue.

The CARE Act aims to clarify that states have primary authority to regulate alcohol. I can go on and on with details about letters to congress, lobbying rationales, assorted fine print gobbledygook and each side’s arguments and counter arguments.  But it’s simple — the wholesalers want to protect and solidify the three-tier system and the suppliers want to make inroads and cause some erosion.

So, back to the WSWA –

I don’t believe the attendance will be down. I also don’t buy the argument that “we see the wholesalers on a frequent basis already so why go to the event?” Because, it’s called relationship building. Because, the size of the line alone is not the answer for “winning the hearts and minds” of distributors and their salespeople.

As for the wholesalers, if the big boys don’t show in the same numbers as in the past, perhaps they will spend more time in the exhibit area and get to know the smaller suppliers and the new brands and players that may become the powerhouses of the future.

It’s fascinating to see each of the oligopolies battle each other. I guess it’s called the “irresistible force” meets the “immovable object.”

Wine and Spirits Daily had a story last week entitled, IS TEQUILA THE NEW VODKA?

Good question.

The article quoted a writer at the Washington Post who said… “A new trend emerges: the proliferation of ‘ultra-premium’ tequilas targeted at a club crowd that slowly has begun to trade in Grey Goose for Patron.” The article goes on to point out that “various social indicators, such as Al Roker claiming on the Today Show that Tequila is the new Vodka.” (I must have missed the announcement about Al Roker as social forecaster. I thought he did the weather.)

A few observations:

Drinking Patron at clubs at the expense of Vodka brands like Grey Goose is not a new concept. They are often interchangeable depending on the mood and occasion. Both brands are at the top of the heap in terms of being icons.

Further, it’s not Tequila, it’s Patron. Generally speaking, among most consumers, the Tequila category has three brands…Patron, Cuervo and all others. Remember the old adage? Consumers drink brands not categories.

Tequila will grow as it continues to be the focus of new product introductions and in that regard, it will be the new Vodka. I don’t have the actual data but I’d bet there have been more new Tequilas introduced in the last few years than Vodka. The shifts in Vodka preferences from the high end to mid-priced and value brands make new Tequila entries more enticing.

So, among most consumers, Vodka will continue to rule. Whether Al Roker thinks so or not.

Have you been following the press about privatization of some Control States?

In case you haven’t, Wine and Spirits Daily (June 7^th edition) has a great score card on what’s been happening.

NABCA has issued a resolution in support of Control States. No surprise but people I’ve talked with have wondered why they didn’t do this some time ago. WSD reports that 4 states (NC, PA, WA and VA) are looking closely at privatization. So the debate must be getting serious.

I’m not sure I know how I feel about privatization.

Those who want to keep government involvement argue about jobs and the need for industry regulation or control in their jurisdiction. But the NABCA resolution states, “there is irrefutable proof that alcohol control systems have a positive public health and safety impact on their communities.” Does this mean that the 32 open states are not doing a good job in protecting health and safety? Or, that the industry, unless governed by state officials, will behave badly?

Follow the money. As WSD points out, in tough economic times, states will look to a range of resources to increase revenue including taxes, fees and privatization.

Hey, look at California – on the ballot this November is a voter initiative to legalize marijuana. The tax revenue from sales is seen as a way to help the state’s budget difficulties.

Interesting that the economic climate has created change in government’s involvement in the social climate. But I guess it’s always been that way.

Here’s a thought if you’re working in a state store that gets privatized – think about moving to California.

I found Megan’s article on Constellation Brands in yesterday’s issue of Wine and Spirits Daily to be particularly interesting.

Here’s an excerpt:

Constellation may be one of the world’s largest wine companies, but its spirits brands had a phenomenal year.  Total spirits organic net sales grew 19% for the year, led by a 38% gain for its star Svedka vodka.  Svedka also recently launched it’s first-ever television advertising campaign “which marks an exciting milestone and serves as another example of how Svedka is setting itself apart in its quest to bring future fun to vodka lovers everywhere.”

The quote is from Constellation Chief Rob Sands who, in my opinion, is among the best executives in the business. Smart, knowledgeable and effective. But, obviously not an advertising maven.

Maybe it’s just me that thinks the ad campaign is ridiculous. It features a well-endowed, sexy, female robot (fembot) supposedly symbolizing the brand’s future achievements. If the marketing folks are looking to be more than a price driven brand and want to add image — keep looking.

Oh, and check out the TV campaign. I’m the guy who was there when Seagram and the industry decided to end the voluntary ban on broadcast advertising. This ad makes me think we made a mistake.

Svedka is a great brand built on hard work and smart marketing…excellent imported Vodka with high quality at a very competitive price. I’ve even been known to buy a 1.75L every now and then.

But its growth is not a function of the advertising. Its growth continues in spite of it.

Maybe mainstream advertising is not as important for brand building as it once was.

Just sayin’…