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What were they thinking?

April 15, 2011 No Comments

I was troubled on many levels today when I saw a story in USA Today (April 15) about two restaurant chains accidentally and mistakenly serving drinks to toddlers that had alcohol.

Here’s the lead:

This week, two of the nation’s largest casual dining chains — Applebee’s and Olive Garden — found themselves very uncomfortably trying to explain how alcohol ended up in kids’ drinks.

Tuesday, at an Applebee’s in Madison Heights, Mich., a 15-month-old boy’s sippy cup was supposed to be filled with apple juice but was filled with margarita mix and alcohol. On March 31, at an Olive Garden in Lakeland, Fla., a 2-year-old was served alcoholic sangria, not orange juice.

At one level, as a part of the alcohol industry, I recognize that these are extremely rare occurrences. But, as a consumer and grandparent of a toddler, even one in a billion or trillion is too much.

What were the servers thinking? Are they so bored, uninterested or lazy that they didn’t look carefully at what they were serving? How about the managers at the restaurants, is this how they train their staff?

Another part of the USA Today story got me further annoyed:

Leaders at Applebee’s, Olive Garden and the National Restaurant Association all declined interviews on Thursday, deferring to public relations departments and statements. Applebee’s cited pending litigation.

Come on, I know that corporate lawyers rule, but this is a moral and public confidence issue. Instead of hiding behind PR and counsels, senior management needs to be out there explaining what happened and what it intends to do to prevent this in the future.

This is not the first time. In 2006, a New York City Applebee’s admitted to accidentally serving a 5-year-old a Long Island iced tea instead of apple juice. A California restaurant experienced a similar incident to the one in Detroit in 2007.

So my advice to the brass at these chains is to forget about “damage control” and hiding behind the lawyers. Kick some butt and regain public confidence. The food service business is rebounding, why do you want to shoot yourself in the foot?

For those of us in the alcohol industry, the accidents (or acts of carelessness) add another arrow in the quiver of the anti-alcohol forces.

The US Census

April 6, 2011 No Comments

This week’s Ad Age had a story and insert about trends from the 2010 census. I found the information and learning interesting as a snapshot of the US market in general and my favorite industry in particular.

If you look closely at Ad Age’s analysis and spend some time with the census results itself, the “story” is about the shifting population. Not a new trend, by any means, but some interesting twists and turns that continue to affect marketing.

First, it should come as no surprise that the US is becoming more diverse — the minority populations grew 8 times faster than the majority white, non-Hispanic population.

Interestingly though, the news about Hispanics is that the population and growth is concentrated, with nearly half of all US Hispanics living in just two states – you guessed it – California and Texas. And, three quarters live in just eight states.

The Asian population is growing even faster and is more highly concentrated. Since 2000, the population has grown by 43%. New York and California have the largest concentrations.

Among African Americans, the Census data reported by Ad Age indicates, “many are moving to the suburbs and to the South…a sign of better job prospects and increasing affluence.”

I think the implications of these shifts are clear. The consumer and the spirits and wine marketplace is anything but homogeneous. Strategies, plans, brand building and related marketing/sales factors that don’t take this into account are simply worthless.

I also think that as affluence and acculturation take hold, the old rules of who drinks what need to be re-examined. As demographics change, over time, so do attitudes, life styles and purchase behavior.

Oh, one more piece of information from Ad Age caught my eye that I wanted to share. In an analysis of Boomers sponsored by AARP, it seems that older Boomers (55 to 65 years) spend as much on alcohol as the general population. But, younger Boomers (45 to 55 years) spend 15% more than the population in general.

No surprise to me…I used to think it was because the empty nest means more entertaining and food and beverage occasions. I now know better. It is not because of the empty nest – it’s more drinking because the kids have come back home.

Cuervo for Sale?

March 21, 2011 No Comments

I no sooner posted the piece below on South America when my inbox lit up with stories about the possible sale of Jose Cuervo International.

(In case you don’t know, the brand(s) are owned by the Beckmann family and distributed worldwide by Diageo.)

Both Buffalo Trace Newsletter and Wine and Spirits Daily had special additions on Sunday reporting that the Beckmann family was in talks to appoint Barclays to explore a possible $2 billion sale of all or part of the Jose Cuervo brand.

I heard from a wide range of people who know the brand and the players well. Their opinions on the matter were all over the place, but very interesting.

Some wondered about the low price…

“As recently as a few years ago, they bragged about a $5 billion price tag …$2 billion must be for part and not the production or for limited worldwide distribution…seems crazy.”

The more cynical views had to do with the historic combative nature of the relationship between Cuervo and Diageo…

“I once heard a senior Diageo executive say that if Patron were available, they would gladly overpay for it in order not to have to deal with the Beckmanns any longer.”

“Diageo’s recent poor performance on the brand now looks like a strategy to keep the value low in order to buy the Beckmanns out.”

My own view is that it could be (as WSD suggests) based on a preemptive move against the possible sale of Sauza, although count me among those who think Beam Global will remain in tact and flourish in the future. Perhaps it’s a warning shot to Diageo to pick up the pace since their contract comes to an end in a few years.

What I can’t understand is where Proximo (also owned by Beckmann family members) fits in the equation. They are doing well and could easily handle the addition of Cuervo to the portfolio. But, their strength is strictly in the US. So, perhaps the low price tag is for international distribution.

One thing for sure is that the Beckmanns are shrewd and unpredictable so who knows what they have in mind.