The Seagram VO and VO Gold story

April 11, 2019 43 Comments

A Second Shot for Both Brands

“Diageo sells portfolio of brands to Sazerac,” read the headline of the press release. It went on to say that among the brands acquired were Seagram’s VO and VO Gold. I found this fascinating on a number of levels. First, you might say that these brands have seen better days and why would a company like Sazerac, with a full and lush portfolio, want these brands. On the other hand, Sazerac has done amazing things with brands they acquired from Seagram (think Eagle Rare and Fireball to name only two) so, a revival of the Seagram VO franchise would not be unusual or impossible.

It was under my watch at Seagram that VO’s decline accelerated and VO Gold was created. So, among others, I contacted John Hartrey and Art Peterson (both of whom you have met before on this blog) who played important roles with those brands, back in the day. I also spoke with Drew Mayville, who worked on the creation of VO Gold and was the 4^th and last Master Blender at Seagram, and is now the Master Blender at Sazerac.

{By the way, as I write this, I’ve learned that Sazerac has introduced “Mister Sam” Whiskey — a Blend of Sazerac’s American and Canadian Whiskeys and a tribute to the Seagram founder, Sam Bronfman. The blend was created by Drew Mayville.}

The importance of VO to Seagram

Let’s start with the fact that the New York Stock Exchange symbol for Seagram was VO. That speaks volumes. Next, consider the fact that The Chairman (aka Edgar M. Bronfman) earned his stripes at the company working on VO.

It was always a great whiskey, a 6-year-old Canadian blend and the aspiration of Seagram 7 drinkers looking for more and, yes, better.

I recall, after taking over the position of U.S. marketing head, being summoned to a lunch with The Chairman in his private dining room. This was during the time that Edgar Jr was involved in Hollywood. I think, in retrospect, the purpose was to let me know that he was back in control and was in charge during this interregnum. Really? As though I didn’t know? All I recall from that lunch was that the butler asked me what I wanted to drink and I looked at him in amazement. With the exception of a special occasion, drinking at lunch was not for me. When I told him so, his look was beyond amazement as he said, “The Chairman generally has a VO before lunch… I’d suggest you do the same.”

Some believe that the term VO stood for “Very Own” and, according to the Master of Malt website, “It is said the blend was created after a post-prandial conversation (during or relating to the period after dinner or lunch) amongst the Seagram family; the letters “VO” might well stand for “very own”, as in, their very own blend…”

Art Peterson told me the following story about the family’s commitment to VO:

“When Edgar Senior and Charles (Bronfman) were running the Canadian operation, they learned that due to some production or maturation difficulties, the blenders were unable to match the character of the current VO production to the standard. So, Charles and Edgar made the decision to stop shipping the brand until they solved the problem. That meant that there were shortages in the marketplace, but they were determined that no shipments would be made until that problem was solved.” (Despite my griping about the owners, they were all about quality and doing the right product thing, no matter what.)

Most interesting to the VO story is the packaging, notably the ribbon on the bottle. I’ve been told that it was the racing colors of a Bronfman owned horse. More about that ribbon in a moment.

But tastes changed and the brand slipped

By the early 1990s, consumer liquor preferences had leaned to clear spirits in general and vodka in particular, so whiskies (with a few exceptions) suffered volume declines. At Seagram, Seagram 7 Crown was huge and a bar staple so its losses were manageable. At the other end, Crown Royal, whose appeal was to top shelf drinkers and strong regional support, actually grew in volume. In part, this was a result of an upmarket line extension — Crown Royal Special Reserve. Seagram VO was awash in red ink and, while it held its own against the archrival Canadian Club, you didn’t want to be the brand manager who presented the sales and marketing results when there was a Bronfman in the room. As in… “our sales are way down BUT, our market share is up.”

The central question became, “What to do about VO.”

Enter the Consultants

The owners of Seagram loved to bring in consulting companies such as McKinsey or Boston Consulting Group — you know, highly paid outsiders who basically ask for your watch so they can tell you what time it is. I couldn’t help but wonder why they chose to go around the company’s employees. I often felt they thought, how smart can our people be, they chose to work for us didn’t they?

Among other things the consultant contribution to the brand was to “take the goodness away,” by eliminating what they saw as ‘unnecessary’ packaging elements. You know… what we in marketing and sales call “brand personality elements.” Among the cost saving victims was the VO ribbon.

The Answer…

…came from the toilers in the company, not the consultants. In so doing, we broke what classic marketers call the rule of line extensions — don’t line extend from a weak brand. Nonsense.

There were many reasons why an upmarket VO line extension made sense, including increased margin, additional VO facings in stores, a new face in the brand’s franchise and lineup, and more. And, the success of Crown Royal Special Reserve, gave us the impetus to try that tactic on VO. What did we have to lose?

So, VO Gold was born and, with the thumbing of our noses at the consultants, we put all the goodness in packaging back into VO Gold. Including the ribbon.

But the strength of the brand came from the blenders and the marketers. Here’s how Art Peterson described what happened with the product formulation:

“Drew Mayville was part of the team and in on the creation of the brand. What happened was that VO Gold was just an idea. We knew it had to be some kind of a premium VO, but true to VO characters. We started by discussing, ‘What could we do to improve VO?’ Well, one idea, of course, is you can use older whiskeys. We decided that we would focus on eight-year-old whiskeys. And then, ‘What can we do to VO to make it different but still recognizably VO?’ We decided to go with a whiskey that would be brighter. Also, some of the characteristics in VO that we liked were the fruity characteristics, and that came from having certain yeasts that we used in our rye whiskeys in the VO blend.”

The proof of the blenders’ success came in a letter to Art from Charles Bronfman:

“I have tasted VO Gold and it’s just fabulous!!! Best damn VO I have ever tasted, and as you know, I have tasted an awful lot of VO over the years. Nice going, my friend.”

What I especially enjoyed about Seagram was the team spirit and, in this case, how marketing worked hand in hand with the blenders and production to bring this brand to life.

Led by John Hartrey, the marketing folks came up with a totally unique idea; never done before but used by others afterward. They ran a program that centered on “meet the blender.”

What they did was communicate, through advertising and point of sale, a series of dinners in five different markets. It was a contest whereby “you and 20 of your friends” could win a dinner with Art Peterson, followed by an expert tasting with him. It was a huge success and VO Gold was on its way.

About that ribbon

John reminded me of a great story about the VO ribbon. It was removed because it required special equipment and was expensive to produce. Little did the geniuses at the consulting firm (or many of us) know that it played a role in the Viet Nam war. According to John:

“When we removed the ribbon, we got a letter from a Vietnam Vet asking why the ribbon was removed. He told us that during the war, the VO ribbon was referred to as a “short timers’ ribbon”. The idea was that when someone had a short time left on their tour (probably 30 days), he put the ribbon on his uniform so that everyone knew to protect him and get him home.”

The story was corroborated here.

# # #

Seagram’s VO and VO Gold now have a second shot at success. The best part is that one of the blenders who worked on the original products, Drew Mayville, is the current Master Blender for the new owners (Sazerac) of the brand.

Drew used a great expression when we spoke that really resonated with me, “A lot of companies want to meet consumer expectations. At Sazerac, we strive to delight the consumer.”

I can’t wait for it to come on the market.

Thank you John, Art and Drew for taking the time to talk with me about this.

Tom Jago: The Passing of an Industry Icon

October 14, 2018 No Comments

The Dean Of Global Spirits

This is from The Last Drop Distillers, a company that Tom co-founded:

It is with profound and heartfelt sadness that we announce the death of our co-founder and inspirational president, Tom Jago, aged 93. Beloved by us all, we give thanks for his brilliance, his incisive humour and, above all, his deep affection for the team and the industry he so loved. Rest in peace, Tom.

Tom Jago. 21st July 1925 – 12th October 2018

There is no one I have met in my booze business journey that I respected more than Tom. He was a true gentleman, a creative genius, and a warm, fun, person. I wrote his story in this blog and in my book and I thought it would be worth re-telling as my personal tribute to a terrific man and friend.

# # #

I first met Tom Jago in the early 1990s when he was part of James Espey’s scotch and cognac team at Seagram. My immediate reaction was, here is a man who is gifted in product development and marketing. He’s also affable and fun to be with. I’m not sure he’s really British.

Over the years he taught me a great deal about the spirits business, above all, how to choose and enjoy good Claret (Bordeaux).

Together with Dr. Espey and Mr. Peter Fleck, he is a principal in the Last Drop Distillers Ltd. (The full story of the company is here.)

Here’s how their website describes Tom:

From a village school in the remote countryside, via a scholarship to Oxford and service in the Royal Navy during WWII, Tom Jago found his niche in the wine and spirits trade. He led the team that developed new ideas on old themes, like Croft Original Pale Cream Sherry and Le Piat D’Or brands, which revolutionised British drinking habits forever. He cooperated with the ‘gang of three’ in the invention of Bailey’s Irish Cream and Malibu.

But wait, there’s more. Tom was instrumental (as in the driving force) in such brands as Johnnie Walker Blue Label, Hennessy, Chivas Regal 18 Year Old, Martell, The Classic Malts and many others.

If that’s not enough, while at Seagram, Tom helped in the creation of Imperial Blue and Royal Stag, now an important part of Pernod India.

In preparation for this article, I’ve spent some time talking and emailing with Tom on a range of topics and his thoughts on the industry.

Tom’s Career

After the war, Tom “slipped accidentally into advertising.” He applied for a job as a photographer but was mistaken for someone else and got a job as a copywriter. He later became an account director at an ad agency that ultimately became Ogilvy & Mather. Among his accounts was a small company that hired him, called Gilbeys. Through mergers and acquisitions, Gilbeys became IDV and finally Diageo.

Next came four years at Moet-Hennessy, followed by United Distillers (with James) and later Seagram.

The area of focus throughout his career was innovation and new products. As Tom puts it, “I was not very good at being a marketing director (at Gilbeys) so they gave me a small budget, an office and secretary and said try and think of some new drinks we might profitably sell.” The string of successes mentioned earlier, attest to the accomplishments.

Product Development Philosophy

Tom Jago’s focus over the years has been simple, and straightforward, guiding principles.

First, “Make the drink agreeable to the palate, the eye and the nose. Baileys and Malibu are good examples of this.”

The other principle was to develop products that inherently persuade drinkers that there is virtue in drinking them and in learning to appreciate their quality. Interestingly, it’s the same motivations of palate, eyes and nose but applied to whisky, cognac and even tequila.

But above all, Tom has a powerful way of looking at the acceptance and growth of a brand – patience.

“It is clear to me that the motivation to drink alcohol is very deeply buried in the human subconscious… therefore, attempts to market distilled spirits must be subtle too. A spirits brand is bound to be slow growing, so promotions must be long, steady and consistent.”

In my experience, new products and brands often fail because the companies behind them, particularly the global ones, lack the fortitude to see them through to fruition. That’s why the successes in the US (e.g., Grey Goose, Tito’s, and Patron) have come from entrepreneurs.

Another interesting and worthwhile notion from Tom is not to let drinker research get in the way. “It is of course useful, but in the specific case of alcohol drinks, not to be relied on, given the essential illogical responses of people to alcohol,” says Tom. He goes on to say, “No one will tell you the truth about their feelings regarding drinks – mainly because they don’t know what they are themselves.”

I tend to put it another way. Consumer research is like a lamppost, some people lean on it while others are illuminated by it.

Whisky

Despite the drink inventions that favor light, sweet and palatable drinks, Tom is an unabashed devotee of Malts.

“These are, I must confess, my favourite of all the alcoholic drinks… I admire them partly because of their enormous variety of nose and taste (cognac, no matter how fine, all tastes much the same – compared with the vast difference between a malt from Islay and one from the Spey). Much of their appeal, of course, lies in their relative rarity – the amateur can ‘discover’ them for himself, so he feels that he owns a part of the brand. It is interesting that when a malt gets as big (in volume sales) as for instance Glenfiddich or the Glenlivet, people stop thinking of it as a malt, rather as just another Scotch brand.

His focus on whisky over the years has been extraordinary. Johnnie Walker Blue Label was created in 1987 to reassert the perceived value of the Johnnie Walker brand in Asia, where grey market discounting had damaged it. He also developed Classic Malts, a collection of outstanding products from individual malt distilleries, which became brands.

At his current venture, Last Drop Distillers Ltd, he and his partners are using 70 single malts in their blend. Some are from distilleries long since closed. It’s truly an amazing venture and you might want to look it up. (Today, The Last Drop Distillers is owned by Sazerac Limited.)

Throughout his career, Tom helped to define and advance product quality. While at Hennessy, for example, he learned about the sophisticated use of oak in spirit maturation. No one in the scotch business knew about this at the time and one can only imagine the battles that ensued between this young upstart and the tough and crusty old timers who ran the whisky production.

Perhaps based on these battles or just plain good common sense, Tom taught me to be wary of production managers.

“A word of caution concerning those splendid fellows…Don’t let them ruin a great luxury brand by economy measures unrelated to the essential perceived value of the pack; I have seen a production man try to save less than a penny by spoiling the closure of Johnnie Walker Blue Label – this on a brand that sells for £100.”

India

In the late nineties, while at Seagram, Tom was called to Seagram India to help with new product development. One of the chemists, had the idea of making a good admix whisky by using both imported scotch malt and local grain spirit. The resulting products were successful and have stood the test of time – Royal Stag and Imperial Blue. As Tom puts its it, a number of factors accounted for the success – branding, packaging, price (above the competition) and the unique use of TV advertising outside of India.

# # #

Tom Jago was indeed a man for all seasons and the most extraordinary spirits marketer I’ve ever met.

Industry executives, both young and old, can learn a great deal from his business strengths and skills – innovation and outside the box thinking; patience and tenacity; an understanding of people; how to build brands and the price/value relationship in marketing. Above all, Tom has a skill set all executives need, but not all have – a sense of humor.

Side Bar

What I love about the spirits and wine business is that it’s an industry of people, relationships and stories. No one I’ve met has better industry tales than Tom Jago.

Vodka

Real change began in 1949 when a Mr. Kunett, a Russian émigré in the USA, sold his tiny Smirnoff distillery to Heublein. At the time he was making about 5,000 cases a year. He and Heublein began seriously to promote vodka as the spirit with negligible taste, which mixed with fruit juice, tomato juice, or even ginger beer, to give a drink that was actually NICE. So vodka drinking spread to the civilised world (in Russia, it was never that civilised, the vodka was always sold in 50cl bottles with an aluminum capsule – non-reclosable!)

I was closely involved in this period of change. From 1957 I had been helping an old drinks merchant called Gilbeys with their advertising.

Gilbeys had been smart enough to get the rights to Smirnoff vodka for a large part of the world, so we were engaged in promoting vodka – which was entirely unknown in Britain. We began to understand the revolution that was taking place, although research produced some unexpected results: we used an ad showing young men in their digs preparing for a party. One of them was cleaning his teeth; the advertisement was badly understood, and it emerged after a few enquiries that only some 12% of young English males owned a toothbrush!

And when we claimed that Smirnoff doesn’t give you a hangover, we got the response “What’s the point of having a drink if you don’t get a hangover?” Binge drinking is nothing new, it seems.

About Gilbeys:

There was lots of fun to be had at Gilbeys. In the first place they owned a beautiful chateau in the Medoc (Chateau Loudenne), which I used as a cool place to plot things with co-workers. The cellar had first growths from 1875 on.

And board meeting were delightful on occasion. Walter Gilbey said one day, “Tom, I just got a lift back on Hennessy’s little jet – ever so nice. Do you think we might get one?” I said I thought it unlikely but would search and report back. Next week I said “we can’t afford it; costs £2m and that’s about our overdraft. And anyway, you would have two pilots to feed and clothe.”

“Oh,” said young Walter, “Couldn’t Hawkins learn to drive it?”

The joy of this was that Hawkins, an old family retainer, was 56, a serious drunk, and only worked one day a year when he drove the Gilbeys to Royal Ascot race meeting in the coach and four.

Product Placement in Films:

James Bond was in part my baby. I was with Gilbeys in the ‘60s and they had the franchise for Smirnoff in what used to be the British Empire. When Cubby Broccoli (Albert Broccoli, the producer of the Bond films) was rounding up funds for Dr. No he approached Gilbeys and got a flea in his ear; they were broke, in fact. But one of them told me and I persuaded them to let me give him two cases (one blue label 100 proof, the other red, 37.5) I said I hoped that they could include both in the film, and they agreed, with the great scene where Bond rejects the red and makes his martini with the stronger vodka. When I asked for a few more cases for their wind-up party to which I was told to get lost – no more money. So we lost the chance to be in all the Bond films. No money changed hands. Times change, huh?

And when I was down at Pinewood negotiating this, I lunched in the canteen with Terence Young (director); at the next table was Ava Gardner. She took a mouthful of steak and salad, drew deeply on her Camel, and started chewing. Never forgot that.

The Seagram Heiress and the Company Plane

July 31, 2018 6 Comments

A Seagram Story of Yesterday and Today

From the NY Times, July 25^th

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

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.”