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Marketing and Sales, New Brands, Seagram

“It will never sell” vs. “You never know”

March 31, 2011 No Comments

I was chatting with James Espey the other day and the subject of Baileys Irish Cream came up. For those of you who don’t know him or of him, suffice to say that James is a legend in the spirits industry as a very senior manager that has successfully run companies, categories and brands. In addition to creating the Keepers of the Quaich (see Sept. 28, 2010 posting) James’ innovation history includes the invention of Malibu, significant involvement in Baileys and much more.

He is still at it with a range of new and unique ventures including Last Drop Distillers among other ventures.

Anyway, the subject turned to what it takes for a brand to withstand the naysayers (generally corporate types who are risk adverse and would rather buy than create) and the prognosticators (the self proclaimed experts at prediction of success and failure). James told me the story of a well known industry observer who took one look at the Baileys idea and proclaimed, “that s**t will never sell.” Well, the forecast was wrong but never mind, that gent went on to make millions in the industry anyhow.

The Baileys story I had heard came from the late Jerry Mann (former Seagram CEO) right after I took over new products. His advice began with a typical Jerry Mann comment. “Listen pal,” he said between puffs, “in this business, you just never know what will sell and what won’t.”

It seems that when Jerry was running a distributor operation in California a friend called and asked for a favor, which was to buy some 5,000 cases of this new cream liqueur. He thought it was doomed for failure but a friend asked a favor and Jerry complied. As he put it, “we stuck the crap in the back of the warehouse and forgot all about it.” Then one day out of the blue, a sales manager called and informed him that retailers were clamoring for “that crap at the back of the warehouse.”

7 million cases per year later, despite ups and downs, lower priced knock-offs and diet and weight concerns, Baileys is still going strong and a true global brand.

According to James, it was launched using a well thought out new product approach, a strong dedicated team, management commitment and an understanding of consumer needs and wants. Which I believe gave the brand its momentum. Once you get momentum, boys and girls, even a large bureaucratic behemoth can’t slow you down.

Just ask Seagram’s 7 Crown.

The Bronfman Enigma

January 24, 2011 2 Comments

There have been lots of conversations among Seagram alumni since it was announced on Friday that Edgar Bronfman Jr. was convicted of insider trading in a French court.

The news reports I read raised a number of questions. According to Crain’s NY Business, “The conviction came even though the prosecutor had recommended acquittal…” That’s curious.

The report went on to say that “the prosecutor felt the executives did not have enough information themselves about the company’s health.” What? Are we talking Edgar Jr. here? Didn’t have enough information after having bet the heritage and fortune on a guy who referred to himself as Master of the Universe?

I wonder what the judge heard and saw that the prosecutor missed.

Edgar Jr. sometimes referred to the ease and depth with which people in Hollywood were capable of lying. He described studio executives as people who can swear on their mother’s life that it is raining outside when you and they know it’s a beautiful sunny day. Yet, he couldn’t wait to do business there.

Every year since the 1950’s, Seagram ran the Seagram Family Association (SFA) meeting, an annual session for senior managers and distributor principals. At what turned out to be the last SFA, while it wasn’t known at the time, the deal to sell the company was in the works. Rumors were widespread and felt to have more than the ring of truth. Every conversation, among distributors and management alike, dealt with the speculation. Junior was at the event but hardly visible. Stayed in his suite the entire time, and based on subsequent events, was probably cutting the deals.

He showed up at the last session where customarily the owner addressed the distributors to remind them that Seagram was a family in both the literal and figurative sense of the word and to provide remarks on the state of the business and the future.

When he walked into the back of the room, he stopped and asked what we thought he should touch on in his remarks. What was the tempo, what were the top issues, what’s on their minds?

The answer was candid. “What’s on everyone’s mind is — are we going to be sold?” “The concerns are palpable…they, we, all want to know what’s going on.”

He just looked at us and went on the stage. Immediately, he began to address the topic of a sale in no uncertain terms. He said emphatically and repeatedly that Seagram was not for sale. He didn’t say this — but it was almost as though he swore on his grandfather that would not happen. Less than a month later the announcement of a sale was made.

It was a sunny, beautiful day in southern California but inside the meeting room the rain was pouring down.

In a previous blog on the Bronfman’s I wrote about pity or scorn. This is another occasion for pity. Junior orchestrated the end of his family’s spirits and wine business in favor of the idea of integrating media, entertainment, information and communications in one hand held device. The Smartphone. The idea he had was ahead of its time and with the wrong people.

Quel dommage.

Absolut Truth

January 19, 2011 3 Comments

This is the time of year when we used to meet with distributor management to discuss the previous year and how we looked over the holidays. It reminded me of a story about a candid assessment of a new vodka product from V&S (Absolut owners at the time) called Sundsvall.

Let me set the stage for you.

In the late 90’s it was clear that high end, connoisseur and, for some, “badge” vodka products were on the ascendency. From a day-to-day marketing and sales standpoint, it was also clear that Absolut was becoming a middle brand, flanked by the top shelf entries above and the value priced vodkas below.

We requested, pleaded and ultimately begged our Swedish partner to supply a brand that would compete with Ketel and Grey Goose. Unfortunately, the gentleman who ran the brand at V&S was totally disinterested. His intractable position was that Absolut was the best and to have a more expensive and presumably higher quality entry would belie their proposition.

No amount of cajoling could change his mind. We tried to explain that the analogy was in the scotch market — single malts are not better than blended scotches, they’re different. He ignored his own people, those of us in the trenches and even the owner.

Finally, out of the blue, we were informed that a top shelf vodka brand would soon be available. I suspect that the owner went to the top of the V&S feeding chain or, for all I know, the King of Sweden to get it done. We didn’t care so long as we had a viable brand.

Ah, viable, what a good word. Like the cliché, it’s in the eye of the beholder.

The good news was that the proposition made good sense and was indeed viable including differences from Absolut in ingredients and distillation process. The up charge of $3 to $4 higher than the other super premiums was well justified in terms of the resulting taste and initial reactions.

There were two main problems. First, V&S wanted no association between Sundsvall and Absolut, even going so far as to bypass Absolut’s longtime agency (TBWA) in favor of an agency in Boston. There was no reference to Absolut anywhere in the marketing material. No opportunity for synergy or leverage.

The bigger problem was that the package did not live up to the super premium expectation or price point. It was, at best, blah. I couldn’t find a photo on the Internet so you’ll have to take my word for it. But I remember research that indicated that servers and distributors liked the taste but felt the packaging “too plain” and “too discreet vs. competition.” Someone described it as “a clear barrel with an orange shrink wrapped top.” Those are the most positive things we heard.

No surprise that after a strong initial push the brand just languished.

The scene now shifts to the Seagram Advisory Council at some offsite location and serious winter watering hole. Don’t be fooled, the invitees were the best and brightest distributor management people in the business. While the afternoon and evenings were fun, the 5 or 6 hour work sessions were grueling. This was an occasion where the supplier was on the chopping block and got to hear about strengths and weaknesses versus competition. No BS, no holds barred, all straightforward and candid remarks.

Occasionally, there would be moments of reticence where the distributors kind of hemmed and hawed, not wanting to offend. That’s what happened when the subject of Sundsvall came up. Lots of looking at the floor.

I knew why but needed my management to hear the problems first hand from our customers who obviously didn’t want to offend or appear negative.

Question after question was lobbed and the answers were platitudes and fluff. Finally, I pushed and said, “Why is Sundsvall doing so poorly?”

One very senior manager from a very large wholesaler operation had the courage to call it like it was. He told the Absolut Truth and said, “Arthur … it’s simple — the baby is ugly.”

A few months later the brand was gone. What a relief.

To this day I believe that the V&S senior manager who never wanted an up market brand in the first place, did all he could to sabotage the effort. It wasn’t the only mistake he made.