Booze Business | A blog dedicated to the business of spirits and wine

More Tequila Tales

July 30, 2011 1 Comment

The caller was annoyed and had a threatening tone in his voice. He got right to the point and informed me that he was a business manager for Jimmy Buffett. He quickly added that we had infringed on trademark and other intellectual property rights – I can’t recall the full extent of our alleged/supposed violations but I was intrigued.

When I politely asked, “What the hell are you talking about?” he explained that Parrot Bay Rum by Captain Morgan, which had recently been introduced, infringed on their established use of the term Parrott Head, the commonly used nickname for fans of Jimmy Buffett. (I remember thinking, “Is he nuts?” How do you trademark the term parrot?)

I knew who Buffett was and associated him with the song Margaritaville, but I was far from a fan, much less an aficionado. I knew he had a strong and loyal following but that was about it.

Instinct told me this gentleman had more on his mind than a lawsuit so I pushed back.

“I don’t know what you’re talking about,” I countered. “Two floors below there are offices chocked full of lawyers who spend their time dealing with real and frivolous issues, so I suggest you take your best shot and do what you need to do.” There was silence but I could hear him blink. “Now, do you want to tell me why you’re really calling?”

He went on to explain that they’d like to have private label tequila for their restaurants and, since we didn’t have a viable brand (that hurt), would we be interested in producing one for them.

“Listen… private label tequila is not a good idea … you’ll make a nickel and we’ll make a dime. It won’t be anything more than a well brand… Tell you what … let’s talk about licensing Jimmy Buffett’s name for a tequila.”

The glee in his voice told me that I had just been played but, no matter, we needed a tequila brand and this might just be the ticket.

He informed me that they would prefer to use the name Margaritaville but the look and feel would be totally Buffett.

It didn’t take long to consider, particularly since a friend and wholesaler, one of the best and smartest in the business, recommended him to us. The deal was done, so far as I was concerned. Getting approval from management (not the owners this time) was another matter. It took a while.

Buffett’s man lived up to his end of the deal – wouldn’t you if you got a hefty royalty off the top? As for me, I became whatever the word is that goes beyond an admirer of Buffett, his music (made my kids so crazy by playing it constantly that they refused to ride in the car with me), his business and, of course, going to his concerts.

The biggest issue in the development was to capture the essence of the Jimmy Buffett brand. The next thing I know, the man himself appears at the office and lets us know that he is there to help with the back label copy. In twenty minutes, he produced the most incredible story that was totally Buffett. He is an amazing guy, top of the game performer, highly recognized and accomplished author and a decent, down to earth person.

In the few years that Seagram had it before the lights went out, the brand went from 5,000 to 50,000 cases. Afterward, it continued to grow but was bounced from company to company without, in my opinion, any significant focus or direction.

There is a happy ending however. Margaritaville is now part of the Sazarac Company and in good hands. In addition to the original tequila brands, they have rum and prepared cocktails including a skinny margarita mix.

Reminds me of his song, Changes in Latitude, Changes in Attitude – nothing remains quite the same.

Coyote Tequila

July 18, 2011 7 Comments

At lunch the other day with an old friend, who worked on Seagram new products and packaging design, I was reminded of the Coyote Tequila story and the supremacy of product over imagery. It is also a story of how logic and formulae don’t work in new product development.

When I was running new products, the single-minded goal was to fill holes in the overall portfolio. There was no larger hole than the absence of tequila.

Oh sure, there were 2 wannabe brands in the company’s history. One was Olmeca and the other was Mariachi, both now owned by Pernod Ricard. Not sure how well or poorly they are doing now, but at the time they were in the “brand hospice” division of the company. So the mission was to create a tequila brand that could compete with the dominant Jose Cuervo in a category that at the time showed the promise that has since come to fruition. (This was pre-Patron.)

The project was launched with gusto, intensity and with the best team and intentions. No effort was spared; no resource (in or out of the company) was held back; it was full steam ahead.

First step on the journey was to develop a concept. One that could make the new brand stand out from the others on the market and perhaps do for tequila what Captain Morgan did for rum. After all, it was argued, Bacardi dominates rum much the same way as Cuervo does in tequila and the extra-added attraction of a flavored product could separate the new tequila from the rest. Hmmm, sounded logical to me.

But what’s the name and imagery? Coyote, of course… as in southwest, as in rough and tough, as in sneaks up on you and steals your cattle, as in – you get the picture.

To further borrow a page from the Captain Morgan playbook, a howling pedestal was conceived and produced for bars. Each time a bottle was taken off the pedestal a button was released and activated the sound of a howling Coyote. The trade loved it. It reminded all of us of the highly successful Captain mirrors that bars clamored for. It cost a bloody fortune but who cared, this was Seagram and we’re taking on tequila. We’ll make it up on volume, as the saying goes. (See Nov. 30, 2010 posting Great Tchotchkes (Swag) I Have Known.)

Now for the formulation. What we learned was that most people at the time thought the taste of tequila was awful and that’s why the Margarita was invented. For the rest, the awful taste was a badge of courage that would be forgotten after a few rounds of shots by the machismo.

As a result, someone in R&D came up with the notion that Coyote needed to be harsh, even harsher that Cuervo – a taste that replicated the southwest concept and was truly macho, as in fiery. So this ‘tequila with natural flavors’ was “spiced” with hot peppers. Might have been a billion on the Scoville chili peppers heat scale for all I know. Whatever, it was doomed from the outset. I can’t blame R&D as much as the marketing team and myself for jumping to the wrong conclusion and letting this happen.

On the one hand we had consumers and the trade loving the idea and the brand. That is, until they tasted it. No matter how hard we tried to get the heat down, it still tasted like crap and over time the damage was done.

Lessons learned: What works in one instance doesn’t necessarily work in another. There are no formulas to success in spirits marketing or in any category. Further, no matter how good the packaging, name and proposition is, if it tastes awful – remember the expression “lipstick on a pig.” Unless, of course, an awful taste is the concept.

By the way, Seagram never really got tequila right. In addition to Olmeca, Mariachi and Coyote, there were ill-fated efforts with Herradura and Patron. Margaritaville, the last attempt, ended when the lights went out.

But that’s another story.

Governmental Booze

July 11, 2011 No Comments

Here we go again.

The press about initiatives concerning the privatization of alcohol sales has started to heat up once more. Looks like the Washington initiative will be back on the ballot; Ohio is pushing across the board privatization, not just alcohol; and Pennsylvania lawmakers are expected to file legislation that would auction off the state’s wine and spirits wholesale operations and liquor stores to private vendors.

But wait a minute… Didn’t I just read that the Pennsylvania Liquor Control Board (PLCB) just reported record sales and contributions to the state treasury?

In fact, the control board hit $1.9 billion in sales (up 4%) and claims to be the largest buyer of wine and spirits in the US. The sales volume generated some $500 million in sales tax and profit transfers.

It seems to me that, in addition to being a monopoly, they have tried to use marketing efforts more like a private enterprise than government. They run ads (print, billboards and even radio); lots of price promotions; and have initiatives like an online store and supermarket wine and spirits kiosks.

But it’s a government enterprise and, as such, I’m not sure they speak marketing. Their ads are okay but hardly comparable to those run by large private enterprise retailers. Despite the blasé nature of their communication, the PLCB still gets criticized for running ads. Imagine how much louder the criticism would be if the ads were compelling.

Their retail initiatives are worth applauding even if Wegmans ultimately rejected the kiosk idea because of customer complaints. According to Bloomberg Business Week, “customers who use the kiosks insert their identification, and a state worker at a remote location verifies it. The wine buyer must then use a breath machine to prove their blood-alcohol level is below 0.02.”

Where I come from all of this is referred to as “close, but no cigars.”

I don’t mean to be harsh, but government running a private enterprise – no matter how well intentioned and creative the employees are – just doesn’t measure up. The obstacles are too numerous and strong.

I read an article today that the wineries in New York have appealed to Sen. Schumer because the federal government is hurting business by taking too long to approve new labels for wine bottles. Schumer said, “Often, when wineries finally do receive feedback, it is with a rejected label and the necessary corrections. And, at that point, labels must be resubmitted and the process must begin again.” He went on to point out that delayed label approval means delayed sales that in turn means less tax dollars.

Maybe the folks in Pennsylvania should work for the federal Alcohol and Tobacco Tax and Trade Bureau (TTB).