Crown Royal

Crown Royal has always been an iconic brand. But to me it’s been a bit of a mystery.

When I first met it as a consumer, it was the brand my grandfather served when company came over. Philadelphia Whiskey was his usual fare but his Crown Royal was special.

I’m not an historian on the brand but from what I can gather over the years, at the outset it had important equities but just needed a spark. The taste was great and unlike other whiskies at the time, unique packaging inside and outside, a back story about the royal visit to Canada and very aspirational look and feel. The spark occurred when oil workers from Canada working in the Gulf of Mexico (way before the current disaster) came to Gulf cities on their night off, with pockets full of money, and wanted the best whiskey they knew from home…Crown Royal.

As the story goes, this set off the growth and proliferation of the brand, primarily in the South.

It was marketed in the Seagram days in a classic brand-building manner. ‘Push’ and ‘pull’ efforts worked together successfully and the brand grew — even while vodka was growing by leaps and bounds.

The sales and regional marketing component, orchestrated by Jim Reichardt, was top of the game. All the activity was integrated and based on strategy, from the distributor focus to programming to ‘pull’ activity at retail. Above all, carefully thought through marketing innovations were introduced under Jimmy’s watch.

On the national marketing side, programs were developed to maximize the equity – especially the bag – and develop relationships with the core consumer. And, the advertising was that unique combination of creative excellence combined with brand recognition and sell. Not your average garden-variety ad campaign.

Everything on the brand was done for strategic reasons. The sole line extension (at the time) was Crown Royal Special Reserve whose intent was to protect the brand’s flank from above and make a price-value statement about the base brand. It was not to make a number. In fact, many worried about cannibalization of the base brand, which never occurred. At one point, both were growing at double digits.

Lately I’ve been looking at Crown Royal and how it’s doing. Last year was a tough one for the brand as it was for most high-end spirits. But I noticed the following in WSD the other day–

“…Furthermore, Trevor {analyst} believes the promotional support … behind Crown Royal ‘seems to be paying off,’ perhaps partly helped by its new, more expensive offering, Crown Royal Black.”

I also noticed that there are 5 Crown Royal products in the line.

I think my grandfather would have been confused.

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What does the consumer think?

There has been lots of press on the subject of privatization of state run stores with the focus on the state of Washington. For those of you who are unaware, there will be two conflicting initiatives on the ballot, one of which seeks to end the state stores. Here’s the way a local news blog described it.

There’s big money behind two efforts to privatize state liquor sales in Washington. Defenders of the status quo say the measures could end up costing the state hundreds of millions of dollars in lost tax revenue. Nonsense, say privateers.

Most of the comments to the blog seemed to support privatization.

The general and trade press has been all over this. Not surprising since many control states (not to mention suppliers and distributors) are looking at this closely.

But, what about the consumer? What does the alcohol shopper think of all this? Do they favor or oppose state run liquor stores?

The only pulse taking I’ve seen on the subject is a poll run by a research center at the University of Washington. Here’s the question they asked in the May, 2010 poll:

Another initiative that could be on the ballot in November would privatize alcohol sales. Currently hard alcohol can only be sold by the Washington State Liquor Control Board, but this initiative would allow alcohol to be sold at grocery stores and other places where beer and wine are already sold. Will you vote yes or no on the alcohol privatization initiative?

More than half (52%) of those polled said yes; 37% said no with the remainder presumably undecided. Interestingly, this spread of 15% among all voters turned out to be 21% among Republicans – 57% indicated yes and 36% said no.

I haven’t seen or conducted in-depth research on the subject but I would hypothesize that the consumer is indeed more in favor of privatization than the status quo. Obviously, attitudes will vary from state to state but in general, there are some consumer-based reasons that might be in favor of privatization:

  • Convenience and the need for one stop shopping
  • The perception that the overhead to run state stores can give way to more tax dollars
  • Desire for less government involvement (see the Republican support mentioned above)
  • Competition and better prices
  • Belief that 70 years since the end of prohibition means less need for government to exert day to day control of sales

No value judgments here but I would guess that privatization, slowly but surely, will take over. Control States need to do a better job of telling their story and justifying their role in the booze business if they are to survive.

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A Booze Business Fairy Tale

Once upon a time in the land of Makaplan, the ruling Prince was having some problems. Business was not good and the people were not happy.

“How will we manage to increase our wealth if our sales are not growing? If you can’t do it, then we will find someone who will move our goods and at a more profitable rate,” they exclaimed.

The Prince was worried and turned to the King for help. Alas, the King, who was from another land, had no idea how to increase the wealth of Makaplan. “What do you think?” asked the King.

“Well, I could do what we always did in my previous kingdom when I was just a Duke,” said the Prince. “What is that?” the King asked.

“First, we will tell everyone that the cost of our products will go up soon,” said the prince.

“How will that help?”

“Don’t you see, they will buy more at lower prices than they will soon pay,” said the prince. “Our sales will go up.”

“What about the year after” asked the King?

“Well… in my previous Kingdom, we also put new things up for sale. That brought us more business; people are always looking for new shiny things” said the Prince.

“Are you sure that both these things will increase the wealth and keep people happy?”

“Absolutely” said the Prince.

He also thought to himself… “If that doesn’t work, next year, I will be the King.”

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