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What the Maker’s Mark dilution debacle says about corporate strategy
- nasalgoat 14y agoIf you want to relate this to the web, imagine that you have more traffic than you expected, but can't bring up more capacity right away - if you do your own hosting, this is one of the only drawbacks. So, you have the choice of throttling traffic, making things worse for everyone but at least everyone gets served, or you traffic shape and most people get full speed but a percentage don't get anything at all due to packet drops. Looks like Beam decided to traffic shape!
- bencollier49 14y agoHmm, deliberate marketing ploy?
- cyanbane 14y agoAs soon as I heard their recant the first thing I thought of was some smug marketing high up grinning at their office that 'his/her plan had worked'. That being said it doesn't sound like that is the popular opinion (esp from this article). More that they were actually going to do this for business reasons.
- olefoo 14y agoThat is some genius marketing move; although an extremely risky one. How much earned media did Maker's Mark get over this? How many people will be buying their bourbon rather than a competitors' because they "decided to do the right thing"?
- simba-hiiipower 14y agonot sure about the 'decided to do the right thing' part, but knowing supply's tight makes me want to go pick-up a few cases right now. ..which, of course, would only be making the problem worse, so i don't think it’s a marketing ploy as high demand is the issue here.
- evandena 14y agoIt might be riskier than you think. All my friends knew about the shortage, and their plans to water down remaining stocks. However, Maker's reversal might not generate the same buzz that their initial shortage announcement did. That leaves the casual drinkers only knowing of the watered down Makers, not the "do the right thing" Makers.
- meej 14y agoThat could alleviate their shortage problem.
- AJ007 14y agoI can't be the only person who thought it was a PR move when I read the first story? I imagined it as something you would read on one of those copy heavy ads in an old magazine, straight out of Bernays' playbook.
- deleted 14y ago[deleted]
- mmanfrin 14y agoThey didn't decide to do the right thing, they decided to do the wrong thing and backtracked. They've hurt their branding. They announced they were watering down their product. That hurts the image of 'high class'. To call this a PR move is to be blind to the enormous amount of backlash that has occurred due to the announcement.
- tptacek 14y agoIn the sense that all bourbon distillers control the final ABV of their product (cask-strength bourbons being swung the opposite direction, bottled at undrinkably high ABVs so customers can dilute them to taste), the term "watered down" is both strictly true and not very descriptive. Lots of bourbon is sold at 80 proof.
- mmanfrin 14y agoThis is not a comparison of Makers Mark vs all other Bourbons, this is a comparison of Makers Mark vs literally* watered down* Makers Mark.
- tptacek 14y agoAll bourbon is "watered down". Literally! It comes out of the barrel at an undrinkable ABV. When you say things like "literally watered down", you sound like that might be news to you.
- nmcfarl 14y agoI agree completely with this. As you point out the act is standard - but the outrage is evident in the usage of the phrase "watered down". (And it's been used repeatedly in different places across my news feeds). This means - to me at least - that they've totally lost this PR battle.
- ctdonath 14y agoHow many people will be buying their bourbon rather than a competitors' because they "decided to do the right thing"? How many people will be buying a competitor's bourbon because Makers "decided to do the wrong thing" and now, short of nontrivial research, one doesn't know what's in the bottle now? There are a lot of other bourbons on those upper shelves. And I still don't buy Belkin products because of that "replace random web-page requests with ads" router fiasco years ago.
- ScottBurson 14y agoI'm not a drinker, so maybe this is a stupid question, but why can't they dilute their stock with ethanol instead of (or in combination with) water, so the proof is unchanged? They'd be diluting the flavor, of course, but that would happen in any case. No?
- homosaur 14y agoSometimes you have to make an idea public to understand how truly stupid it is. For anyone that doesn't understand why this is such a big deal, when you make bourbon drinks, especially a mint julep, you want ~100 proof liquor because you add so much ice that otherwise it becomes too watery. Makers Mark was basically stating that they didn't care about being taken seriously as a bourbon whiskey and their customers understandably had a cow, man.
- joezydeco 14y agoIf I took 1,000 people at the Kentucky Derby and did a blind taste test of 90-proof Makers and 84-proof Makers, what % would you think could notice the difference? Products are diluted and reformulated all the time to save cost. The half-eaten box of Girl Scout Samoa cookies on my desk right now reminds me every year. But why make it such a public thing so loudly? Were they afraid whisky fans would start an uproar and this was a preemptive notice?
- homosaur 14y agoTo me Makers was already a subpar julep liquor for the reason it was 90 proof. Making any weaker simply takes it totally out of contention for serious bartenders. The reality is people who are not serious already don't care and they'll make a julep out of regular Jim Beam. Makers is not in that market though, I generally think of Makers as a good default fallback whiskey if I can't get some great 100 proof small batch whiskey. If they simply turn it into Jim Beam, they're neutering their brand. You have to have SOMETHING so you can charge an extra 7 or 8 bucks, even if it's exclusively perception.
- fencepost 14y agoI thought part of the original reasoning was that by dropping to a slightly lower proof they could also sell in locations where the current alcohol level was too high (states with tight liquor laws), but I'm not hearing any of that now.
- kyllo 14y agoI believe they did this to make more money off the Chinese market. While whiskey drinkers in China mostly drink scotch, they recently have warmed up to bourbon. They mostly buy alcohol not for enjoyment of the drink itself, but to impress business clients. So they are buying lots of Maker's Mark for the famous brand name and distinctive bottle, and they couldn't care less that it's being diluted--they might actually enjoy it more that way.
- IgorPartola 14y agoIf that's the case, then why did they dilute it state-side? Wouldn't it be more prudent to just dilute it in China and not piss of customers in the US?
- philoye 14y agoI can't speak to China, but here in Australia they already diluted it to 40%. I'm not sure when it happened, the bottle I have is at least 4 months old.
- justin66 14y agoThe new, diluted stuff has been spotted on store shelves here in the US as well.
- kyllo 14y agoTo save even more money? I don't know, I'm not saying it was a good idea. But the original reason they gave was growing "international demand" especially in Asia. Anyway, the news channels are now reporting that they changed their mind and decided not to dilute Maker's after all. Probably because of the bad PR.
- r0s 14y ago> a growing number of bars in D.C. using Bulleit bourbon, a bit cheaper and rougher on the finish than Maker’s Bulleit is better, frankly. Maker's is overrated.
- IgorPartola 14y agoSo basically if Maker's was its own boss, this would not be happening. As is, Maker's is propping up terrible brands that Beam, Inc. is trying to push and in order to continue pushing those Maker's must be the sacrificial lamb. Imagine if Maker's only had to worry about their own product. Now, a 6-7 year shortage would buy them 100 years of legendary status. "This bourbon is so good, for a while you couldn't even buy it!" They position themselves as an artisan product. What's a better story to tell as an artisan than huge growth and small batches? As is, Beam, Inc. is like the cable networks: selling you HBO bundles with 200 channels of worthless crap, hindering HBO's ability to innovate in the process.
- bradleyjg 14y agoThat's essentially what happened with Pappy Van Winkle. I've had it, and it's quite good, but nothing is as good as its reputation. It got that reputation because of the extreme difficulty of finding it, and it is so difficult to find precisely because they never raised the price, instead creating shortages. I don't know if they are capitalizing on it. Their youngest is 15 years old, so it'd be a while before increased production would be seen -- but they certainly could.
- tptacek 14y agoWe have a bottle of Pappy 20 at the Chicago office and it's our least favorite of our collection. We're told the 23 is the "real" stuff, but, whatever; I think you're right that most of the value in Pappy is as a social signal.
- tptacek 14y agoAlmost all of the top-quality bourbon brands in the US are owned by large distilling concerns. Beam, Inc. isn't an epithet in the whisky world. Go look: think of a top-tier bourbon you like, and trace back its ownership. It's not an indie-friendly market. I'm also not entirely sure how your logic works here. How does reducing the proof on Makers help Skinnygirl Pre-mixed Processed Cocktail Beverage Product in any way? Those products are presumably already marketed to capture profits for markets that don't care about quality. I buy Beam's explanation of why they did this. They pivoted Makers as a global brand, and in foreign markets (like Australia) were already marketing the product at a lower proof. They were unexpectedly successful, and one sane response to shortage was to unify the product line around the foreign proof. Obviously, Makers has always controlled the final proof of its product. Bourbons sold cask-strength are sold that way in part because it allows the distiller's customers to buy less water and more booze. The final proof Makers tried to choose wasn't an unusual one for bourbon, either.
- philoye 14y agoIn Australia, Maker's Mark lowered the proof a while ago. The bottle I have in my pantry is 40% (80 proof). Not to mention, bottles run ~$40 (1 AUD ~= 1 USD), so I suspect the branding/marketing considerations are different.
- bradleyjg 14y agoIIRC that has something to do with your taxation of alcohol (or maybe import tariffs on alcohol).
- philoye 14y agoThis article[1] suggests excise tax isn't that high ($1 or $2), though GST is 10% so that's certainly part of the overall price. I rather suspect it is pure price discrimination. I saw Pabst Blue Ribbon for AU$49 a case. PBR! Sierra Nevada Pale Ale is around AU$75 a case. These prices are at a huge discount retailer (Dan Murphy's). [1] http://theconversation.edu.au/calling-time-on-alcohol-taxation-in-australia-6585 http://theconversation.edu.au/calling-time-on-alcohol-taxati...