So 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.
Almost 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.
> 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.
TFA explains this. Beam, Inc. strikes a deal with the distributors saying "if you want Maker's you also have to buy Skinnygirl". Once again, if they wanted to dilute it for specific markets, why did they do it for all the markets?
I did think of an alternative explanation, though I think this is less likely. Perhaps Maker's sells well at their current price point because there it's a good value. However, if you raise it by, say, $10/bottle, it will now compete with more premium bourbons where it will not hold up nearly as well. Then, lowering the price on it after the shortage is over will even further cheapen the brand. So perhaps Beam, Inc. was faced with a really tough choice of whether to market Maker's as even more premium and lose, or lower the quality and hope that the customers won't mind. However, I think TFA explains it better, and Occam would probably agree.
I read the article but I still don't see what selling Makers at 42% ABV changes about Skinnygirl.
I agree with you about price vs. demand; I think if you read between the lines what Beam already said, they're more or less acknowledging this (in that you can always solve a demand problem by increasing the price, and they're choosing not to do that).
As I read the article, Makers Mark is a widespread first choice at their current price point. They already face some competition at the fringes of this leadership position (e.g. the Bulleit reference in the story).
If they allow the price to rise, bar purchasers move to alternatives. (Whether independently or in conjunction with a shift at the distributor level.)
Currently, Beam can and does (per the article) use Makers Mark as leverage to sell their other products. I would imagine including before the point of the bar's purchase decision. Liquor distribution is big business in the U.S.; in many places, it is an oligopoly if not monopoly. (Illinois, for example, currently has issues with this. And I realize that this circumstance might argue for any potential change taking place at the distributor level rather than the level of the individual bar, depending upon whether and how much diversity the distributors offer.)
If you want Makers Mark, it comes as a package deal along with X quantity of this other stuff. Being that the other stuff is targeted at less discerning market segments (at the least, based upon price), a pretty good argument can be made that "whatever you buy for these segments, you'll be able to move it" (especially with a little effective marketing).
One of the first words that popped into my own mind was "bundling". Whether the article has the situation right, this is how I understood what it is saying. (With "bundling" being my word and analogy, whether or not it would be the proper term and analogy.)
Ah, this makes sense (sorry, Igor). It's not just that Makers has a choice between going upmarket or downmarket, but that the upmarket option has a penalty on it.
I'll reiterate though, this is not an uncommon position for a bourbon brand to be in. Bulleit is a Diageo brand; one can only imagine the crap Diageo might want to bundle. Even Sazerac has a bunch of crappy mixers and vodkas in their portfolio.
Archaic regulations. Takes a long time from start to finish to produce quality bourbon. There are technical reasons (barrel size, surface area to liquid ratios) you might want larger batch sizes. So it's hard to start small. Which is what you have to do, because getting a new liquor product onto store shelves involves tremendous capital outlays.
That'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.
We 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.
Sometimes 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.
1. 42% ABV (where Maker's was headed) is fine for a mint julep. Here, Eric Felten of the WSJ gives an appropriately glowing review to Evan Wiliams based juleps. Evan Williams is 43% ABV. (Maker's is 45%.) http://online.wsj.com/article/SB120916374801546109.html Yes you make it with lots of crushed ice and some branch water but that doesn't mean you need "~100 proof liquor," which is 50% ABV seen in contemporary "barrel strength" bottlings but not in any bottled whiskey available historically when the julep became popular. In other words, the julep is meant to be a little "watery," and in fact has enough water to open up the bourbon so you can more fully taste it. You might prefer it with a strong whisky but that's really an orthogonal issue as the julep became popular when made with standard strength bourbon (and anyone who wants a meaningfully potent bourbon will upgrade to barrel or cask strength anyway).
2. Other than the julep and perhaps the "whiskey highball" (not drunk nearly as much today as 50 years ago) you should not find many "bourbon drinks" with lots of ice.
The most popular cocktails today made with bourbon are the Manhattan and the Old Fashioned (both arguably better with rye, but whatever). The Manhattan is traditionally served "up" (no ice); the old fashioned is properly served with either one very large cube or a few medium large cubes. Anyone serving with smaller ice (bad idea) is not going to go to the trouble of serving a 50%+ ("~100 proof") ABV barrel- or cask- strength bourbon. And anyway over proper ice a 40% ABV bourbon is just fine, thank you, in an old fashioned.
Another popular bourbon drink would be the whiskey sour, served either iceless or like an old fashioned (ice wise).
3. In no way are whiskey cocktails particularly likely to be icey or watery vs cocktails made from other spirits. Gin has the Tom Collins, Gin Rickey, and Gin & Tonic, all watery enough to compete well against the julep and whiskey highball. Rum has the mojito, for which the same holds true; vodka the Moscow Mule and screwdriver.
Anyway, I agree that this was a dumb move on the part of Maker's Mark, but not because it involves any actual functional issue in terms of mixing drinks. It's dumb because the brand stood for a particular flavor profile, and people paid extra to get that flavor profile, and you don't go changing it out from under them. Life is complicated enough without liquor brands getting all dynamic on us.
For traditionalist sticklers, you can purchase Evan Williams 100 proof fairly commonly (white label).
99% of people honestly could not care less and probably shouldn't. I only care for traditionalism's sake that I grew up on the KY border and simply like to do it the "right way" down to the pewter goblets, ya know? (us dirt farmers don't mess with silver)
EW is solid, it's what most higher end bars use as rail whiskey. They make a single barrel small batch also that's really fantastic. I'll have to give credit to John C. Dvorak for the recommendation on that one. $25 a fifth too.
Had no idea about the white label 100, I bet that's even better for derby juleps :) I will defer to the dirt farmers here. I come from a line of Texas circus performers, I don't think they knew much about cocktails because they tended to put the booze directly in the glass (not necessarily a good thing, given the number of broken homes!)
If 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?
To 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.
That 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"?
They 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.
In 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.
I 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.
All 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.
It 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.
I 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.
How 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.
If 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.
I'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?
In 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.
This 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).
I 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.
If 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?
I 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.
To 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.
I 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.
As 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.
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.