Makers Mark Bourbon ripped a page out of the Walmart playbook and is getting a reduced alcohol content. So What?
Since the beginning of modern commerce or as we call it, business, being able to deliver a product for a lower price and in higher volumes has been the path to wealth and success. Some brands have avoided this trap and been able to command a premium on their name and the quality of their reputation.
In business, you have a choice to market to the masses who will accept a little less so they can spend less if it "feels the same". You also have a choice to market to dedicated fans. Many say that loyalty is dead. If you believe that show up at any In-N-Out Burger at 12:00 noon and see if you can get lunch in under five minutes.
I have never bought a McDonalds shirt, but I own three In-N-Out T-shirts that I paid for. I'd have more if they gave them away. Loyalty isn't dead, businesses just lowered the standards to reach more wallets.
Wal-Mart was a case study while I was attending college and getting a business degree because of it’s ability to negotiate a slightly different product and give the appearance of delivering it at a lower price. T-shirts were a little narrower at Wal-Mart than Macy’s even though they had the same label. Today that is standard practice with companies like Costco and Outlet Mall locations.
Consumers have embraced this trend, and are actually the reason why all of this is happening. Outlet Malls are filled with stores which are simply offering lower quality goods with similar styles as their named partners. One of my favorites, Brooks Brothers is where I first figured it out. I looked at a jacket while wearing some Brooks Brothers slacks, and the texture didn’t match.
The sales lady sheepishly explained that the jackets in the factory stores are marked “compare at” because they really are a different jacket of a “similar” weave, made in a completely different country.
At the time my wife laughed, and said that all of the branded stores in the Outlet Mall did the same thing. Now I only go to the outlet malls to buy Crocs and Fleece Pullovers. As far as the rest goes, I want the real deal.
A while back Breyer’s was purchased by Unilever. Unilever quietly switched Breyer’s from “Ice Cream” to “Frozen Dairy Dessert”. It looks like Maker’s Mark Bourbon is going to do something similar. Recently Rob Samuels, the COO of Beam Inc that owns Makers Mark sent out a message saying they can’t make enough to meet demand, so they are going to reduce the alcohol from 45% to 42%.
What is 3% more water among friends? With a brand like Makers Mark, there are a couple of other options that just about all of us understand. First they could reduce the money they spend marketing Maker’s Mark to help reduce demand or they could increase the price to reduce demand. In either case the company can increase profits without degrading the product.
Even though I don't really drink Maker's Mark, I ran to the store and grabbed my last two bottles of the real Maker’s Mark before it is gone. I guess it was like trying to buy the last of the real Levi's a decade or so ago.
Bill Samuels Jr. posted a note on the Maker’s website saying that he wanted to post directly instead of Rob (The COO). His note asks readers to reserve judgement until they try the new bourbon.
What do you think? It is clear they aren’t going to market the product less, so should they raise the price or lower the alcohol content?
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Thank you for your insights.