Tuesday, January 3, 2017
Beam Suntory Bungles Booker's Price Boost
What else can you call the Beam Suntory decision to raise the price of Booker's Bourbon by 100 percent and then, a few weeks later, to amend that to a mere 50 percent increase?
The previously announced production cut was not rescinded. Will it be? Who can say?
Only one thing could have forced Beam Suntory managers to backpedal on their original decision, heavy pushback from customers--not you and me but wholesale and retail customers. That should not have been a surprise. Capable managers don't announce such major, radical changes without first gauging the likely reaction of the distribution chain. To publicly make such a decision only to be forced to roll it back almost immediately is beyond embarrassing. It makes consumers, customers, and investors question the basic competence of the managers who are making, and un-making, those decisions.
The goal of the original plan was to push Booker's into the unicorn class, as exemplified by anything with 'Van Winkle' on its label, products that are so in demand and so allocated that retailers hold lotteries to choose the privileged few who get to buy one. Unicorns also drive an underground secondary market where bottles can fetch many times their suggested retail price.
Many doubted Beam could create a unicorn by fiat and they were right. Beam couldn't. What is striking is how quickly and strongly the answer arrived.
Some Booker's limited edition releases, such as the 25th anniversary bottling and more recently Booker's Rye, have enjoyed that kind of demand but regular Booker's never has. Booker's always has been released in batches but the decision a few years ago to give each batch a name and story, rather than just a batch number, was successful, as was the creation of the Booker's Roundtable, in which whiskey scribes (including yours truly) help select certain batches. Even so, stores rarely run out of Booker's and it is frequently on-deal. These facts made many question the wisdom of the original increase.
Instead of the intended image upgrade, Beam Suntory has made the brand look like a grasping wannabe, damaging rather than enhancing its status. Booker's is an excellent product with a proud legacy. Its stewards have failed it this time, big time.
Everybody makes mistakes and reversing course, as embarrassing as that can be, is better than stubbornly pushing forward, so Beam Suntory deserves some credit for that, but not very much.
Beam Suntory has had a great run. Thirty years ago it was a smallish subsidiary of a tobacco company and had only one major brand. Today it claims to be the world's third largest premium spirits company. The Booker's bungle won't sink the ship but it makes one wonder if the folks in charge over there in their new River North offices are really ready for prime time.