Tuesday, January 3, 2017

Beam Suntory Bungles Booker's Price Boost



Dumb.

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The previously announced production cut was not rescinded.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.

25 comments:

Anonymous said...

Excellent post. I agree and disagree.

I will guess that they did their market research after they made their announcement then decided not to take the plunge.

Personally, I think that this plan to double the price of Bookers and force it into the uber-premium world by price perception and allocation alone would have been successful in the long-run. There are far too many who do not do their research and make a buy decision based on perceived value, rather than on actual value. For me, Wild Turkey continues to offer excellence and value; unfortunately, not many still do.

As you say, big mistake on Suntory's part with this, but it will blow over quickly. Booker's fans will be happy that their favorite won't go up so quick, and us non-Beam people will simply get more popcorn, and await the next bit of entertainment.

Happy New Year, Chuck.
Keep up the great work.

Regards,
Dan

Anonymous said...

I for one, will look else where for my bourbon fix. I find what Beam Suntory did as dishonest and a slap in the face to their consumers. Not just Bookers, but I will do my best to avoid all Beam Suntory products where ever possible

Unknown said...

I completely agree. I bought 3 more bottles in anticipation of the hike. I will never buy a bottle again, nor will buy any other Beam product. Admittedly that is little loss to me as the only Beam products I bought were Booker's and Knob Creek, and Beam lost my Knob business with the faux special release 2001.

Anonymous said...

I've disagreed with some things written up here but not this time. Bravo! The marketing gurus (rather, clowns) who hatched this whole debacle should be given pink slips as their New Year's bonus. I wonder how many people are kicking themselves for running out to grab and bunker bottles of Booker's at the "old" price when the $100 thing was announced? They were thinking that those would be the last bottles that they'd ever buy after the price went insane and now it turns out that it was a false alarm. "Oops, sorry. Just kidding!". I've never been really bowled by most Booker's releases, save a few editions and, especially, the amazing 25th Anniversary, so I didn't go nuts, but quite a few people that I know did stock up because of what turned out to be fake news. I guarantee you that they aren't going to be happy, at all, with this development and the fact that they now have deep collections of Bourbon that they can still buy, probably for close to the old price, at every Mom & Pop corner booze emporium in these great 50 States. Things will probably right themselves down the road but, in the meantime, a lot of Bourbon lovers are entitled to hold a pretty dim view of Booker's in general and Beam in particular. And they should. You did a really nice job of holding their tone-deaf feet to the fire here.

Anonymous said...

The sad part is that Booker's always had its own special place with bourbon drinkers for being a reliable small batch bourbon at barrel proof and being a pioneer in selling that product. I agree that they had made successful steps in improving the branding by labeling the names of each batch and giving Booker's lovers limited releases like Booker's 25th and Rye. They could have cut back on regular production, raised the price $10-15, and put out a yearly limited release at a much higher price (given the rave reviews of their last two) and the bourbon masses would have continued to love them. That anybody with Beam Suntory thought this would work, before taking into account the number of people who ultimately probably had to sign off on this boneheaded idea to double the price of a bourbon that has trouble moving off the shelves quickly, says volumes about their leadership and marketing team. To not understand the current market enough to know that they cannot correlate a one-off 13-year-old rye that has little competition to their regular product that has multiple competitors at its current price-point is astonishing.

kaiserhog said...

My definition of a superior distillery is one that makes a great tasting whiskey at an affordable price for most.

I am sure it is great whiskey but I am not going to pay $1,000 per bottle for Pappy Van Winkle. Surely, that price is way past the point of diminishing return for each extra dollar paid. Likewise I won't pay $100.00 or $50-60 for Bookers, when there is so much more as good or better for much less. Just my two cents.

Brian (AKA The Dean) said...

Count me among those who think this might have been a marketing move, from the get-go. After seeing how the Maker's Mark proof lowering played out (a LOT of publicity, and public love shown for the brand), perhaps they thought they could play the "oops, our bad" card once again--yet still get their price increase.

I'm not saying I know this is true. But I believe it is very plausible.

Chuck Cowdery said...

They wish they were that smart.

Jim Laminack said...

Chuck
You nailed it. The Beam Bumblers tried to manufacture a false status and it backfired. At the end of the day it's the consumer (and the writers) that bestow status. We have a saying in the south. Don't piss on my head and tell me it's raining.

Anonymous said...

or...maybe there is no such thing as bad publicity.

Booker's has been the talk of the town since they announced the increase.

Now we are talking about it again.

I'm not saying it was planned that way but it may be the result.

ZX said...

As interested as I was in this developing story, I suspect it is so much "sound and fury," signifying little, if not nothing, for Beam/Suntory. Chatting with whiskey drinking friends and folks at liquor stores (customers and staff), I find that very few people follow these kinds of stories. So few, that my gut tells me that fewer than 1% of bourbon drinkers even knew (or will know) this was going on.

Based on this inkling, I find the indignation from some folks here about Beam machinations an overreaction. Bad business decisions working themselves out, sure, but nothing to get worked up about.

Chuck, maybe you have some insight on industry polling on how many average drinkers (or even high end drinkers) would even be aware that this "price hike that never was but will instead be slowly introduced" ever happened.

I also agree that the price hike might've worked. How many times have I been in the store and seen a customer ask for a crazy expensive bottle for a gift?... Based on the competition, I think Booker's is worth $50-60 and an outstanding value at the $40-45 I saw it at last month (now much higher or unavailable in Louisville).

Brian the Dean: You beat me to the punch on wondering about the Maker's Mark connection hypothesis. ;-) And said it much better than I would have.

unclebuccs said...

I think this could have worked, but Beam needed to implement a little more psychology.

Step one: announce standard Bookers to be discontinued.Just start by leaking, allow for speculation, and then confirm. Don't roll out any new product for at least 6 weeks so that people believe, and the hoarders and speculators buy up the scraps.

Step two: Announce new "Limited" and much more "Select" Bookers, with each release being deemed a Roundtable, and accompany each release with descriptions that make them seem very different from one another. Also, the packaging will need to vary with the color scheme reflecting the nearest holiday to each release. Red, white and blue 4th of July edition would be an absolute must.

Anonymous said...

How about just make a decent product and quit worrying about all the games that are played by some distilleries? We all know who plays games and who just makes good bourbon.

Richnimrod said...

I'm surprised nobody has mentioned what seems somewhat obvious to me...
Booker's wasn't getting the kind of 'respect' B.S. wanted for it's 'top-of-the-line' offering, and they saw others in the industry getting more cash for their top-lines... Add to that indignation the fact that Booker's isn't a reliable mover in many markets, and you arrive at the 'product-surplus-status-lack' that caused B.S. to do what they did (and fairly quickly undid . . at least partially). They did accomplish probably the main goal of clearing product off shelves rather quickly. I'm sure this combined with the rescinding of the bulk of the price increase made all those retailers and wholesalers much happier than they were before the whole fiasco.
Just an opinion, of course; but seems logical to me. As to buying more Booker's? I possibly will; but not 'til I see the ages begin to creep back up, and only if the price stays 'reasonable'.

Yagami Kisaragi said...

I'm disinclined to believe that this was a marketing ploy because, well, it really pissed off a good number of people - and unlike the Maker's Mark issue, simply "restoring the proof" isn't going to placate the fans (not to mention that they didn't really do away with the price hike either).

Sure, some of the people who are pissed off right now might come around and buy Booker's again in the future but I'm willing to bet that many of them will follow through with their vow about either "not buying any more Booker's" or "not buying anything from Beam Suntory" - and quite frankly, with all the choice that's out there currently this vow isn't that hard to keep.

Also, I'm inclined to argue that this debacle will "stick" as in, people will always remember this episode when they talk about Booker's and needless to say, this isn't a really positive episode. This is an episode that shouldn't have been attached to the Booker's brand and I'd have to say that I'm rather sad that it happened.

Anonymous said...

Sad story. Here’s the Big Man spending a lifetime of proud hard work doing what VERY few can do-perfecting a full strength complex potable that actually was great enough to bear his own name. A whiskey that was widely appreciated by more refined bourbon consumers, but never the rage of cocktail enthusiast or the new to whiskey crowd. And since it was aged less than many of its competitors could be produced and procured in mass amounts.
Now comes an office marketing guru. Maybe a kid who’s knowledge of the process to distill such an iconic brand is lacking. His understanding of the consumer is even less, and he concocts a scheme to clear the shelves and create an overnight cult demand for something you can’t have. Probably read a story of Wine Spectator putting Pappy on the map?
And now we end up with all we DO know and conjecture on what we don’t. 

Brian (AKA The Dean) said...

Yagami, since Chuck has considerable experience in the whiskey marketing world, I'll believe him when he says he doesn't think this was a marketing tactic. But don't discount that it might be intentional, simply because it wasn't successful (or may not end up being successful). It isn't that unusual for a planned marketing tactics to fail.

I spent 20+ years as a research executive (in a different industry) and I can definately see this as something marketing departments might try. I can also see the use of blogs and social media as a sort of a research tool, too (supplementing traditional research, or replacing it entirely for one campaign), as a ploy by top management to save money, and test some new ideas some have on research. For some, guerrilla marketing is being supported by guerrilla research.

We won't know how this helped, or damaged, the brand until we see what becomes of Booker's sales numbers (and price). But if it was planned, and Booker's manages to keep it's numbers up (price and sales), then you might expect to see this play out again. If it ends up hurting Booker's, then perhaps we won't see this again, from Beam.

In some ways, it's pretty low risk for Beam. Should this move really hurt Booker's sales, then they can simply put the juice into some new brand, and charge whatever the hell they want for it (as well as use it in established products).

Anonymous said...

Something is going on at Beam, almost like it is intentionally trying to self destruct its brands.

Fist it kills the age statement on Knob Creek, quickly followed with a "fake" 100% price hike on Booker's, quickly followed by a correction to a 50% or so pice hike along with a production cut.

Could it be a shortage of juice???

I doubt it. It is not like Beam needs to let barrels age for more than 4 years because none of its juice has an age statement anymore (I think).

IMHO it is time for Beam to clean house and fire all those concrete headed people people in the marketing department who probably sit around drinking super sweet 80 proof flavored vodka cocktails.

kaiserhog said...

Beam has some great brands starting JB himself. I noticed the lack of age statement on KC., this is truly sad. KC rye barrel proof has been getting rave reviews. I hear it is really barrel proof Old Overholt, I wish they brand it as Old Overholt build a marketing campaign around the history of the brand. Heck, make it in SW Pa. again.

Sam Komlenic said...

I wrote an email to Beam in 2008 asking if they had any plans to promote the 200th anniversary of Old Overholt in 2010, with nary a peep in reply. I suggested a bottled in bond or barrel proof version to honor the brand's legacy. They seem to have little interest in their bottom-shelf rye.

Too bad...it still carries a bit of cachet and deserves better.

Brian (AKA The Dean) said...

Sam and kaiserhog, I agree with both of you. Old Overholt could use a little exposure, and extra love. It was one of my standbys in the neighborhood old man bars, where I did most of my drinking, the better part of my life. (Still do drink there, when I can. Just not too many of those bars available here.) "Old Overcoat", I'd order.

It may have been a tad better, back when it was made in PA, but it's still OK by me. I'd welcome a higher proof, or special edition, if available.

Punter said...

"KC rye barrel proof has been getting rave reviews. I hear it is really barrel proof Old Overholt,"

I would be surprised if Beam were cooking more than one rye mashbill. My suspicion is that Jim Beam Rye, Knob Creek Rye, and Old Overholt all start with the same distillate.

Your take, Chuck?

Chuck Cowdery said...

All of Beam's rye brands are from the same distillate. The only exception is the limited edition Booker's Rye, which used an experimental mash bill.

Anonymous said...

I have been a Bookers fan for years and have 13 bottles of various batches on hand. The comments regarding Beam backing off the $99.99 MSRP may be true but unfortunately, Michigan law requires minimum shelf price of $100 starting today 1-29-17. Sucks for sure but you have to wonder what took them so long to up the price on what has been a premium product for years,,,

C36 said...

I decided I would not buy any more Booker's after the price hike. Even with the lowered hike, I won't touch it....well, I'll drink it if someone else is buying, but they won't get another dollar from me.