View Full Version : Whiskey Capitalism

01-28-2004, 21:58
Profits are good. Profits allow companies to pay their stockholders better dividends, which encourages more people to acquire the stock, which raises its price, which makes all of the stockholders wealthier. Profits also allow companies to expand, invest in infrastructure, invest in new product development, take risks on innovative products, hire more workers, pay better wages, etc. Naturally, if profits are good, more profits are better, so companies naturally and appropriately look for ways to increase their profitability.

While I seldom buy either whiskey, I have tremendous admiration for Brown-Forman and Allied-Domecq, owners respectively of Jack Daniel's and Maker's Mark. We've seen complaints on this board about how those evil, greedy companies have taken price increases or reduced bottle proof (effectively a price increase) in order to increase profits, but think about why this is possible. Why don't consumers simply abandon these evil, greedy products for some available, less costly alternative?

That's where the brilliant part really comes in. In both cases, the products have been so brilliantly marketed that their perceived value is actually higher than their retail price, as evidenced by the fact that their consumers have been willing to accept price increases without objection. In both cases, the brands have been positioned and adopted as badges of identity. The identity profiles are slightly different, but in both cases they appeal to sufficient numbers of consumers to keep sales growing and profitable.

We can deride these two products, mock their consumers and bemoan the fact that both firms seem to put more emphasis on making great profits than on making great whiskey, yet if I held stock in either company (which, sadly, I do not) I would have to applaud.

I also, as a marketer, feel compelled to point out that great marketing often can be the most cost-effective way to ensure a company's long-term profitability. (So please start investing in marketing again. I need the work!)

01-29-2004, 15:10
A quibble, or maybe just a clarification: my remarks about JD Black #7 and Maker's Mark about price/proof in another thread were not so much a complaint about the price itself (I don't buy either one, either), but a comment on the latter increasing its price to put itself in the range of another market-grabber it wants to be associated with. I understand that, in this case, the money was not the issue for Maker's Mark, it was image. I just find it ironic they would raise their price to put themselves in direct competition to JD. The common practice, I think you'd agree, is to lower prices to gain market momentum. Not so here.

01-29-2004, 16:46
Chuck, I think the reason these two particular products get such a reaction from SB.com members is we're actually knowledgeable enthusiasts, not the mindless lemmings that their sort of marketing caters to. (I realize this is an unfair sweeping insult to all drinkers of those products, but you get the idea).

While I see your point about distillery company health being a good thing, the contempt (at least on *MY* end) is not for the distilleries or marketing departments themselves, rather for the poor taste of the American public.

01-29-2004, 17:10
> While I see your point about distillery company health being a good thing,
> the contempt (at least on *MY* end) is not for the distilleries or marketing
> departments themselves, rather for the poor taste of the American public.

I really enjoyed that comment, and all the others in this thread.

I'd also like to add my own:
I think that to a certain extent, much of the percieved value of these
products comes not only from what we traditionally think of as marketing
(i.e. magazine ads, label design, etc.), but is also due to careful
consideration of the psychology of pricing. It's my opinion that if
"they" were to decrease the prices of JD and MM, then the traditional
high-school-economics prediction of increased sales would not come
to be. Instead, these products would be looked upon as lower quality,
since the price is lower. The price is as much a part of the image
as anything else is.

(I've heard numerous examples of artists not being able to sell pictures,
until they multiplied the price by 4. Then the pictures sold quickly.)

Tim Dellinger

01-29-2004, 17:11
While I see your point about distillery company health being a good thing, the contempt (at least on *MY* end) is not for the distilleries or marketing departments themselves, rather for the poor taste of the American public.

As they say on the Rush Limbaugh program, "Ditto".


01-30-2004, 12:18
I wouldn't be so harsh as to say I have contempt for the masses of consumers, just pity. In many parts of the country these brands are THE premiums available. Small town liquor stores stock what they can quickly turn over and these brands are known commodities. Not many Mom and Pop stores have the capital to invest in a case of Pappy Van Winkle or Black Maple Hill and have it sit for months on a shelf. I can remember times when someone with a bottle of JD would be asked what the special occasion is.

Peer pressure also has to be taken into account especially when it comes to JD. Can any of you imagine crawling off a Harley at the Dew Drop Inn and ordering anything other than JD? Sure the image started with the marketing, but for many consumers, they buy what their buddies buy.

Just remember that ignorance is bliss and there are a hell of a lot of happy people out there pulling the JDs and MMs off the shelves because that is what is ON the shelves.

01-30-2004, 14:37
One could also say imagine how much happier they would be if they were more well informed and knew what else was available to them if only they would be inquisitive and ask.

01-30-2004, 17:44
I don't have too much of a problem with the cost of whiskey, if the whiskey (bourbon, in this case) is of high quality and has a premium taste. What I object to is the cost of plain old distilled alcohol, like vodka and gin, costing as much as a premium whiskey. These aren't even aged. http://www.straightbourbon.com/forums/images/graemlins/mad.gif

Marketing of booze, like Grey Goose vodka, Bacardi "O", etc., that allows their prices to increase up to premium bourbon prices, only makes whiskey distillers think that they can increase their product prices, because in comparison to non-aged distalites, aged whiskey IS a bargin! They (whiskeys) may appear to be a bargin, only because the others are so damned expensive.

Lastly, federal and state taxes are about 60% of the price of booze. This is unconscionable! Tax the cheap booze, to keep the amateurs off the roads, but relax the tax on bourbon-loving, stay-at-home, enjoying-a-fine-drink people like us! http://www.straightbourbon.com/forums/images/graemlins/hot.gif

'nuff said....