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  1. #1
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    Handling Increased Demand

    Rather than derailing the MM proof cut thread...

    Considering the circumstance that demand for bourbon is higher now than it was a few years back, and seems to be increasing, I'm wondering how people would prefer the distillers handle the situation, obviously operating under the assumption that they wish to maximize profit. I'm also assuming the continued availability of the super high end bottles which are helping to create the demand.

    Eliminate labels to support others? Weller Centennial is no more, but we all know that 10 year old juice has found a good home after sleeping all those years in the wood. No one was happy about this and plenty of us are fretting over the fate of the rest of the line.

    Degrade age? The forum's Old Overholt drinkers were sad to find that it is now a three year old. Wild Turkey is a sadder tale. Weller, Evan Williams, and more. Never a popular decision.

    Degrade proof? Maker's Mark's decision sure isn't popular but I don't think it has upstaged the demise of Wild Turkey 101 Rye. Jack Daniel's, Eagle Rare, more examples of this too. None popular.

    Just increase the price? No one would be happy but at least it's free of subterfuge.

    All of them have their drawbacks. I'm up in the air over which of these I think is the least worst.
    Last edited by HighInTheMtns; 02-12-2013 at 18:13.
    Jim

  2. #2

    Handling Increased Demand

    The silver lining of all of this is that everyone reading this board is aware of these changes and has ample opportunity go bunker as much bourbon as they can afford. I don't like that MM is switching to 84 proof, but at least plenty of 90 proof is still available.

  3. #3
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    Re: Handling Increased Demand

    Jim, this is a great thread, even though I'm not sure I can give an articulate response, now. I find myself going in so many directions on this topic, I can't be definitive. I hope to come back later. But, you have put forth the great conundrum to us "enthusiasts".
    JOE

    Wag more.
    Bark less.

    "Every bottle is its own learning experience." -- Sensei Ox-sama

  4. #4
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    Re: Handling Increased Demand

    Strategy depends on the brand.

    For a mass market brand with high volume the first step is to lower proof. You can take the high road of "keeping same taste" and most of your existing consumers won't notice. If that isn't enough, lower age. Again, at high levels of sales, most people won't notice. The buyers that notice and leave the brand are easily replaced by new customers that are attracted by the "smoother" taste of lower proof alcohol. Price is a last resort because at the mass market level customers are more likely to be price sensitive. (Think mass market consumer goods - ex Tide - where prices are kept stable but package size gets progressively smaller.)

    For low volume brands messing with the product itself is dangerous since their customer base is most likely enthusiasts that are most bothered by changes to their little undiscovered secret. For these premium brands, price is almost irrelevant, therefore price increases are the best strategy. In some cases the higher the price goes the higher the demand - the old gentleman with the cigar on the label comes to mind.

  5. #5
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    Re: Handling Increased Demand

    You forgot to add in "Expand Capacity to meet Demand"

    The options Jim has brought up are all low-risk strategies which suits the producer. Expansion is fraught with risk and the majors have likely all been burned before as evidenced by the whiskey glut of legend. I can see why the producer can be reluctant to pursue this method...

    but then I look at Wild Turkey and you can see the end result of this mindset.

    Their flagship product is just awful, sorry to the folks that offends but it is a poor product IMO. It is a shadow of it's former self that no "it tastes the same" fanboy could credibly deny.
    They play a marketing game with 81 proof bourbon and rye offerings. I'm not sure how they taste but the 86.8 here is just about unsippable and fit only for mixing with soda.
    The rarebreed label has been good but is being modified so we'll find out if it is a step forward, sideways or backward soon enough.
    The Russells reserve lines are in the process of rebranding and dissociating from the wild turkey brand and have already suffered proof cuts.

    Gambling on brand loyalty by discarding the qualitative properties of your product seems an equally big risk in the longer term to me. All it takes is for someone to take a sip of something else that is half decent and poof, there goes another one. I consider myself a bit of a Turkey fanboy but I just can't seem to put my hand in my wallet for their product anymore and that makes me sad.
    Quote Originally Posted by HighInTheMtns
    They should sell Pappy by the gallon, everyone buys the whole shelf anyway
    Quote Originally Posted by WAINWRIGHT
    I'm wearing a kilt right now...
    I feel like the fat Britney
    P_Elliots word of the day: odacity, coaqulate, preflent

  6. #6
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    Re: Handling Increased Demand

    Quote Originally Posted by portwood View Post
    Strategy depends on the brand.

    For a mass market brand with high volume the first step is to lower proof. You can take the high road of "keeping same taste" and most of your existing consumers won't notice. If that isn't enough, lower age. Again, at high levels of sales, most people won't notice. The buyers that notice and leave the brand are easily replaced by new customers that are attracted by the "smoother" taste of lower proof alcohol. Price is a last resort because at the mass market level customers are more likely to be price sensitive. (Think mass market consumer goods - ex Tide - where prices are kept stable but package size gets progressively smaller.)

    For low volume brands messing with the product itself is dangerous since their customer base is most likely enthusiasts that are most bothered by changes to their little undiscovered secret. For these premium brands, price is almost irrelevant, therefore price increases are the best strategy. In some cases the higher the price goes the higher the demand - the old gentleman with the cigar on the label comes to mind.
    This mirrors my thoughts exactly. Raising the price of BT, Makers Mark, WT and other mass market brands pushes them into competition with more premium brands and they will lose market share with that approach. They also appeal to folks who probably won't notice the difference in proof.

    As for the premium brands, their price is out of whack, as much as I hate to say it, at 70 a bottle for BTAC, I'll clear the shelf with no pain, until there is pain, people will continue to clear the shelves. Personally, I wouldn't mind seeing a decrease in bottle size for the BTAC and other high end releases. With a moderate increase in the price, this means more bottles in the market and the price increase will slow them just a bit from flying off the shelves. Maybe 375s at 50 a piece.

  7. #7
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    Re: Handling Increased Demand

    I will play along. Obviously we all would prefer no change, but if I had to choose, I would say distilleries should focus their cuts (proof and age) to the mass market bourbons (usually those under $25) and leave the higher proof / higher age ones along. They will see a great return on dilution with those and still keep whiskey lovers happy. Let's face it... most people buying the super popular brands care less about flavor and proof than "smoothness" or brand appeal. Of course that might mean we see some cuts to the cheaper higher proof brands that we love (OGD114, OWA, etc.), but if you have to cut somewhere, cut with the cheap stuff.
    Hope is subversive, for it limits the grandiose pretensions of the present by calling into existence the possibility of something better.

  8. #8
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    Re: Handling Increased Demand

    I would prefer cyclical product shortages to product dilution. Look, Ritt100, Weller12 and other products are sometimes missing from the shelves and that's okay because a prudent man can stock up when available. Why should a producer want retail shelves full of unsold product? To catch some spur-of-the-moment buyers? To prevent losing sales to their competitors? If all of one's production is periodically sold-out, that's a good thing in my book.

    Who really wants more water in their whiskey bottle?

    Here's the real question in the MM case - Why should buyers suffer a diminished product due to failure in distribution logistics? (Common experience suggests there's MM sitting on retailer shelves in most locations all the time.)
    Last edited by MauiSon; 02-13-2013 at 03:21.

  9. #9
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    Re: Handling Increased Demand

    I don't know why they can only have one option when they can do multiple things and keep their base mostly happy. Maker's could easily dilute 80% of their stocks, giving them their room for growth, and leave 20% of it at the original proof with a 10% price hike. While the current customers won't like the price hike, it will give them options. Another upside to increasing the price is the illusion of an even more premium product, if its expensive it MUST be good. On top of all that, they need to increase production. The worlds population is growing and these Asian markets love their whiskey. Outside of a complete world financial crash, the demand is not likely to shrink any time soon. This also allows them to take even more advantage of scales of efficiency.

    1) lower proof for most stocks = more profits
    2) raise price for remaining stocks = more profits
    3) increase productivity to meet market demand = more profits

  10. #10
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    Re: Handling Increased Demand

    Quote Originally Posted by kickert View Post
    I will play along. Obviously we all would prefer no change, but if I had to choose, I would say distilleries should focus their cuts (proof and age) to the mass market bourbons (usually those under $25) and leave the higher proof / higher age ones along. They will see a great return on dilution with those and still keep whiskey lovers happy. Let's face it... most people buying the super popular brands care less about flavor and proof than "smoothness" or brand appeal. Of course that might mean we see some cuts to the cheaper higher proof brands that we love (OGD114, OWA, etc.), but if you have to cut somewhere, cut with the cheap stuff.
    Do you work for a distillery Ben? I figure this is exactly the model most of the distillers bean counters would like them to head toward. A large supply of low proof young whiskey to underpin volume and a healthy premium on anything with a bit of age or proof. Just got to kill off those pesky historical value brands like OGD114, OWA etc that anchor the prices they can demand on "the good stuff".

    Maybe I'm overly cynical, I sure hope so.
    Quote Originally Posted by HighInTheMtns
    They should sell Pappy by the gallon, everyone buys the whole shelf anyway
    Quote Originally Posted by WAINWRIGHT
    I'm wearing a kilt right now...
    I feel like the fat Britney
    P_Elliots word of the day: odacity, coaqulate, preflent

 

 

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