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A Toast to Maker's Mark

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A toast to Maker's Mark

Popular brand brought into Jim Beam's fold, could gain global clout


By David Goetz


The Courier-Journal

It might have been high spirits, but Maker's Mark President Bill Samuels believes he saw a twinkle in the eye of a lot of whiskey salesmen who used to be his competitors.

Samuels was meeting and greeting at a recent national conference of sales managers from Beam Global Spirits & Wine, the newly named, greatly expanded successor to Jim Beam Brands.

Maker's Mark became a member of the Beam family as part of a $5.2 billion purchase by Beam parent Fortune Brands that included several big-name liquors that belonged to Maker's former owner, Allied Domecq.

"I've never been in a situation where more folks came up and introduced themselves to me in my whole life," Samuels said of the conference. "I thought the enthusiasm was pretty unanimous."

There's reason for enthusiasm. Maker's Mark gives the Beam lineup of bourbons an established, easily recognized brand at the high end of the premium shelf, where analysts find the most potential for spirits-industry profits and growth.

With annual sales of 600,000 cases, Maker's is the No. 2 bourbon in the Beam stable, behind only Jim Beam, and is six times larger than Beam's most successful super-premium, Knob Creek.

Last year, U.S. liquor sales grew 2.9 percent by volume while revenues rose 7.5 percent, said Corey Horsch, a Credit Suisse research analyst. In a report this week, Horsch said those numbers show consumers are buying higher-priced brands.

Currently, the premiums and super-premiums -- brands that cost $16 and up for a 750-milliliter bottle -- make up only 23 percent of volume sales, Horsch noted, so there's room for the top-tier brands to grow.

"We believe that brand managers will continue to be increasingly focused on the top shelf," he said.

Tequila was the fastest-growing category last year, cordials were second and bourbon was third, said Tom Flocco, Beam Global president and CEO.

"All of those were above vodka. That's very promising for us," Flocco said. "We think bourbon is in a terrific place to achieve a whole different growth profile, because of its versatility, its variety and how different bourbons are" from one another.

Maker's Mark stands out because of its red wax seal, bottle shape, labeling and marketing. That could give it an advantage as the top shelf gets more crowded.

Its loyal following has been built by its Samuels-inspired, low-key advertising, which made the brand appealing because there wasn't enough of it to go around, particularly in markets outside the traditional bourbon belt.

"Consumers buy brands, not categories," said Horsch, who listed Maker's as the only bourbon on his index of "power brands" for tracking the health of the high-end market. "Successful high-end innovation has less to do with the type of liquid and more to do with the intangibles."

Flocco called the red wax and other elements "the whole ethos of the brand," and keeping them intact is consistent with Beam Global's goal of becoming a brand-oriented marketer, he said. "We have no intention of messing with that."

But it's not all give and no take for Maker's Mark. Joining Beam Global gives the little bourbon from Loretto, Ky., potential global clout.

The new Beam brands, which include Sauza tequila, Courvoisier brandy and Canadian Club whiskey, have international standing. They double its revenue to $2.5 billion and make it the fourth-largest spirits company in the world. Beam has kept a distribution arrangement with the owners of Absolut vodka and two other premium spirits.

"It gives us a route to market for our brands that really is stronger than we would be able to develop on our own, even with the addition of the new brands," Flocco said. "Scale does matter in this business. It matters in terms of your costs to get to market. But it also matters in terms of how you influence your wholesale and retail partners out in the marketplace."

Jim Beam's international sales have been focused primarily in Australia and New Zealand, Flocco said, but there are plans to develop other markets for Jim Beam and Knob Creek. Maker's Mark can join them once its distillery expansion is far enough along that it can keep up a steady flow of inventory.

Samuels said the company has been "squirreling away a little barrel inventory assuming that emerging interest, especially in Europe." He recently returned from Spain and Great Britain, two potential markets for Maker's Mark.

"We've been offered access to markets around the world where there's already emerging consumer interest," Samuels said. "We've had that interest for a long time. We haven't had access to the markets because of Allied's approach of only dealing with large brands."

Reporter David Goetz can be reached at (502) 582-4698.

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