OGD BIB going away.......... but picking up

[fogfrog]

I called a local liquor store and they had OGD BIB for like twenty bucks. McScrooges had it for like two bucks off because they are discontinuing it. so .... I bought it there. They told me that sales are picking up! I am curious about this because they wanted to discontinue it but maybe because of SB.com, more people are drinking it! so they may continue it........... Its interesting we have such an influence on consumption... and I also think that OGD BIB should not be discontinue from an avowed liquor warehouse.... what do you think?

[NickAtMartinis]

Fog,

If this site is any indication, I would say that it would be crazy for any liquor store to discontinue carrying the OGD line. Problem is, I don't know if this site reflects the bourbon demographic. It may or may not.

Mark

[Mamba]

Problem is, I don't know if this site reflects the bourbon demographic. It may or may not.

My experience has been that, as a general rule, online forums do not well represent the larger segment they are apart of. They generally harbor a more educated, enthusiastic, and picky group of consumers than the larger demographic they're apart of. This is a good place for companies to tap into the opinions of their most educated consumers, but it is generally unwise for these same companies to assume that these opinions will automatically sell themselves to the larger market.

This is a relatively easy position to support. Just compare the sales numbers of JD No. 7 and JBW & B to the amount of praise they garner on here.

[NickAtMartinis]

My experience has been that, as a general rule, online forums do not well represent the larger segment they are apart of. They generally harbor a more educated, enthusiastic, and picky group of consumers than the larger demographic they're apart of. This is a good place for companies to tap into the opinions of their most educated consumers, but it is generally unwise for these same companies to assume that these opinions will automatically sell themselves to the larger market.

This is a relatively easy position to support. Just compare the sales numbers of JD No. 7 and JBW & B to the amount of praise they garner on here.

Fine point, Mamba.

[Charter13]

Unfortunately, even in TN, which is firmly rooted in the Bourbon Belt, this forum doesn't represent the typical demographic. A huge chunk of consumers in East TN still believe that Crown Royal and Jack Daniels are bourbon because that's what they have heard it called all their lives. My store has a more educated demographic than most (or if not, they will get the spiel when they ask for the Bourbon section and then ask "Why don't you have Crown over here?")

We carry an extensive selection of bourbon, but it is harder to maintain commodity Bourbons than premiums. With premiums, the SB and BE guys will buy them, but so will the off consumer coming in to browse for something different or the clueless mom/secretary/brother/uncle that wants to pick up something nice for a birthday.

With commodity products, you have to offsell the routine consumer of X product to Y product. Bourbon is a category, like Vodka and Blended Scotch, that people pick a product and stick to it. With the exception of SB and BE guys, most people have a "Brand" that they drink exclusively and won't switch. Or if they do switch, what's the gain? So the issue is that while SB/BE guys do buy commodity goods, it isn't with enough regularity or in enough quantity to justify the shelf space that could be occupied by another good with higher selling potential.

In the case of OGBIB, we literally sold 3 1.75L and 4 .750's in 2007--most of which was to me. However, our closeout apparently generated some interest and we sold out rather quickly. Unfortunately, since we decided to continue carrying it, sales have returned to sluggish at best. This is the quandry of retail. People constantly request wines, spirits, beers for us to carry promising they will buy X bottles per month. We get in the products, the customer picks up one bottle and moves on to something else. We're stuck with 11 bottles of product that we now have to hand-sell or put on sale. It is a tough situation with no good answer.

McScrooge's answer has always been and will continue to be, however, that we value selection so much, we will carry inventory that sometimes doesn't fly off the shelf to make sure that our clients are satisfied each and every time.

Brent Barnett

Spirits Manager

McScrooge's Wines & Spirits

[Gillman]

Brent, thanks for these comments which are most interesting.

I am curious whether the customers are amenable to trying something new. I mean of course the average consumer, not the bourbon nut or someone who wants something fancy for a special purpose.

Why would they choose (I know they do but I am wondering why) the same price brand time and again? No one has the same meal every evening... Is it that they think they all taste the same? Or maybe it is the opposite, do they think they have chosen the best-tasting brand for what they wish to pay?

How many of this group are interested in learning more about bourbon?

As for Crown Royal being bourbon to many in your part of the State, do they call it this but still know it is Canadian whisky? Or do they not know it is Canadian whisky?

Thanks.

Gary

[melting]

Could be the same mentality that affects many other choices consumers make. I drink Coke. I've never bought a Pepsi in my entire life. Every week a 12 pack of Coke to bring to work. Maybe there are better drinks, maybe not, but I drink Coke.

I buy Sam Adams and PBR beers. That's just about all I've been buying for the last few years. I'm sure there are better offerings but I like Sam Adams and PBR.

I'd probably still be buying Peter Pan if it wasn't for the food poisoning issue recently.

Call me a creature of habit, but it is what it is.

Really, about the only regularly purchased items that I will experiment is whisky and scotch.

Chris

[Gillman]

Very valid points, and I guess I'm the same with certain things, like toothpaste!

Let's say that explanation accounts for 75% of the habitual buyers of a brand, i.e., they buy based on satisfaction and habit whether or not they are price/quality sensitive. But could you argue the other 25% might be inclined to try something different where they had an informed opportunity, e.g., say if they sampled a premium bourbon at tasting in the store, or would listen to a merchant describe alternatives to what they normally buy?. I am sure Brent's store and many others try all these things, I am just curious how the retailer views it since he has the experience.

Few the merchants are though (in my experience) who know bourbon well and good to see Brent's presence here as a welcome exception. But still, for those with the knowledge and interested, I wonder if part at least of the commodity group could be persuaded to trade up thus improving margins. I think too even where the retailer lacks specialty knowledge, often they supply it in the form of in-store tastings and other tutorial events run and financed by liquor brand owners.

Gary

[Thesh]

McScrooge's answer has always been and will continue to be, however, that we value selection so much, we will carry inventory that sometimes doesn't fly off the shelf to make sure that our clients are satisfied each and every time.

Brent Barnett

Spirits Manager

McScrooge's Wines & Spirits

You know, I always love listening to thoughts on managing inventory, prices, etc... Very interesting subject.

That's where you have the advantage in the spirits world. You put something on the shelf, you are limited by space only. It allows people like myself to get bourbon in an area where most people drink spirits, but only when they are mixed. Much better than perishables, where if there isn't a market for it, no one can possibly carry it without taking a loss.

[marco246]

Brent,

Thanks for the perspective. Helps me understand better the local market. I'm trying to figure out how to get various premium whiskeys here. Think I'll approach my favorite store owner and ask him to get me a case of XYZ, from which I'll buy 2 bottles immediately with a guarantee to buy whatever is left in the case after a certain amount of time. Everybody wins, unless I really dislike XYZ.

Cheers,

Mark

[chilidawg7]

Sounds like this is one of the ways in which those 'dusty bottles' end up showing up randomly, I suppose. They were bought, no one wanted them, so they were relegated to a back room or office for a while. Then one day, on a whim, they're placed back out there just to see what happens.

[cowdery]

Brent explained the business as I have always found it to be, except there never used to be what he characterized as the "SB/BE people." About the only difference in the stores where I shop is maybe they get a slightly higher percentage of SB/BE people, but we're everywhere in the minority. You have to remember that if you want to understand the business from the producer's perspective.

[Charter13]

Brent, thanks for these comments which are most interesting.

I am curious whether the customers are amenable to trying something new. I mean of course the average consumer, not the bourbon nut or someone who wants something fancy for a special purpose.

Why would they choose (I know they do but I am wondering why) the same price brand time and again? No one has the same meal every evening... Is it that they think they all taste the same? Or maybe it is the opposite, do they think they have chosen the best-tasting brand for what they wish to pay?

How many of this group are interested in learning more about bourbon?

As for Crown Royal being bourbon to many in your part of the State, do they call it this but still know it is Canadian whisky? Or do they not know it is Canadian whisky?

Thanks.

Gary

Gary, great questions. To address the Crown first, if you go to a bar in TN and ask for "bourbon" you will be given the rundown of "Crown, Jack, Beam and Turkey". They genuinely don't know it's not bourbon. Since most people's first impressions of alcohol are created in bars, it is tough to fight that unfortunate "urban legend" here in TN. It is also the reason for the formation of my General Rule #2 for drinking: Don't believe what bartenders/waitstaff tell you. Of course, there are exceptions.

Regarding the repetitive buying, unfortunately, that is a legacy issue in the US. Diversity may have been around in the US for the past 100 years, but it wasn't nationally distributed. People in the latter half of last century bought what was available and if you think of what was available in the US from 1950-1980 in spirits, it wasn't much. The decadence of the 1980's really spurred on the premium movement IMO, but it wasn't felt until the late 90's in the retail sector. We get the consistent 55-80 yr old population coming in for their weekly ration of Jack, Seagram's 7, Dewars, VOB, etc. It is one of the reasons the Blended Scotch and Low end bourbon sectors are slowing to a crawl--their main demographic is dying.

As far as moving people to other brands, it is easy, if they are under 40ish. Once they break that age, we find that they are too entrenched in their habit of buying their "weekend Crown" or "Sunday Jack" for moving. As with everything, there are exceptions.

[Special Reserve]

When I'm out bourbon hunting, I'm often directed to a special Jack Daniels bottle or a premium Royal Crown bottling as a "bourbon" that I should be interested in purchasing.

I just simple decline their offer.

[Charter13]

Brent explained the business as I have always found it to be, except there never used to be what he characterized as the "SB/BE people." About the only difference in the stores where I shop is maybe they get a slightly higher percentage of SB/BE people, but we're everywhere in the minority. You have to remember that if you want to understand the business from the producer's perspective.

I will make this addendum to my previous statements: the liquor business doesn't follow a Gaussian distribution, but rather a Pareto distribution. This is great for SB/BE people because we love you (at least at my shop). You belong to the 20% that does 80% of our revenue!

The real issue most liquor stores face is that 20% of their inventory is responsible for 80% of sales. The top 20% for most stores tends to be Jack, Crown, Beam, Bacardi, Yellow Tail, Franzia, Beringer WZ, et cetera. These "global" or "nationally distributed" brands are heavily marketed and make up the majority of sales.

One thing we have done in my shop is to focus on more premium goods. For instance, we have the 4th-5th largest collection of single malt in the country now (425ish). We have seen margins improve (as Gary mentioned) when we move customers to premium goods, but also, our distribution has shifted. Whereas my top 20% a few years ago was all commodity goods, we have seen what we consider premiums (based on quality, not necessarily price, but definitely margin) move into the top 20% of product. Additionally, we have seen erosion of what was previously strict adherence to 80-20. Now, our top 20% of product only accounts for around 74% of sales. Premium products with higher price tags are starting to bleed into or around the top 20%. It doesn't take too many $100 bottles of Scotch or Bourbon to start moving in on the $20 1.75 market.

Brent