Up Close With - Beam Global Spirits & Wine Inc.
Last year, Beam Global Spirits and Wine Inc., Deerfield, Ill., set out to become the world’s fastest growing spirits company, says Bill Newlands, president of North America for the Fortune Brands-owned company. To achieve its goal, the company increased advertising spending and introduced several new products, including Maker’s 46 and Cruzan 9 spiced rum. Also benefiting Beam Global was the alignment of its portfolio with overall spirits and consumer trends, Newlands says.
“We saw a real resurgence in the bourbon business across any number of brands,” he says. “We saw some continued trends toward more flavor interest, in terms of the way the consumer was engaging. Even though you started to see a little bit of recovery in the on-premise arena as the year went on - and the economy getting better, frankly - you’re still seeing a bit more of the in-home entertaining, which works well for our business. We have a lot of things that fit in that environment quite well. It was a very, very good year and a real step up for our business certainly in the U.S. market.”
Beam Global reported $1.8 billion in net sales through Sept. 30, 2010, which represented a 7.2 percent increase from 2009 sales through the same time period, according to Fortune Brands’ third quarter results.
The company continues to emphasize the strength of its brands, many of which carry a rich history and long heritage. Brands such as Jim Beam bourbon, Cruzan rum and Sauza tequila have been led by generations of family members since their founding. Accompanying the lineage, are a stable of legends and family stories, which are frequently incorporated into the brand lore.
The rich history also plays into the company’s reputation for high-quality products, Newlands says.
“The consumer at a time when the economy is not as strong really, looks to products that have great value for the money,” he says. “That doesn’t mean low price - it means something that people feel like they are getting their money’s worth. And I think it speaks very highly to our set of premium brands that our brands grew extraordinarily well last year.”
One of the tactics employed to grow sales in 2010 was to increase advertising and marketing spending across its portfolio, which is a principle promoted by Bruce Carbonari, chairman and chief executive officer of Fortune Brands. The goal is to attract consumers and create brand loyalty as the economy is recovering from the recession, Newlands says. In 2010, the company aired its first TV commercial for Hornitos tequila and promoted products across its flagship Jim Beam franchise, he says.
“We’re spending a fair amount of time with more of our key brands - our tequilas, our bourbons,” Newlands says. “We’re putting our money where our mouth is, basically, and spending a fair amount more to engage the consumer. That’s both at the media level and it’s also with things like partnerships, which we’ve done with ESPN. We have a fairly unique partnership with them. We’ve had the relationship around Red Stag with Kid Rock that’s worked out very well for us. And we’ve got a couple others up our sleeve.”
In March 2010, the company announced Jim Beam Bourbon as the sponsor of an ESPN web series talk show hosted by journalist and ESPN personality Scoop Jackson. “The Next Round – Served Up by Jim Beam” is a biweekly series aired online featuring Jackson and a range of guests, such as actors, athletes, media personalities and comedians, discussing relevant sports and pop culture topics. Portions of the show also appear occasionally on the evening “SportsCenter” broadcast on ESPN as well as on the show’s Twitter account and Facebook pages.
In addition to its partnership with musician Kid Rock, Beam Global aired its first TV commercial dedicated to Red Stag whiskey during the National Hockey League’s All-Star game in January. The black cherry-infused bourbon launched in 2009 and in its first full-year on the market more than doubled in volume, Newlands says. Red Stag also contributed to a fair amount of the growth in the bourbon category, he says.
“It’s one of the - if not the - fastest growing whiskeys in the last five years, which is fantastic for us,” Newlands says. “It has really brought a new audience to the table that we hadn’t really been addressing to some degree. We’re bringing a fair amount of people in and having them experience bourbon and given that we’re primarily a bourbon company that’s a great thing to do.”
Made with four-year-old bourbon that is infused with a black cherry flavor, Red Stag has attracted many female consumers as well as consumers on the younger end of the 21-and-older crowd, he says. As new consumers were introduced to bourbon, the overall category improved, Newlands says, which translated into sales across Beam Global’s bourbon portfolio.
To continue the acceleration, the company plans to roll out a new campaign behind its flagship Jim Beam brand called “Bold Choice” in 2011. The campaign encourages consumers to take the bold choices in their lives, including choosing one of the old standards of the industry: Jim Beam, Newlands says.
Last year, Beam Global introduced a new packaging design for Jim Beam Black, its triple-aged bourbon. The redesign features a taller bottle and contemporary label that highlights the eight-year aging of the variety. Newlands says that Jim Beam Black’s new bottle has helped the brand become “tremendously well-received.”
Beam Global’s Maker’s Mark Distillery released Maker’s 46, the first new product in its history, which also performed well in 2010, according to Newlands. The bourbon starts with original Maker’s Mark that is emptied from barrels and then 10 seared French oak staves are affixed to the sides of the barrels. The bourbon is aged for an additional three months, which brings out more richness and flavor, Newlands says. An initial 25,000 cases of Maker’s 46 were planned for 2010, and Newlands says, “We’ve been out of stock more often than we’re in stock.”
Also beneficial, Beam Global has seen that consumers are not replacing Maker’s Mark for Maker’s 46, Newlands says.
“The great news for us is that Maker’s 46 seems to be just enhancing the overall Maker’s franchise,” he says. “Our base Maker’s had a terrific year and it certainly appears that [Maker’s 46] is virtually entirely incremental to our business, which is fantastic for our purposes.”
In addition to its flagship brands, Beam Global also maintains a portfolio of small batch bourbons, including its Knob Creek brand. Knob Creek is a small batch bourbon that is aged for nine years. Last month, the company released Knob Creek Single Barrel Reserve, which is based on the results from individual barrels for varying characteristics in each bottle. The Single Barrel Reserve is a full-flavored product that is considered the pinnacle of Beam Global’s bourbon collection, Newlands says.
Knob Creek Single Barrel Reserve is a new entry for the brand, said Fred Noe Sr., Jim Beam and small batch distiller, at Beam Global’s “Spirits: Confidential” event in Chicago last month. His father and former Master Distiller Booker Noe would not release a single barrel product because he aimed for consistency, Noe explained. However, Noe, who became the seventh generation Beam family distiller in 2007, believed in the value of releasing a product in which every bottle is a little bit different. Similar to Maker’s 46, Single Barrel Reserve is not anticipated to replace Knob Creek, instead Noe described it as “a first cousin or a brother.”
Beam Global’s new initiatives are not limited to the bourbon category and the company follows a standard process for new product development, Newlands says.
“The ideas can come from any number of places, a lot of things bubble up from the employee population, that’s where Red Stag came from, interestingly enough,” he says. “We put ideas through a fairly rigorous process that includes consumer testing to make sure that the look, feel and taste of an individual new product meets the goals that we would have for it and is enhancing both from a liquid as well as the brand image perspective.”
Last year, the company added Cruzan 9 spiced rum to its Cruzan portfolio. The variety capitalizes on the growth of the spiced rum segment by enhancing the inherent quality of Cruzan liquid with nine all-natural spices, Newlands says. The company shipped the amount it had planned for the year in the first two months of Cruzan 9’s availability, he says. It also ties in with an unintentional new product trend.
“We joke that we’ve gotten a bit tied into numbers here because we did Cruzan 9, and that did very well,” Newlands says. “We’ve done Maker’s 46. We introduced Courvoisier 12 and 21.”
Bringing a new element into the cognac category, Beam Global developed Courvoisier 12 and 21, which are each aged offerings of the cognac brand.
“The cognac category has been a little challenged in the recent past,” Newlands says. “One of the things that we felt that we could do to, sort of, have people take another look at it was to present it in a way that they look at other categories. If you say, ‘I’ve got an aged 21-year-old Scotch,’ everybody knows what that means, the same with 12-year-old.”
Courvoisier 12 and 21 were launched in limited quantity, and the 21-year-old batch has sold out, Newlands says.
“By having specific ages, you can taste the difference,” he explains. “I’ve heard people argue which one they like better because they are both good, but they are different. We were able to present things that give a different taste profile, but are consistent with the kind of quality and approach that we like to take.”
The latest release in Beam Global’s pipeline is a new cucumber flavor to its Effen vodka line. Expected to launch next month, Effen Cucumber was inspired by the refreshing quality of cucumber water that is often served at spas and also makes a great Bloody Mary, Newlands says. At retail, the new flavor will be promoted with recipe cards to encourage consumer creativity.
The aforementioned products are just the start of the innovations for 2011, Newlands says.
“We’ll have a few other things to talk about as the year goes on,” he says. “A couple in bourbon. We’ll have something else to talk about in tequila as well.”
In December, Newlands transitioned from his previous role as president of Beam Global’s U.S. business to a wider focus across North America. The international position allows him to understand the entire North American market and opportunities across borders. Highlights of these crossover opportunities include Canadian Club whisky, which is mainly a Canadian and U.S. business, and to the south, Mexico and the United States make up 85 percent of Beam Global’s tequila business, he says.
The company also is investing in large growth markets, such as India, Brazil and Russia, to increase its franchises internationally, Newlands says.
As Beam Global looks ahead, many of the tactics that brought it success - advertising, innovation and alignment with industry trends - will be similarly leveraged in 2011.
“We think that if we can continue the momentum and growth that we had in 2010, we’ll be very excited about it,” Newlands says. “We think we can continue to win in this marketplace because we’ve got the best-in-class liquids, and we’ve got exciting ways to present them to the public - now that’s a pretty good combination.
“Our expectation is that the combination of continuing to talk to the public about our stable of brands as well as talking about some of the innovations that we’re doing to add more energy to those brands, we’ve got a pretty good combination that we’re ready to go,” he continues. “We couldn’t be more excited about 2011.” BI