It’s an idea George calls “simple connoisseurship,” which is the concept that the average person “just wants a little snippet or a little quick story that makes them seem like they know what they’re talking about” when they are sharing a drink with friends, he says.
It’s just one concept that Beam is putting to use in its quest to become the fastest-growing spirits company in the world. With $2.7 billion in revenue, the Deerfield, Ill.-based company is the fourth-largest spirits company in the world and the largest based in the United States.
Beam’s overall brand will get a bit of a boost when Fortune Brands, Beam’s parent company, completes its split into two companies early in the fourth quarter. The company’s home and security business will be spun off and trade under the symbol FBHS, while the spirits business will change its name to Beam, Inc., and trade as BEAM. The company plans to complete the sale of its Acushnet Co. golf business, maker of Titleist golf balls, later this summer. According to George, the split really won’t change Beam’s strategy much, as it has been operating independently, but it will give the company the advantage of the Beam name and a clear focus on the spirits business, rather than being under the umbrella of Fortune Brands.
One of Beam’s most recent new releases, Devil’s Cut, is a prime example of a product that taps into the simple connoisseurship idea. In bourbon making, the whiskey lost to evaporation in the barrel is known as the “angel’s share.” The story is that Fred Booker Noe III, Jim Beam’s master distiller and the great-grandson of Jim Beam, used to “sweat” empty whiskey barrels as a kid by putting water in them and rolling them around in the sun, which drew out the whiskey trapped in the wood, called the “devil’s cut.” Beam developed a proprietary process to extract this trapped barrel whiskey and blended it with six-year-old Jim Beam to create Devil’s Cut.
The product comes with a highly relatable backstory – “I can tell it in 15 seconds on my back porch when I’m drinking it with my buddy,” George says – to offer consumers something that is more than just a drink. Launched on May 1, Devil’s Cut has shipped approximately 20,000 cases and is tracking to exceed Beam’s 2011 forecast in the next few months.
Serving a drink with a splash of history also ties into a macro consumer trend George calls “imagined authenticity” that goes far beyond alcohol brands. “That’s why you see kids wearing vintage T-shirts or you go into Anthropologie and all the furniture in there looks like it’s been worn and it’s been there for 40 years and it’s probably brand-new,” he said. It’s a desire to identify with products that have their own context, and George sees it as a factor in the growing global popularity of bourbon, a uniquely American product with a colorful history and established associations.
George said Beam’s efforts to identify with authenticity and heritage are enhanced by the fact that many of the company’s brands have actual people attached as faces: Noe for Jim Beam; Bill Samuels, chairman emeritus, for Maker’s Mark; Gary Nelthropp, whose father started Cruzan rum; Carlos Camarena, third-generation master distiller at El Tesoro tequila.
“At the end of the day, you can meet these people. If you want to talk to Captain Morgan, you can’t do that … for us, having that real authenticity and that heritage and that link is really a differentiator for us and it’s a marketing kind of gold mine.”
While capitalizing on the tradition associated with established spirits such as bourbon, Beam has also made it a point to introduce new products across its portfolio; George says 25 percent to 30 percent of the company’s growth now comes from new products. Besides Devil’s Cut, another bourbon innovation was the release 18 months ago of Red Stag, a cherry-infused bourbon that launched “a flavored whiskey category that didn’t really exist,” he says.
Innovation at Beam has also been accomplished through acquisition, with the company buying reality TV star Bethenny Frankel’s Skinnygirl low-calorie bottled margarita brand for a reported $120 million in a highly publicized deal in March. According to Nielsen, Skinnygirl is the industry’s no. 1 value share gainer, and IRI scan data shows that it was the no. 1 selling spirits brand of the last 52 weeks. Beam just recently introduced Skinnygirl Sangria and a number of other Skinnygirl products are in the pipeline to be released over the next year or two.
Along with introducing new Skinnygirl products and focusing on ramping up distribution, Beam’s mission is also to take the brand beyond Skinnygirl creator Frankel’s persona, emphasizing the low-calorie and all-natural identity of the brand and trying to reach “people who never have heard of Bethenny Frankel who are interested in health-conscious alternatives to products that they like to drink,” George says.
The Skinny on the Girls
Skinnygirl is also part of a larger effort on the part of Beam to market to women by showing them that what would perhaps normally be a wine occasion for them could be a spirits occasion, George said, based on Beam’s research about how and why women drink.
“Women don’t tend to drink alone in a bar. That’s not what they do. There’s a connection that happens and they get together for a reason and they talk. And so understanding that whole occasion is really important from an inside standpoint, and then crafting products that meet their needs.”
Beam’s research also found that traditional macho tequila marketing may be missing the boat. While 65 percent of all tequila is drunk in margaritas and 70 percent of margaritas are drunk by women, women tend not to have a particular brand they prefer for the tequila that goes into those margaritas, creating a huge opportunity for tequila brands. Beam’s answer to this was a campaign based around the idea of “girls night in” for its Sauza brand, which focused on in-home margarita parties. “The reason women get together, like a book club, is just an excuse – it’s all about the margaritas,” George says.