I have to admit that I was very surprised when I heard this week's news about Maker's Mark bourbon. The company announced that they cannot keep up with customer demand, and therefore, they are cutting the proof from 90 to 84 to boost availability. As Roger Dooley points out in his column at Forbes, the move risks damage to the brand. Even worse, Dooley cites a statement by the company's chairman emeritus, Bill Samuels, Jr (son of the company founder). Here is an excerpt from a news report by the Louisville Courier-Journal:
In an interview Monday, Chairman Emeritus Bill Samuels Jr. said he
failed to foresee a worldwide surge in demand for premium bourbon when
he was still in charge of the brand about six years ago. As a result,
Maker’s Mark is being diluted to 42 percent alcohol by volume, from 45
percent, so more of the whiskey can be bottled to meet demand. That’s a
cut from 90 proof to 84 proof.“I was the forecaster in chief around here. ... I must have been asleep at the wheel,” Samuels said. Samuels
and his son, Maker’s Mark Chief Operating Officer Rob Samuels, insist
consumers won’t notice the change when the slightly weaker bourbon hits
shelves in the next few weeks. Even Maker’s Mark’s professional taste
testers couldn’t tell the difference, Rob Samuels said.
Wow... as Dooley rightfully points out, why makes things worse by claiming that your loyal customers won't know the difference! Perhaps it is true, but should you really say that? The bigger question is whether Maker's Mark has put short term revenue and market share goals ahead of what is good for the brand in the long run. Does this move really fit with a company whose historic slogan was: "It tastes expensive... and is."
How does a firm handle scarcity? Should it try to capitalize on the excitement and frenzy that scarcity can create, or should it move to rapidly expand supply? One other interesting note: Beam Spirits now owns Maker's Mark. Would the company have made the same move if it was privately held? Does being part of a publicly traded company put too much pressure on management to make up for this supply shortage?