Beam Inc., the newly constituted maker of Jim Beam bourbon, has decided to chase women.
Having spent 216 years catering to guy’s guys -- tattooed singer Kid Rock is a pitchman -- Beam is touting Courvoisier cognac infused with red wine, tart Pucker vodka and low-calorie Skinnygirl cocktails. Beam becomes a separately traded company tomorrow, after splitting from Fortune Brands Inc. (FO)
“Two years ago, 100 percent of our marketing was geared to men,” Global Chief Marketing Officer Kevin George said in an interview. “We weren’t talking to women in any specific way.”
Not that Beam Chief Executive Officer Matt Shattock, 49, is abandoning men. He aims to boost sales faster than the industry with higher-margin versions of existing brands, such as Beam Devil’s Cut and Makers 46. He also wants to expand Beam, Teacher’s Scotch whisky and other primary brands overseas.
While alcohol consumption has declined at restaurants and bars, drinking at home has risen steadily in the U.S. since the recession ended in June 2009, according to Bloomberg Industries. Total spirit sales by suppliers rose 2.3 percent to $19.2 billion last year as they took share from other alcoholic beverages, according to the Distilled Spirits Council of the U.S. Americans may guzzle even more this year as they search for affordable luxuries. Volume sales will increase 1.8 percent, says Norwalk, Connecticut-based Beverage Information Group.
Fortune Brands, an assemblage of booze, home and golf products, decided to focus on liquor last year after investor William Ackman pushed for change. The Titleist golf unit was sold for $1.23 billion this year, while Beam and Fortune Brands Home & Security Inc., both based in Deerfield, Illinois, will trade independently on the New York Stock Exchange.
The focus on women happened almost by accident. In 2009, the distiller introduced a black cherry-infused Jim Beam. Marketers gave the whiskey a masculine name, Red Stag, and signed Kid Rock to pitch the product. As sales took off, Beam discovered women were buying the sweeter concoction at almost three times the rate at which they typically bought bourbon.
Beam decided to dig deeper, and research revealed what the company came to call the “girlfriend connection.”
“They tend to drink with other women or in a very social setting,” said George, 44. “We wanted to understand the emotional reasons why women drink wine or spirits.”
The resulting insights guided new marketing programs targeted to women and led to the development of more flavored spirits. The opportunity was significant. While women make up almost half of spirits drinkers, they consume just a quarter of the volume sold, according to George.
“We started to understand how to move that wine occasion to a spirits occasion,” he said. “Every time I do that, there are some dollars in it for me.”
When Beam created a flavored Courvoisier cognac, the idea was to give women their own version of a classic male drink -- popular among rappers -- to share with their husbands and boyfriends. Beam cut the alcohol content by more than half. The product is designed to be served cold, so that it sits in the refrigerator next to the wine, where women are more likely to see it, George said.
Beam’s Sauza tequila brand also got in on the fun. About 57 percent of the tequila sold in the U.S. is mixed in margaritas, George said. Two-thirds of those margaritas are consumed by women. Yet, tequila marketers were talking to men.
“It was a shot occasion, it was spring break,” he said.
Sauza began marketing itself around the notion of a “ladies’ night in,” hosting 1,000 in-home margarita parties and advertising on Food Network. Research also suggested women had no loyalty when it came to the tequila in their drinks, so the company teamed up with restaurants to brand so-called “Sauzaritas.”
Fortune’s new outlook on women led to acquisitions. This spring, the company bought Skinnygirl cocktails, created by reality TV star Bethenny Frankel, who appeared on “The Real Housewives of New York City.” The brand caters to women with 100 calories per serving -- compared with 480 in a typical restaurant margarita -- and wine bottle packaging.
Early next year, Beam will begin selling a line of chocolate liqueurs called Crave. The 30-proof drinks will blend flavors such as mint, chili pepper and cherry.
CEO Shattock says more acquisitions are possible as he seeks to expand overseas.
“We won’t feel constrained in terms of the scale,” he said in an interview last month. “We have a strong and very flexible capital structure and that gives us the opportunity to contemplate various types of transactions.” He declined to identify potential acquisitions or how much the company may pay.
Shattock may have time to see his strategy play out, said Alfredo Scialabba, an analyst with GFI Group Inc. in New York. Bidders aren’t likely to come forward immediately at Beam’s current share price, which on Sept. 30 was $41.56 on a “when- traded” basis. They may wait for a better opportunity.
“Shattock doesn’t look like a guy there to sell the company,” Scialabba said.
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