Why Zima Faded So Fast
With the beer industry going flat in the early 1990s, marketing execs at Adolph Coors Co. in Golden, Colo., thought they finally had a product that would put some bubble in their business: Zima, a clear malt concoction meant to attract young consumers. Lured by a quirky ad campaign, twentysomethings rushed to try the strange new brew.
There was just one problem: Almost nobody came back for seconds. "The taste was not appealing, and it left you feeling bloated," says Angel Cain, a 25-year-old IBM employee who tried Zima while at the University of North Carolina. Her cohorts across the country apparently agreed. And in the brief moment that it took them to reject the Zima fad lies one of the more embarrassing marketing miscalculations of the decade.
SOMETHING DIFFERENT. Launched nationally in 1994 into the thick of the New Age beverage craze, Zima was defined almost entirely by what it was not: not a beer, not a wine cooler, and without even a color. Early TV ads featuring Z-speak helped create an offbeat image. "What'z in it?" asked a barkeep. "It'z a zecret. It'z zomething different," replied the mysterious pitchman in his white suit and black hat. A crowd of Generation Xers tried to find out, propelling Zima to a stunning 1.2% share of the beer market almost overnight. But within a year, sales would fall by half, from 1.3 million barrels to 650,000. Last year, they dropped an additional estimated 38%.
Though two years ago Coors touted Zima as having great potential, in the recent 1996 yearend release it barely merited a word. The 39% earnings rebound, to $47.3 million, on sales of $1.7 billion last year was eked out by dint of old-fashioned cost-cutting and gains by stalwarts Original Coors and Coors Light. Abandoning its hope for a powerhouse new product to levitate its market share, the No.3 brewer is once again staking its future on its flagship brands, overlooked in the Zima excitement. "Specialty brands have a place, but they shouldn't overshadow our core brands," says Coors President W. Leo Kiely III, who inherited the project when he joined the company in 1993.
The tale of Zima's extraordinary rise and fall offers plenty of lessons--from the folly of letting expectations outrun reality to the difficulty of wooing the fickle tastes of young consumers. And Coors is by no means alone in learning from mistakes; other brewers and soft-drink makers also floundered with new products this decade. But few brands had as outsize, and unexpected, an impact on a company as Zima.
Zima may have been the ultimate created-by-committee product. Stuck at a 10% share of the market in a slow-growth industry, Coors was determined to catapult ahead. In 1991, it put together a team drawn from production, marketing, public relations, and Coors' ad agency Foote, Cone & Belding. The mission: to create an alternative to beer, starting from scratch.
Hoping to ride two trends--consumer experimentation and New Age beverages--the Z team conducted hundreds of focus groups, testing everything from the taste to the name, taken from the Russian word for winter. "The logic was: What can we do to be different, appeal to young adults, with minimal cannibalization of our existing business?" says William H. Weintraub, senior vice-president for marketing.
Their competitors were also concocting new brews, showering the market with red beers, dry beers, and ice beers. There were even other clears tested, but their appeal proved evanescent, and most died fast. Miller Brewing Co.'s Qube clear malt generated "a lot of curiosity and trial, but the vast majority tried once," says an insider.
EUPHORIC NUMBERS. The Qube pattern was to repeat with Zima, but the early warnings were lost in the euphoria of heady trial numbers. Zima was tested in three markets in the fall of 1992, and scored big as consumers rushed to try the novel brew. "This was something like the results of a Coors Light introduction," recalls one former exec. "These were the highest numbers we'd ever seen." But some on the Coors team were uneasy: The repeat sales were not encouraging, and the business was drifting toward women, who drink far less beer.
Any doubts were overwhelmed by the blare of publicity that accompanied the national rollout in early 1994. Rivals, plotting their own strategy in case Zima proved enduring, were impressed by a number of marketing moves: the fluted-glass bottles, the eye-catching in-store displays, and one of the first consumer-product Web sites, which spoke directly to the twentysomethings Coors sought with a downloadable game, merchandise, and an online soap opera.
And Coors didn't stint on advertising. In 1994, it lavished a staggering $38 million on Zima, according to Competitive Media Reporting, some 38% of its entire ad budget. Much more was spent on packaging, merchandising, and product development. Rivals Miller Lite and Budweiser were beginning to falter, but Coors, sure that it had a gusher, bet on Zima rather than exploit their weaknesses. "What hurts is the opportunity cost of diverting so much time, money, and attention to something that fell on its face," says beverage analyst Emanuel Goldman of PaineWebber Inc.
At first, distributors sitting with stacks of slow-moving, traditional brands couldn't have been more thrilled. The new high-margin brew, priced between super-premiums and imports at $5.99 a six-pack, was flying out of the warehouse. "I sold 18 railcars' [worth] in the first 30 days," recalls James Merideth, vice-president of Zeb Pearce Cos., a Phoenix-based distributorship. "In 31 years, I've never seen anything like that." Coors marketing executives hadn't, either. For the year, Zima helped push sales to record levels. In retrospect, though, those dazzling early numbers led to a certain hubris. "The marketing created a huge amount of visibility, and Zima became the in thing," says Weintraub. "But it also set up the expectation of a long-term, huge business."
A LETTERMAN JOKE. Within months of the rollout, Zima started to go flat. Although Foote Cone's early ads created mystique by enumerating what Zima was not, Coors never made it clear what it was. "You couldn't tell whether you should be pounding it down or sipping it over ice," says one former marketing exec. A second wave of ads in '94 featuring stereotypical Gen-Xers at play didn't help. Suddenly, the once hip drink was the butt of David Letterman jokes.
But Zima suffered from a worse problem than bad advertising: It had a flavor, that, to put it kindly, wasn't habit-forming. "We had people who liked the idea but not the taste," admits Robert Joanis, vice-president of marketing for Coors' microbrew unit. Consultant Tom Pirko, president of Bevmark LLC, was monitoring Zima for other clients. "You couldn't find any consistent feeling from any group," he says. "It was meant to be fun and easy, but it was expensive, and people couldn't find the value."
Coors could have retrenched sooner if only the marketers had listened to the marketplace. Distributors alerted them early on that Zima drinkers were mixing the stuff with fruit juice. "Consumers were telling us that flavors should be added," says Dallas distributor Dennis E. Nauslar. But Coors resisted until long after the Zima wave had crested, fearing that a flavored product would consign Zima to the has-been status of a wine cooler.
What's more, even though the consumer profile was largely female, Coors was determined that the brand appeal to men as well. That led to two more critical errors. Despite mounting evidence to the contrary, executives were convinced that Zima sales could at least hold steady in 1995. "We shouldn't have been so greedy," concedes one insider. To make that happen, Coors experimented with "male" Zimas, settling on a high-octane Zima Gold with a slight taste of bourbon. Rushed into national rollout in the spring of 1995, Gold lasted just six weeks. Instead of climbing, sales for Zima in '95 fell by half. When net profit dropped 26% that year, Coors told its shareholders that management had been distracted by Zima's initial success.
HIGH-OCTANE DROSS. The Gold debacle finally forced Coors to concede that Zima wasn't destined to become a mainstream brand. Last year, ad spending fell to an estimated $6.5 million. The once hot Web site is now just an afterthought, its games and other interactive features gone. A much-diminished Zima makes money on an operating basis, but Coors is some way from recouping the estimated $180 million it poured into the launch. At Merideth's Phoenix distributorship, sales have settled in at about 14,000 a month, placing it somewhere between Beck's and Heineken. "If you look at it that way, it's pretty nice," he says.
Coors management is eager to put the Zima boondoggle behind it. In the year since the brewer refocused on its core brands, it has made some progress. A relaunched Original Coors seems to have reversed steady declines. Heavier spending behind Light helped it grow 4% last year. And Zima? This spring, Coors plans to relaunch it, this time as a fruit-flavored niche product.