Beam Reverses Maker's Mark Decision: Has the Damage Been Done?

From now on, it's safe to say spirits giant Beam (NYSE: BEAM  ) will be careful to manage its drinks more responsibly.

Maker's Mark executives announced a decision last week to lower the alcohol content of their flagship bourbon from 45% to 42%. Perhaps predictably, the company's Facebook page and Twitter feed lit up with thousands of complaints, and some longtime Maker's Mark "ambassadors" even lamented they would never buy the brand again, despite repeated assurances of painstaking measures taken by the company to preserve its taste.

As it turns out, the consumer backlash wasn't as much about the actual alcohol content but more a matter of principle, with many disgusted the multibillion-dollar company would be willing to shortchange its die-hard fans to meet demand in the name of profits. Some even pointed out the fact Beam executives criticized Brown-Forman (NYSE: BF-B  ) in 2004 for lowering the proof of its Jack Daniel's whiskey for the second time in as many decades.

Sure enough, Dave Racicot, Jim Beam's senior director of global marketing at the time, said, "I think it's interesting that our primary competitor says they've been true to their roots yet they've lowered their proof and altered their recipe."

While Beam didn't acquire Maker's Mark until the following year, the entire situation still smacked of hypocrisy and threatened irreparable harm to its brand.

Strike that. Reverse it...
That's why, less than one week after its initial announcement, Maker's Mark wisely reversed its decision and issued a public apology, even going so far as to update its Facebook cover photo with this:

Source: Maker's Mark Facebook page.

In a Forbes interview, Maker's Mark COO Rob Samuels also stated:

Over this past week we have been extremely humbled by the overwhelming response. Our customers have spoken loud and clear and we have heard them. Effective immediately, we are returning to 90 proof, which it has always been since we started. We are starting that tomorrow morning at the distillery.

In addition, after expressing his amazement at consumers' fast and furious response and with some insisting they would rather "go from store to store to seek it out and deal with any shortages than to have us make any changes," Maker's Mark chairman and founder Bill Samuels put it bluntly, saying "We got the picture quickly and we are not quite as stupid as we were at this time last week."

Sure enough, the company's Facebook apology alone has garnered more than 27,000 "Likes," 8,500 shares, and 4,100 largely appreciative comments since being posted Sunday.

In the end, Maker's Mark deserves a round of applause for quickly nipping the situation in the bud by reversing its decision and providing a humble, "no excuses" apology. All things considered, I'm also pretty sure watching demand outstrip expectations is an enviable problem, and can't help but wonder whether this might turn out even better for parent Beam had the uproar not occurred in the first place.

Now that Maker's Mark has owned up to its mistakes, customers will be much less tempted to blame the company for its inability to predict exploding global demand, which is largely thanks to emerging markets like India and China in which bourbon is enjoying a surge in popularity. Instead, consumers now know Maker's Mark is working to expand its distilleries to meet future global demand "which has surged in the past 18 to 24 months," according to the younger Samuels. In the meantime, consumers will simply relish the opportunity to buy Maker's Mark's flagship product while they still can.

From an investor's standpoint, I'll gladly drink to that.

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  • Report this Comment On February 19, 2013, at 3:26 PM, sgt1917 wrote:

    I don't think it'll hurt significantly...heck, most people probably have no clue that it even happened!

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