Some companies just refuse to learn from the mistakes of others. According to an AP wire report Wednesday, venerable whiskey maker Jack Daniels, a subsidiary of brand management company Brown-Forman (NYSE:BFB), has gone and "pulled a New Coke" on its customers.
Usurping the traditional role performed by barkeeps worldwide, Jack quietly began watering down its famed "Old No. 7 Black Label" sippin' whiskey awhile back, completing the change earlier this year. But subtly as the company worked, customers in liquor stores around the country are finally beginning to notice that the labels on their favorite 86-proof whiskey now read "80 proof." And they aren't liking it one bit.
For one thing, changing the formula for a bottle of Jack flies in the face of one of the company's most established promises. To quote from its website: "Time changes everything. Except the way we make our smooth-sipping Tennessee Whiskey, of course." Yeah, and Coke (NYSE:KO) used to be a classic without needing to call itself "Coca-Cola Classic."
If the customer revolt continues to build steam, this could spell trouble for Jack's owner, Brown-Forman. Jack is one of the company's flagship brands, with serious name-recognition heft, and an established constituency among the spirits-consuming public. Brown-Forman depends on loyal consumers to continue providing it with the 96% of its annual revenues derived from alcohol sales. But by alienating its staunchest fans, the company is going to put some of that revenue -- and its self-declared status as the most popular whiskey in the U.S. -- at risk. The gambit could also delay the company's march toward taking away the title of "Number 1 in World Sales" from (Scotch) whisky king Johnnie Walker (owned by Diageo (NYSE:DEO)).
Meanwhile, at least one company is savoring Jack's watered-down whiskey. Rival (bourbon) whiskey-maker Jim Beam, which is owned by Fortune Brands (NYSE:FO), wasted little time in pointing out that it has no plans to dilute the alcohol content of its own brand. Of course, its ubiquitous white-label bottle is already 80 proof.
Thirsting for more knowledge about the liquor industry? Pull up a stool and sip the following fine Foolish spirits:
- Scotch: Not Just for Breakfast Anymore
- Diageo's Unwarranted Pounding
- Brown-Forman's High Spirits
- Fortune Brands' Future
Fool contributor Rich Smith owns no shares in any company mentioned in this article. While he's got nothing against a nice sour mash, he's partial to Pshenichnaya vodka, straight up.
