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Is White Whiskey the Next Crystal Pepsi?

By Caroline Bennett - Apr 16, 2013 at 5:25PM

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Tasty investing treat or disastrous feat?

Beam (BEAM.DL) suffered a pretty dramatic PR hangover after its Maker's Mark debacle. The company reversed the would-be decision to water down its bourbon just in the nick of time.

However, even after all is said and done, a shot of good news is the perfect way to wash the situation's bitter taste completely out of its shareholders' mouths. Luckily for Beam, a month later, it got to launch a brand-new product: a white whiskey called Jacob's Ghost. Is this product a good marketing strategy for Beam, or is the company treading dangerously close to a Crystal Pepsi fiasco?

Beam's not the first to the white whiskey rodeo... or is it?
Jim Beam may have unleashed a new product onto the shelves, but it's actually not as novel as it looks. The whiskey supposedly resembles Beam's very first product from the 1790s, and is named after the company's founder, Jacob Beam. This type of whiskey is known for being stronger than most, but Beam claims that the flavor of its creation makes the booze as mixable as vodka.

White whiskey may have been Beam's first product, but Beam is not the first company to begin selling it recently. Brown-Forman (BF.B 1.60%), of Jack Daniel's fame, is releasing its own brand of the liquor, Unaged Tennessee Rye.

These companies might be on to something by tapping into a clear-liquor trend, as microdistilleries have had some success with this kind of product already. Still, it's hard to tell whether this will be a great new idea, or a Crystal Pepsi-style disaster -- both clear beverages were introduced to add a spice of something new and different to a beloved brand.  While Crystal Pepsi faltered, there may be hope for the new clear beverage on the block. 

Clear liquor vs. clear soda
The most obvious difference between the clear cola gaffe and white whiskey is that of history. In the '90s, Sprite may have been a successful seller for Pepsi, but turning brown colas into clear ones was largely a fad. Compare that to the new white whiskey trend, and you have less of a spontaneous "Wouldn't it be exciting if..." concept, and more of an idea whose roots go back further into the past than Prohibition.

Besides that, let's face it: This stuff is getting popular. In 2012, sales of white whiskey in the U.S. reached more than $7.5 million, which was three times the amount of 2011. Crystal Pepsi, meanwhile, enjoyed huge sales immediately upon its release, but soon fell off the radar. It's only natural that Beam would want to cash in on this liquor's profits, as they would provide an even greater buffer for its total revenue. Last year, Beam raked in $2.4 billion, a 6% increase since splitting away from Fortune Brands in 2011. Every little bit helps, and selling a trend liquor is not a bad place to start.

That's a whiskey of a different color
Beam stands to make a pretty penny off the white whiskey trend, if it lasts. It is still trying to stabilize itself from both a Fortune split and a PR gaffe, and a popular new item could be just what it needs to straighten itself up and fly right. Here's hoping Jacob's Ghost doesn't start rolling in his grave.

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