About a week ago (2/11), in a move right out of the saloon owners manual in the Wild West, BEAM announced that it would be cutting the alcohol content of its Maker's Mark bourbon to 42% from 45%. The company reversed that ill-conceived decision today.
The initial move came about as the result of a high-quality problem - short-term demand in excess of supply. However, high quality problems demand high-quality solutions, and the initial "solution" boiled down to serving everyone that purchased a bottle of Maker's Mark a watered-down drink. It was a decision that would have had serious repercussions in 1890's Tombstone as well as 2013 Tribeca.
The company reversed its decision today:
"You spoke. We listened. And we’re sincerely sorry we let you down."
Note to management - all you had to do was ask, or use some common sense.
This note is admittedly more fun than actionable, but I think there is a lesson to be learned about managing the equity of a brand. Maker's Mark is a great brand whose equity has been built up over many years - it should be tinkered with only after great deliberation and always with an eye toward enhancing the long-term value of the brand.
May your drinks never be watered down.
Call with questions,
HEDGEYE RISK MANAGEMENT, LLC