Forum Archive Index - September 2003

[Robin Benson <rob@hammerheadmedia.co.uk>]

My take on this is simple. If you have an innovative approach, plenty of marketing dollars, solid distributions and time, it's possible to break into this market.

I do say possible.

You mention the highland peats of Scotland. If you visit Scotland, you'll find that the whisky tradition is alive and well. Tourists flock to the distilleries, eager to appreciate the subtle differences that exist between them. In reality, the only factors are water, grain (commonly barley), yeast and method of aging (wood, time, temperature). Each distillery constructs a story, various blends of myth and fact, and delights in spinning this yarn to anybody who will listen, complete with kilt and thick accent to boot. Some barley is roasted and smoked with peat, giving the whisky a distinctly smokey taste. Others age their product in young sherry barrels, resulting in strong colour. Some are filtered to a clear liquid, whereas others are left unfiltered, giving a cloudy appearance when mixed with water or when cold. Then there's blending ... and so it goes on. Taken as an industry, where producers work closely together in joint exporting/marketing/promotion, it's taken a long time and deep pockets for the Scots to build an export market [1] of £2bn (NZ$5.5bn).

The big money is made in distribution deals, which take considerable negotiation and marketing/branding (hence resources) to even get to square one. It's similar to getting a product on the shelves of supermarkets in a way. "V" faced these issues when they introduced their product into the UK. It's a very crowded and expensive business. If a brand breaks through, it's likely it'll be snapped up by one of the big players such as Diagio [2].

From my perspective, it would be a different proposition if 42 Below was a solid niche brand of some age and they weren't lining their own pockets to the tune that they are.

I'd be surprised if DP were not drip-feeding announcements to the market during this pre-float period.

Robin

[1] 2000-2001
[2] http://www.diageo.com

On Tuesday, September 30, 2003, at 04:41 AM, C Darby wrote:

> Ditto to Marilyn's comments
>
> Wilson's whiskey out of Dunedin was 'cleverly' marketed too. 45 South and
> Wilson's were the two brands. Rough as guts and hardly a worry for the
> crudest of Scottish distilleries. Plonk was probably the best descriptive.
>
> Strange how Dorchester Pacific keeps making security announcements to the
> NZX re 42 Below. I wouldn't have thought it integral to their business to
> warrant half a dozen announcements in two months. Stacking the board with a
> seamstress (Walker) and a sailor (Dalton) is all part of a company
> overloaded with marketing hype.
>
> What I would want to know is the results of a few independent taste tests
> with some hardened Vodka drinkers. How does it measure up alongside Stoly
> and Russian Standard? Does it go down well or is it Kiwi potato brew that
> comes up soon after going down? Is it made from melted ice (as are the best
> Russian vodkas) and free of additives and flavourings? Or is it like the
> whiskey 45 South with its flavoursome McKenzie Country gravel taste in lieu
> of the highland peats of Scotland.
>
> I admire the marketing machine behind 42 Below but will this product pass
> over the lips of experienced vodka drinkers a second time in a product
> market littered with also rans full of equally good ideas marketed with
> comparable craft but rejected by the brutal consumer.
>
> I just cannot see half a dollar of value in this IPO but would be delighted
> to be proved wrong.
>
>
> Charlie