Marketing Maker’s Mark (B): Diluting the Brand?

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Excerpts....

Over the years, Maker’s Mark evolved from a no-to-marketing company to a promotion savvy company. In its initial years, the bourbon makers were not concerned about promoting the brand. However, with increasing competition and an expanding customer base, Maker’s Mark began to update its marketing initiatives. Through a 1980s Wall Street Journal (WSJ) article ‘Maker’s Mark Goes Against the Grain to Make Its Mark’, the company gained its first bit of publicity. The article brought a number of distributors at Maker’s Mark’s doorstep. The brand’s publicity further pushed the competitors to introduce similar products.

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For Maker’s Mark, the growing demand posed a challenge in terms of increasing the production setup. In order to increase the capacity by almost 50 percent and to double the bottling capacity and warehouse storage, the bourbon producer started a US$110 million distillery expansion project in Loretto in 2010......

Amid the growing demand for bourbon and the company’s inability to manage the supply crisis, a reformulating decision was taken. In February 2013, Maker’s Mark left customers stunned when it announced that it would dilute the bourbon from 90% proof to 84%. Industry experts opined that Maker’s Mark had failed in a big way to foresee the booming worldwide demand. The problem for Maker’s Mark was to balance the increasing demand with the limited supply........

On February 17, nine days after making its announcement and facing the aggression and anger of its fans, Maker’s Mark decided to reverse its decision. Rob said, “What we’ve learned is that this is the customer’s brand.” The same day, the Facebook page of Maker’s Mark page carried the message ‘You spoke. We listened. And we’re sincerely sorry we let you down’. This received 28,000 likes on Facebook.........

The whole incident created a buzz about Maker’s Mark in the market. Critics and industry insiders were divided over the company’s actual reasons for rolling out such a decision and then withdrawing it within a few days. Maker’s Mark actions raised many questions.. First, analysts questioned whether the company was actually so ineffective in managing the supply crisis that it could not come out with other options like cutting the bottle size or increasing the price rather than diluting the bourbon. ........

With Maker’s Mark gaining popularity across the globe, the demand for this smooth bourbon exceeded supply. In February 2013, raising concerns over the increasing demand, Maker’s Mark’s representatives said in an email to its loyal fans, “The entire bourbon category is “exploding” and demand for Maker’s Mark is growing even faster. Some customers have even reported empty shelves in their local stores..........

Exhibit I: Financials of Beam Inc.
Exhibit II: Maker's Mark Distilling Process
Exhibit III: Some ads of Maker’s Mark
Exhibit IV:Net Sales Growth of Power Brands under Beam
Exhibit V: Quarterly Results of Beam Inc. (2013)
Exhibit VI: A Timeline of Events
Exhibit VII: Apology Letter of Samuels