After an substantial increase in the worldwide demand for bourbon, and not enough to go around, Maker’s Mark announced its decision last week to reduce its alcohol content in response to supply constraints.
“Brand fans,” as Maker’s Mark calls them, were not happy.
Customers spoke out on Facebook and Twitter in mass, saying that they would rather put up with an occasional supply shortage than put up with any change in their handmade bourbon.
On Sunday evening, President of Maker’s Mark, Bill Samuels Jr. and his son, Chief Operating Officer Rob Samuels, responded in a statement on the Maker’s Mark Facebook page reversing its decision to alter its bourbon recipe:
Since we announced our decision last week to reduce the alcohol content (ABV) of Maker’s Mark in response constraints, we have heard many concerns and questions from our ambassadors and brand fans. We’re humbled by your overwhelming response and passion for Maker’s Mark. While we thought we were doing what’s right, this is your brand — and you told us in large numbers to change our decision.
You spoke. We listened. And we’re sincerely sorry we let you down.
So effective immediately, we are reversing our decision to lower the ABV of Maker’s Mark, and resuming production at 45% alcohol by volume (90 proof). Just like we’ve made it since the very beginning.
The unanticipated dramatic growth rate of Maker’s Mark is a good problem to have, and we appreciate you telling us you’d even put up with occasional shortages. We promise we’ll deal with them as best we can, as we work to expand capacity at the distillery…”
Fans of the whiskey quickly applauded the company’s decision to keep the recipe the same. Within two hours of Sunday’s post, the statement drew more than 14,000 “likes” and more than 2,200 comments.
Corporate Strategy: “The Customers’ Brand”
Maker’s Mark’s statement that “this is your brand” raises some interesting questions about the balance between the overarching strategic needs of company and the demands of consumers.
One of the tricky things about making and selling handcrafted whiskey is that it takes time — about 6 years for Maker’s Mark. That means the company has to predict demand at least 6 years in advance, and it would have been hard for any whiskey-maker to foresee the significant increase in the worldwide demand for bourbon this year back in 2007.
According to Maker’s Mark, the rising demand created a situation where they had three options. The first: Run out of the product in some markets. The second: De-age the whiskey. The third: Reduce the proof. The company elected to go with option three, since they didn’t want to even consider raising prices and losing the bourbon’s status as a go-to for mixed drinks at bars.
Bill Samuels said the company tinkered with how much water to add and keep the taste the same for about three months before making the announcement about the change. He explained that their focus was on the supply problem and they didn’t consider the emotional attachment that customers have to the brand and its composition.
Because bourbon drinkers were so displeased with the decision to reduce the proof, Maker’s will be back to the drawing board and need to rethink their corporate strategy. Will they really allow shortages and essentially charge a below-market price? Are they going to hike price and risk the bourbon’s status as a go-to mass market bourbon brand? Or will they find another way to get more supply of whiskey that is less blatant that diluting it?
It will be interesting to see what direction Maker’s Mark decides to take in the upcoming months. For now, the lesson we’ve learned from this business gaffe is: customers rule.
What do you think of Maker’s Mark’s response to its statement reversing its decision? What would you do in Maker’s Mark’s position? Let us know in the comments below.