SITUATION ANALYSIS
BY: LAURA GILLIGAN SEPT. 6, 2016
INTRODUCTION Maker’s Mark is a premium bourbon whiskey brand based out of Loretto, Kentucky. The company began as a family-run business by Margie and Bill Samuels Sr. in 1952. Maker’s Mark is a bourbon made of corn and wheat that is aged for six years in charred oak barrels. The bourbon was untraditional at its time of initial creation; using wheat instead of the standard grain, rye, to make whiskey was very rare. Maker’s Mark product and economic growth was the first of its kind in the history of the United States. Maker’s Mark growth happened simultaneously, throughout major cities in the country. The brand focuses the majority of its sales efforts domestically, within the United States, as well as Japan and London. Maker’s Mark prides itself in fine craftsmanship and being accessible to the consumer. The craftsmanship of Maker’s Mark is evident in its continuous use of 100-year-old roller mills used to produce the bourbon. In fact, the Maker’s Mark distillery is now a National Historic Landmark and has been since 1980. Maker’s Mark has experienced extreme growth from 1952 to 2016. In 2000, the company built an additional distillery that was an exact duplicate of the original distillery building. This expansion doubled the capacity to produce its popular bourbon. Several limitations have made it difficult for Maker’s Mark further growth. Natural resources like the limestone spring-fed lake used in distilling Maker’s Mark are finite. The bigger the company, the more people are needed to keep up with the growth. The addition of more people working for Maker’s Mark will diminish the family-like business model that is presently intact.
MARKET SITUATION MARKET SHARE Maker’s Mark is specifically situated within the Dark Spirits market. This market includes all other whiskey, bourbon, rum, and brandy, and the market is built upon premium pricing and sophisticated packaging. Maker’s Mark is also included in the broader Distilled Spirits market which encompasses all light and dark spirits including, but not limited to, vodka, gin, and tequila. In 2015, the total sales of Distilled Spirits reached $55.4 billion. The market is still growing and it is estimated that there will be a 14.1% increase in total sales by 2020, reaching $63.2 billion. There is still room for growth due to the popularity of dark spirits. The rising popularity of dark spirits is due to “pockets of unique, highend spirits that offer authenticity, experiences, and greater flavor complexity and variation,” (Sisel, 2015). The market for high-end dark spirits has grown 6.9% in the United States since 2002. The increased market for high-end dark spirits is reflected by the 47.8% volume sales that high-end bourbon and Tennessee whiskeys have. Whiskey has the largest market share within the dark spirits market at 82.1%. This market share is expected to grow 13% by the end of 2020. Maker’s Mark is a bourbon which means it is only grown and distilled in the United States, Kentucky to be exact. This American whiskey sub market is expected to grow 6% due to the PAGE 2
increased interest in American Whiskeys by advanced drinkers. In a survey based on 3,907 adults conducted by Mintel, the amount of people who drank Maker’s Mark as opposed to other bourbon whiskeys rose from 21% to 30% from 2011 to 2015. In Summary, Maker’s Mark lies within several different sub markets of the overarching Spirits Market. These sub markets include the dark spirits and whiskey markets. These markets are all and will be experiencing a large amount of growth by 2020. DIRECT COMPETITORS Direct competitors of Maker’s Mark include Jack Daniel’s, Jim Beam, and Evan Williams. These brands are considered direct competitors because they are all Kentucky bourbon whiskey. These brands are also priced similarly. A 750mL bottle of Maker’s Mark costs $30.99 at BevMo. The direct competitors costs for a 750mL bottle are comparable; Jack Daniel’s costs $25.49, Jim Beam costs $17.49, and Evan Williams costs $31.99. If all other factors aside, the similar prices attract similar consumers who have similar means to buy within that price category.
Bourbon Whiskey Consumption By Brand 2011-2015
Base: 3,907 Adults who drink bourbon whiskey
60%
59%
31%
30%
21% 8%
8%
2011
2012
Maker’s Mark
2013
Jack Daniel’s
INDIRECT COMPETITORS
2014
Jim Beam
2015
Evan Williams
(Sisel, Mintel, 2016)
Indirect Competitors of Maker’s Mark include Captain Morgan, Hennessey, and Absolut. These are indirect competitors because they are not bourbon or even whiskey, but these brands all lie within the Spirits market. In addition, these indirect competitors also share similar pricing with a 750mL bottle of Maker’s Mark; Captain Morgan costs $19.99, Hennessey costs $31.99, and Absolut costs 25.99. The graph below illustrates the 2016 market share of each indirect competitor category.
PAGE 3
Captain Morgan Captain Morgan run was introduced to the market in 1984. The brand is named after Sir Henry Morgan, the 17th century Caribbean privateer. Captain Morgan is the top-selling spiced rum in the United States. The Captain Morgan brand has different varieties of rum including Black Label, Original Spices, Parrot Bay, Private Stock, Silver Spiced, and Tattoo rum. Captain Morgan is an indirect competitor because it is not a bourbon whiskey. This brand also produces dark and light spirits in which it is not directly competing with Maker’s Mark, but it is within the same spirits market. Rum is not as popular as whiskey or vodka coming in at the fourth-largest industry segment by proportion of revenue. Rum started in Latin America and the Caribbean but it has increasingly become more popular in the United States. Rum represents 9.7% out of the total $12.1 billion in the 2016 products and services segmentation. Hennessey Hennessey is a 250 year-old company that started in France in 1765. Since then the brand has been associated with heritage and excellence. The flavor profile of Hennessey is a light and smooth finish and is a cognac, a spirit distilled from grapes. The Fillioux and Hennessey family worked together to start the company and to keep the brand as the best-selling cognac in the United States. Hennessey lies within the other spirit category on the graph with a 9.1% market share of the total $12.1 billion in products and services. Absolut Absolut was founded in 1879 by Lars Olsson Smith. The distilling process used for the first Absolut vodka made by Smith, “Absolut Rent Bränvin,” used a continuous distilling process. This process retains the integrity of the flavors while removing many impurities from the vodka. The concept in creating Absolut vodka was simple, “One Source.” This “One Source” is located near Åhus in Southern Sweden. This “One Source” concept is used to make Absolut form local water wells to the local wheat that gives Absolut its special taste. The “One Source” concept of Absolut vodka is also a guarantee that every bottle of Absolut around the world contains the same, high quality vodka. PAGE 4
Vodka comes behind whiskey in it’s popularity, in terms of revenue. Absolut Vodka is an indirect competitor due to the fact that vodka is often diluted whereas whiskey is normally drank by itself. In a chart that shows the size and of the products or services that industry operators sell, Vodka represents 24.1% out of the total $12.1 billion in the 2016 products and services segmentation. Whiskey is 33.8% of the total 12.1 billion. PRODUCT POSITIONING Maker’s Mark positions itself as a family-oriented company that was born and raised in the United States of America. It is a company rooted in tradition and craft which is evident in continuing the use of older, yet less efficient roller mill machinery. The refusal to use the Hammermill and the pressure cooker due to the change in taste of the bourbon illustrates how the company continuously cares about the consumer and how the product tastes. The caring, family-oriented position Maker’s Mark has in the market is inviting to consumers. UNIQUE CHARACTERISTICS Maker’s Mark is the only brand of Whiskey to utilize a red wax seal over the top of the bottle. Each wax drip on each individual bottle is unique due to the differing techniques of the various hand dippers. Hand dipping each bottle in hot wax limits the bottling time to only 125 bottles per minute when competitors are able to bottle more than 400 bottles a minute. The continuation of this wax dip, even though it slows down the process, shows the care and effort Maker’s Mark takes to be proud of its product and craft. The red wax seal on the Maker’s Mark bottles started in 1985 once the right formula was found after 6 months of trial and error. The red wax on the bottles will not melt under 350 degrees Fahrenheit, so it will never make a mess by melting when stored in warmer temperatures. This unique, red wax drip has become Maker’s Mark recognizable branding icon. PURCHASE LOCATION Dark spirits are most likely to be purchased at liquor stores that carry the biggest variety followed by grocery stores. The greatest impact on where consumers buy spirits is the consumer’s age and their drinking frequency. The main locations where dark spirits are bought are liquor stores, grocery stores, super centers, and club stores. The younger the consumer is, the more likely they are looking to buy spirits on a budget. Consumers on a budget look to buy their spirits at different locations that offer low prices with a great variety. Consumers who are heavy drinkers of dark spirits look to make purchases at different locations that include other shopping needs like grocery stores or super centers. Maker’s Mark main focus in distribution is within the United States. The distilleries of Maker’s Mark are located in Loretto, Kentucky, so it is rooted in American soil and pride. Maker’s Mark focuses its distribution mostly in the United States because it wasn’t anticipated that the brand would become so popular. It takes six years for Maker’s Mark to age, so the company is six years behind in supply. The company doesn’t have the supply to make it internationally available in places like London, Sydney, and Tokyo. There is only one source of the supply and Maker’s Mark didn’t want to produce a mediocre product to be able to sell internationally. PAGE 5
TARGET MARKET The main target market for Maker’s Mark is older, millennial men. Older, millennial men are in the age group of 25-34. These men consider themselves experienced drinkers and somewhat knowledgeable about the varieties and characteristics of dark spirits. These experienced, millennial men have a preference for complex flavors, variety, and quality making them active dark spirits drinkers (Sisel, 2016). Active and intermediate drinkers are open to trying different and new dark spirits, such as different types of whiskey or rum, and have a genuine interest in the specific attributes of the certain brands. These attributes can consist of the region in which the spirit is made, the mixture of ingredients, and the age of the spirit. This group of men drink the most amount of dark spirits compared to other demographics. These men value darker spirits like whiskey more than women value spirits since women do not characterize themselves by what they drink. For these men, whiskey and darker spirits have a deeper meaning than just an alcoholic drink. Some deeper meanings men put to whiskey and darker spirits are that they’re considered a rite of passage, and these darker spirits can also be used as an identifier for a man’s characteristics. This target market made up of millennial men aged 25-34 is considered to be a target market made up of variety seekers. These men enjoy trying new spirits and wanting to be involved in a dark spirits club or group. They tend to try new brands and engage in vicarious exploration of the dark spirits category. Consumers seek variety in different public situations since others will evaluate their decisions negatively or positively. This corresponds to the value men place on spirits due to the identifying nature of spirits and characteristics of the male who drinks them. The choice of which dark spirits is more of a hedonistic choice relating to the pleasure it will give to the consumer. “How often, if at all, have you personally drunk the following dark spirits in the last three months?” Base: 1,898 Internet users aged 22+
54%
34%
31% 15%
Whiskey/ Any Drink
13%
8%
Whiskey/ Frequent Drinker Whiskey/ Moderate Drinker
Male Female (Sisel, Mintel, 2016)
PAGE 6
BRAND PROMOTION “Cocktail Party 2012”
In 2012, an election year, Maker’s Mark recognized that politics was what the target market was mainly talking about. The brand took the interest in politics and ran with it, creating a full-blown advertising campaign titled “Cocktail Party 2012.” Maker’s Mark wanted to take the stress off of consumers and show that there is something that everyone can get behind, a cocktail party. The brand primarily utilized Facebook and Twitter promoted posts and tweets as their social media campaign. This campaign also utilized TV commercial advertisements. These advertisements are visual, using red, white, and blue colors for the campaign as well as the shape of the Maker’s Mark bottle to promote brand recognition. The results of the campaign were favorable, it won a Shorty Award and it increased Maker’s Mark sales by 15% that year.
“You Don’t Know Bourbon”
Maker’s Mark conducted this online advertising
http://shortyawards.com.s3.amazonaws.com/entries/Cocktail_Party_Pic.jpg
http://texastcu.adforum.com.ezproxy.tcu.edu/creative-work/ad/player/34497697/celtra-social-rich-media-case-study-makers-mark/makers-mark
campaign to give the community a unique Maker’s Mark experience. The brand wanted to be apart of a conversation that was already happening and to grab hold of attention for longer than a quick glance at a static advertisement or a promoted post. Maker’s Mark used Facebook and Twitter as the social media channels to run a short bourbon quiz. The quiz reflected Maker’s Mark brand image by using the black background that is prevalent in the majority of advertisements and the use of the big imagery of the bottle. The quiz was played over 70,000 times and the post was shared more than 5,000 times. There is a central theme throughout Maker’s Mark various advertising campaigns: a large bottle as the focus point and a dark background. Using the product as the main imagery increases Maker’s Mark brand awareness within the consumer. It creates a cohesive brand image throughout the various campaigns conducted. This cohesive brand image is one that is familiar with the consumer the more frequently they see the campaigns. Consumers greatly prefer familiar brands, so the more familiar the brand is, the more likely consumers are to purchase the familiar brand. PAGE 7
COMPETITION ADVERTISING PROMOTION Media Mix: June 2015-June 2016
Product
Total (000)
Cable TV (000)
Newspaper (000)
Magazines (000)
Maker’s Mark
563.3
61.5
2.0
499.8
Jack Daniel’s
10,695.5
10,655.8
39.7
0.0
Jim Beam
19,846.7
19,583.8
262.9
0.0
Evan Williams
6,917.4
1,020.0
450.3
5,447.1 Ad$pender. (2016). Maker’s Mark. Retrieved Sept. 5, 2016.
In comparison to it’s direct competitors, Maker’s Mark media spending is extremely low. From June 2015 to June 2016, Maker’s Mark spent the lowest amount on media at $563,300 whereas Jim Beam spent the highest amount on media at $19,583,800. Maker’s Mark has an advantage in magazines against Jack Daniel’s and Jim Beam as only Evan Williams is also utilizing magazines. Jack Daniel’s
http://texastcu.adforum.com.ezproxy.tcu.edu/creative-work/ad/player/34488131/truth-be-told/jack-daniels
2015-2016 Budget: $10,695,500 Jack Daniel’s advertising strategy plays more on the lifestyle of the consumer than selling the actual product. In this 2012 campaign, Jack Daniel’s campaign is focusing on the craft values the company has, hoping to appeal to consumers who value authentic craft. The print advertisements in this campaign are all similar in design. They use the same color scheme; red, white, blue, and black. The print advertisements have a saying that corresponds with the craft of Jack Daniel’s and has the logo somewhere on the ad. In addition to the print advertisements, there are several different commercials that feature different people’s studio and their craft. In these commercials, you see different artists making each different print ad for this campaign. This campaign appeals to consumer’s vales and lifestyles rather than the end product in the various advertising campaigns of Maker’s Mark. Jim Beam 2015-2016 Budget: $19,846,700 Evan Williams 2015-2016 Budget: $6,917,400
PAGE 8
SWOT STRENGTHS • The iconic red wax drip on the top of every bottle has continuously proved to create a strong and recognizable brand image for Maker’s Mark. • Maker’s Mark has a recognizable and likable product position, family owned and approachable.
WEAKNESSES • There are finite natural resources available to Maker’s Mark land and distilleries which stunts the growth of the company and the distribution in a rapidly expanding market. • Maker’s Mark lacks the supply to grow internationally.
OPPORTUNITIES • The target market is made up of variety seekers which means more potential consumers in the growing dark spirits market. • Among it’s direct competitors, Maker’s Mark is one of the only brands to utilize magazines. • Maker’s Mark uses unique and different advertising strategies than its direct competitiors.
THREATS • Media spending is low in comparison to direct competitors in a growing market. • Women are not a part of the target market, but they are big decision makers when it comes to spending.
CONCLUSION Maker’s Mark brand is one of American-bred pride. The company prides itself in tradition and craft throughout the process of making their special bourbon. The pride for America and for the product itself is evident in Maker’s Mark’s continuous advertising efforts. From the “Cocktail Part 2012” campaign to the large imagery of a Maker’s Mark bottle on the majority of the ads, the pride can not be missed. Consumers now look for the value a product can add in their life, not just the product itself and how good or bad it is. It is important for Maker’s Mark to continue to Market and build upon the American pride it has as a company and the unique craft bourbon it is. Consumers are willing to pay more if they think and believe that the product provides an important value that is worth the added cost. The importance of adding value in a product in the present market is extremely valuable to the success of the product and company. PAGE 9
REFERENCES “BevMo.com.” Absolut Vodka 80 Proof. Web. 06 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/31982>.
“BevMo.com.” Captain Morgan Spiced Rum. Web. 06 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/31935>.
“BevMo.com.” EVAN WILLIAMS BOND. Web. 05 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/5099>.
“BevMo.com.” Hennessy Cognac. Web. 06 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/32799>.
“BevMo.com.” Jack Daniels Whiskey (750 ML). Web. 05 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/33481>.
“BevMo.com.” Maker’s Mark Bourbon Whisky (750 ML). Web. 05 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/32023>.
“BevMo.com.” Jim Beam Bourbon (750 ML). Web. 05 Sept. 2016.
<http://www.bevmo.com/catalog/product/view/id/32036>.
“Captain Morgan Rum.” CAPTAIN MORGAN RUM. Web. 06 Sept. 2016.
<http://www.rumwisdom.com/captainmorgan.html>.
Cocktail Part 2012. Shorty Awards. Web. 6 Sept. 2016.
<http://shortyawards.com.s3.amazonaws.com/entries/Cocktail_Party_Pic.jpg>.
“Creating Maker’s Mark Moments That United Us All through #CocktailParty2012.” AdForum. ICrossing. Web.
6 Sept. 2016. <http://texastcu.adforum.com.ezproxy.tcu.edu/creative-work/ad/player/34495651/
creating-makers-mark-moments-that-united-us-all-through-cocktailparty2012/makers-mark>.
MacMillan, Douglas. “Making A Market For Maker’s Mark.”Businessweek Online (2006): 12. Business Source
Complete. Web. 5 Sept. 2016.
“Maker’s Mark Distillery, Inc.” Wall Street Transcript 183.19 (2009): 1-4. Business Source Complete. Web. 5
Sept. 2016.
PAGE 10
Petrillo, Nick. “Whiskey & Bourbon Distilleries in the US.” IBISWorld. Nov. 2015. Web. Sept. 5, 2016. Sachs, Tony. “Hennessy 8 Encompasses the Brand’s History in One Spectacular Bottle.” Robb Report RSS. 28 Apr. 2016. Web. 06 Sept. 2016. <http://robbreport.com/wine-spirits-cigars/hennessy-8-encompassesbrands-history-one-spectacular-bottle>. Sisel, Elizabeth. “Dark Spirits - US.” Dec. 2015. Mintel. Texas Christian University Library. Fort Worth, TX. 5 Sept. 2016. “The Story of Maker’s Mark Whiskey.” Drink Spirits. 03 Feb. 2013. Web. 06 Sept. 2016. <http://www.drinkspirits.
com/bourbon/story-makers-mark-whiskey/>.
PAGE 11