I've been reading The Sun Also Rises this week as I lay in bed, dying from fever, ravaged by this wretched flu bug. Someone recommended I take another look at Hemingway's masterpiece since my high school experience left little to be desired. It's amazing how reading a great book at the wrong time can really tarnish one's penchant for literature. At 33, I'm about the same age as most of the characters in the story which makes all the difference. Reading it this time around, it's hard for me to believe this isn't a modern day novel. The problems are the same. The men have all the same romantic delusions. The drinks are the same: Pernod and water, Jack Rose cocktails, brandy and soda, and tons of Champagne. I should make The Sun Also Rises required reading for K&L customers (I'd sell a ton of booze after the first night alone).
There's something about reading a novel where people are drinking that makes one want to drink along with them. In fact, that's one of the points Hemingway makes in the story itself (the fact that many people imitate the behavior of fashionable novels). Jake and the boys of The Sun Also Rises are constantly dropping the Pernod name, which definitely sticks in the back of my mind as something fun and desirable. Casablanca was on TV the other night and I'll be damned if Victor Lazlo didn't walk up to the bar and order two Cointreaus. Big stars, big brands, bright lights, tons of romance. I'd never wanted a glass of Cointreau so badly, if just to share the moment with Ingrid Bergman. You can see where I'm going with this.
Exactly two years ago, I declared the death of brand loyalty on this blog. Last August, I thought we might be seeing a ressurection. What I've realized now, however, is that the return of big brands isn't a possibilty, it's a certainty. They've got the romance, they've got the history, they've got the marketing and they've got the image. No matter how big or mass-produced the brand, there is someone out there who doesn't care about drinking something more interesting or outside the norm. That's not to say the customer doesn't care about quality, it's to say that there are other factors at play.
My grandmother loves Champagne. She's 92 years old and still drinks a gin martini (or two) every single evening. When I told her I would send her some Champagne for Christmas one year, she was very excited. She talked about Dom Perignon and how she always had wanted to visit the vineyards. She imagined the monks picking the grapes, making the wine, and how romantic it all seemed to her. I told her I would send her a bottle of Champagne that was three times as good as the best Dom Perignon money could buy, which I did. Our in-store secret, the Franck Bonville Belles Voye, found its way to her doorstep one day and she opened the bottle to share with a friend. She said she really enjoyed it, however, I could tell that she wasn't super impressed. If I had just sent a bottle of Dom Perignon, she would have been ecstatic - not because of the price, or the bling-bling image. It's simply the romance of the brand at play and there's nothing that can be done after its been engrained into us.
There's another customer like this who shops at the Redwood City store. He's a nice guy and he loves Champagne, but you can tell he doesn't know a lot about it. We always try and get him to buy bottles that are less expensive than the ones he's buying, but he's not interested. He only wants Dom Perignon or Cristal. He's willing to go big, spend $200 to $300, but he's definitely not flush and really has to save up for each bottle. Nevertheless, he loves his Dom Perignon. He loves it like other people love classic MGM cinema or like Jerry Seinfeld loves Porsche. There's a sense of awe, a feeling of "Wow," and an aspiration towards something grand (regardless of whether we think these things deserve it). Why even try to mess with that?
If the past few years have brought us Brand Wars, then you can definitely count on 2013 being The Empire Strikes Back. Even with the price increases we're all facing (Balvenie 12 Doublewood just went up $7 a bottle today, by the way), they pale in comparison to what the little guys are facing. It used to be the case that independent bottlings were a source for value in the single malt realm. However, Duncan Taylor's recent Macallan 15 year offering runs $140 a bottle. The standard Macallan 15 Fine Oak, in comparison, is $80. Even though the DT bottle is a single barrel, cask strength expression, is that really a $60 difference maker? As single malt producers face their own shortages currently, they're continuing to suffocate the supplies of the independents, forcing them to drastically raise their prices as a result. Then there's the whole sliding scale economic aspect.
Even with a recent increase in pricing, Kentucky Bourbon producers like Buffalo Trace continue to provide plenty of bang for the buck, simply because they're making so much product. The larger the production numbers, the lower the price paid per unit. We just have to hope that the increase in goods produced doesn't lower the overall quality. Let's put whisk(e)y aside however, only because we've beaten this subject like a dead horse. What about gin? Most "craft" or small production gins come in at the $30 to $40 price point. If they're really good, then they're worth it. Yet, look at Citadelle for $20. Look at the Royal Dock at a whopping Navy Strength for $28. Plymouth's Navy Strength for $33 is perhaps the best gin I've had in months and that takes me twice as long to drink because it's 57%. That's like an extra half bottle!
Brands understand that to stand victorious over the new craft spirit movement, they will have to work smarter and cheaper. And they can do it. Small producers cannot afford to take risks or take the hit. $5000 on discounts or rebates to key retailers is nothing to a big brand. It can make or break a new distillery, however. I'm getting phone calls from labels we haven't carried in years and their ideas are finally starting to make sense. "You've revamped your juice, changed your label, and lowered your prices? I'm listening!" The price discrepancy between large brands and craft distillers has been so large that many producers have been able to raise their prices, yet still offer value in comparison to their smaller competitors. Now is where the romance angle comes back into play.
Cointreau and Grand Marnier continue to dominate the orange liqueur market because no one has been able to come up with a better product for less money. The closest I've seen so far has been the new Ferrand Dry Curacao, but I wouldn't consider that a sipping liqueur like the other two. There are some fantastic other brands out there: Cartron, Combier, Leopold, and Santa Theresa, but they all suffer from either poor packaging or poor marketing. Grand Marnier's legendary status and iconic packaging will always carry the day. Cointreau's French roots and Hemingway references give it a huge advantage as well. These are the products we already want to buy. The burden is on the smaller producers to give us a reason to do otherwise. An ugly bottle with a high price tag will never succeed in this scenario, no matter how good the juice inside of it is.
As single barrel prices continue to rise, what independent can compete with Balvenie at $42 a bottle? With Laphroaig and Ardbeg 10 at $40? With Lagavulin 16 at $65? With Old Weller Antique, Buffalo Trace, and Four Roses Yellow at $20? With Ferrand Ambre Cognac for $35? With Belvedere Vodka for $25? With Paddy's Irish for $32 a liter? More importantly, what small company can compete with decades of advertisements, product placements, and built-in brand loyalty? It's always been an uphill battle, but 2013 is the year that smaller producers will face their fiercest challenge. The machine has adapted. The Matrix has updated. Agent Smith is smarter than ever. In George Lucas's trilogy, the Jedi doesn't return until three years after Empire. Hopefully, he's going to return with some reasonably-priced, mature, great-tasting products, otherwise this is likely to be a double feature.