It`s - TABPI

... from oak barrels to mahogany bars
where aficionados come
to meet their Maker’s Mark
By Chris Barnett
I
t’s 7:00 p.m. and Gina Pepperdine is working ‘the
plank’ at Cibar Lounge, a hip, friendly neighborhood
bar tucked inside a circa 1800s townhouse in New
York’s stylish Gramercy Park neighborhood. In this
candlelit, hot-pink hued thirst parlor, she’s shaking and
stirring for an after-work crowd of lawyers, doctors,
bankers, editors and marketing and advertising gurus —
equal parts male and female.
Once a smoky, smelly cigar bar before local lawmakers
snuffed out indoor stogie-puffing, Cibar is a chic “top-shelf”
saloon. To satisfy her discriminating clientele — and maximize profits — Pepperdine makes the Vanilla Manhattan, a
libation she invented by using Maker’s Mark, a Kentuckydistilled bourbon with a growing global demand. She could
cut her “pour cost” and fatten her margins by using a
younger, harsher bourbon, but Pepperdine also knows that a
sophisticated cocktail aficionado would feel ripped off and
probably drink elsewhere.
Even now, purists might scoff at her version of the classic
Manhattan cocktail — until they taste it.
JULY 2, 2007 Shipping Digest 7
Pepperdine infuses a small vat of
remembers. “Even though our ambassasitting in our liquor room when I need it.
Maker’s Mark with two split vanilla
dor went all out to help, by Wednesday
If something goes wrong and a brand
beans and lets it sit for 48 to 60 hours.
we realized we couldn’t get Maker’s so
isn’t there, it’s too late. Not having
Why just two beans? “I want just a hint
we substituted Knob Creek miniatures.”
Maker’s Mark on hand, would cost us
of vanilla, not an overKnob Creek, a pricier
money and anger customers.”
powering taste,” she
100-proof bourbon, is
The mixologist says her distributor,
explains. Then, instead
emerging as a rival to
her Maker’s Mark ambassador and the
of adding the tradition90-proof Maker’s.
distillery “all apologized very sincerely
al Manhattan ingrediPepperdine, who is
and that makes all the difference in the
ents — sweet vermouth
also general manager of
world. We’ve never had a problem since.”
and three dashes of
Cibar, says “flawless
But there is a good reason why the
Angostura bitters —
logistics” is critical for
miniatures didn’t arrive. “We’re horribly
she fills a shaker with
upscale bars serving a
short of whiskey, and miniatures are not
3.5 ounces of the vanilworldly, brand-loyal
big at all with us,” explains Bill Samuels
la-infused bourbon, an
customer. “I have 20
Jr., president of Maker’s Mark Distillery.
ounce of Dubonnet
jobs in a day and one is
Maker’s Mark Distillery has one
and a splash of water.
ordering
liquor.
Once
I
brand,
one supply source and a 6.5-year
On your mark, get set, pour:
Next, she rims a
put
in
my
order,
I
trust
production
cycle. Samuels says he has to
Gina Pepperdine, mixologist at
stemmed cocktail glass
it
will
be
delivered
by
3
forecast
demand
nearly seven years before
Cibar Lounge, used Maker’s Mark
with a slice of orange
p.m.
the
next
business
the
bottle
reaches
the bar or liquor store
to create the Vanilla Manhattan.
rind warmed under a
day, which is a rule of
shelf. If his estimates are wrong, he can
flame and twisted to release the citrus
thumb in this industry. I’ve checked it
easily alienate his wholesale and retail
oil. Then she shakes, strains, pours it to
off in my mind and assume that it will be
(Maker’s, continued on Page 89)
the brim and tops off her triumph with a
brandied cherry. Price: $12.
If there is a problem with featuring
Maker’s Mark in a signature cocktail, it
would be logistical, not libational. The
53-year-old family distillery, now a
wholly owned but extremely independent subsidiary of Chicago-based Beam
Global Spirits and Wine, is careful in
projecting its production. Shortages
could leave bartenders — the last link in
the supply chain — high and dry.
Pepperdine says it’s happened to
her and it was a nightmare. She was
catering a mint julep party before the
running of the Kentucky Derby. “As a
takeaway, we were giving guests the
mint julep recipe, a shaker and a nips of
Maker’s Mark,” she says. (Nips is liquor
industry jargon for miniatures sold on
airplanes.) But three days before the
event, Pepperdine discovered that the
order she placed through her distributor,
the New York office of Southern Wine
and Spirits, had never arrived.
“I called and begged everyone —
Bill Samuels Jr., president of Maker’s Mark, expects the company’s export business to grow
our Southern rep, our Maker’s Mark
25 percent annually for the foreseeable future. Maker’s Mark recently began exporting to
ambassador, even the distillery,” she
Bulgaria in response to an avalanche of e-mails pleading for the prized bourbon.
8 www.shippingdigest.com JULY 2, 2007
(Maker’s, continued from Page 8)
customers, plus his ultimate customer —
the loyalist who expects to have Maker’s
in his or her glass. Worse yet, with a single brand product line and a seven-yearlong supply chain, Samuels can’t push a
back-up brand across the bar and preserve the revenue stream.
Ironically, with all the forecasting
models used today by giant multinationals and small, entrepreneurial businesses, Samuels scoffs at computerized
predictions. “We use only one sales
forecasting method: hanging out in the
better bars in major cities. Call it barstool market research, talking to customers, trying to see if there’s any buzz
out there about my brand. If there’s not
any buzz, I don’t make so much. If
there is buzz, I go back and we scramble. It’s very unscientific but it works,”
he says.
In addition, Samuels says he’s the
main market researcher, which keeps
him on the road a good chunk of the
time. But he isn’t crisscrossing the country, polling every pub. “I’m looking for
momentum indicators, so I go to bars in
the four cities where the jokes come
from — New York, Washington, Los
Angeles and San Francisco. That’s
where you hear the buzz today,” says
Samuels, a seventh-generation bourbon
maker whose father founded the
Louisville-based company.
The company’s Old Gristmill is the
only operating distillery in the U.S. to
be designated a National Historic
Landmark, according to its Web site.
Samuel is forever rolling the dice
on projections and he can’t double up if
his luck goes bad. Samuels contends —
and his labeling explains — that
Maker’s sour-mash bourbon whiskey is
“handmade” slowly in small batches of
no more than 19 barrels per batch. The
iron-free water comes only from a 10acre spring-fed limestone lake at the distillery, located just outside Louisville in
Loretto, Ky. The grain used in the sourmash comes from small, nearby cooper-
“We use only one sales
forecasting method.
Hanging out in the
better bars in major cities.
Call it bar stool market
research.”
— Bill Samuels Jr.
ative farms, slow cooked in an open
cooker, fermented in yeast propagated
at the distillery, double distilled in copper stills and aged in white oak barrels.
The bottle is sealed by hand with dripping hot red wax.
“We’re not mass-produced and that
both helps us and hurts us,” he says.
According to Samuels, his “organic
estimates” of demand growth, based
on wandering into bars and paying
special attention to confident younger
bartenders, is 13 to 15 percent annually.
Based on that estimate, he produces
enough whiskey to meet 11.5 to 12 percent
growth.
Samuels says the distillery will produce slightly more than 800,000 cases in
2007. The whiskey is trucked from
Loretto to its distributor — Southern
Wine and Spirits. Southern warehouses
the bourbon and handles all distribution. Maker’s Mark never delivers or
even drop ships to a retailer, no matter
how big or powerful its purchasing or
merchandising staffs.
Maker’s Mark has a small but
growing presence internationally.
Currently, 15 percent of the annual output is shipped overseas, but distribution
is clustered in a handful of markets. “We
sell to the markets that are hollering the
loudest,” Samuels says. Five cities get
the bulk of Maker’s Mark foreign sales
— Sydney, Tokyo, London, Madrid and
Frankfurt, with Melbourne close behind.
But the bourbon baron insists he
doesn’t have an army of Maker’s Mark
ambassadors, essentially salespeople
who work for the distillery, touting the
brand overseas. Nor is he drawing a
bead on American travelers or expatriates looking for their favorite whiskey.
“Actually, we never target (foreign) customers,” Samuels says. “They target us.
Plus, the demand internationally is
greater than we can accommodate right
now.” But he doesn’t want to shift production away from U.S. markets now
because premium bourbons here are hot.
“It’s an allocation decision. We follow the cage rattlers. We sell where
there is demand,” Samuels says.
Two recent phenomena are driving
sales domestically and worldwide, he
contends. There is a renaissance in
classic cocktails and bourbon-based
drinks are in vogue — the Manhattan,
the Old Fashioned, Mint Juleps. Young
mixologists are also experimenting with
new drinks and using American
whiskeys, not just vodkas, as the main
ingredient. Second, the new whiskey
drinker is younger (25 to 40), urban, hip
and one-third are women professionals.
That Maker’s Mark has an
entrenched reputation as a premium
pour — it has never changed its label
and packaging — appeals to the
younger brand-loyal drinker. It’s a welcome turnaround from the traditional
view of the bourbon drinker, Samuels
says, as “Southern, rural, old, white and
undereducated.”
Taste and trends aside, the supply
JULY 2, 2007 Shipping Digest 89
chain is a core concern for Maker’s
Mark and could constrain its growth.
“We fully expect our export business to develop 20 to 25 percent annually
every year in the foreseeable future,”
Samuels predicts. “This is the era of fine
bourbon and that’s not just in America.”
Japan is a booming export market
for the brand. “There is no other culture in the world where people watch
and emulate others, especially in the bar
scene there,” he adds. “We can sell anything there because Dr. Toyoda, yeah,
the guy who owns the car company that
built an assembly plant in Kentucky,
became a Maker’s Mark fanatic.”
Getting Maker’s to its markets is a
job handled by Barry Younkie, the
brand’s global marketing director.
Younkie, who has worked for the dis-
Shortages could leave
bartenders — the last link
in the supply chain —
high and dry.
Maxxium, a joint venture between
Fortune Brands, parent of Beam Global
and thus Maker’s Mark and several
other major brands and distilleries.
Maxxium handles all sales, marketing,
customer service, receivables and
payables as well as transportation for
Maker’s growing export shipments.
Domestically, Future Brands, a joint
“Our consumer wants to have a drink
after work. We are a stress reliever and we
don’t want to add any more stress to his
day by not having his Maker’s on hand.”
— Barry Younkie
tillery for 12 years and been in the
liquor business for 25 years, approves
overseas orders and juggles inventory
so as not to shortchange domestic
demand.
“We’re exporting to 14 countries
today and our number one issue (aside
from production) is logistics — to make
sure Maker’s is in stock in all the warehouses that serve our customers,”
Younkie says.
That crucial challenge isn’t outsourced to a freight forwarder or a
third-party logistics provider. And
Maker’s doesn’t have a fully staffed
internal logistics department at the distillery. Instead, the brand relies on
venture between Fortune and Absolut,
the big-selling Swedish vodka, handles
all physical logistics and transportation
planning and purchasing.
Maker’s Mark declined to disclose
motor carriers or shipping lines used to
transport its product.
Logistics planning, driven in part by
expansion of its export market, can be
somewhat frustrating. “We have a very
engaged customer, and we only start
exporting into a country when we get
requests from consumers, not because we
sell major accounts,” Younkie says. If
Maker’s production is handcrafted, so is
its export decision-making.
“Usually it starts with an e-mail
90 www.shippingdigest.com JULY 2, 2007
from a consumer who says, ‘I tried
Maker’s Mark in London or Boston
and why can’t I get it in Brussels?’ At
that point, I make a decision whether
or not to send a small quantity — 25
cases — to select bars and hotels in
Brussels. Essentially, we decide to make
Maker’s available when individual customers around the world ask for it.”
Younkie likens Maker’s Mark to a
custom-made shirt. You may have
demand but you need material and
craftsmen to make it. “Six times in the
last 10 years we’ve had to shut down the
distillery because the whiskey wasn’t
ready to be bottled. Five years ago, 10
states had no Maker’s Mark for two
months.”
The whiskey’s supply chain is vulnerable to all sorts of glitches. When
asked if he uses airfreight, possibly to
shore up low inventories, Younkie
shoots back, “the answer to that question better be no. However, we did airfreight some cases to Sydney once when
the Maxxium warehouse ran out.”
Sydney is one of the brand’s most
important foreign markets. “The loyalty of our customers comes first,” he
says. “Our consumer wants to have a
drink after work. We are a stress reliever and we don’t want to add any more
stress to his day by not having his
Maker’s on hand.”
Today, Bill Samuels Jr. and his
merry band of whiskey makers are gearing up for the future. The distillery’s
supply chain recently expanded into
Italy, Spain, China, Russia, Sweden,
Denmark, France and Bulgaria. He
decided to go into the former Eastern
bloc country after receiving a torrent of
e-mails asking for Maker’s. Next in line
is Brazil.
Today, the distillery is working
triple shifts to make enough Maker’s to
hit the 2013 sales forecast of 1.5 million
cases. Samuels hopes he’s on the mark.
Meanwhile, some thirsty Brazilians
are waiting for him to send them a
few cases. s