Proof Positive: Maker’s Mark Blunder Results In Surprise Profit

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John Sommers II / Bloomberg News / Getty Images

Maker's Mark employees hand dip every bottle of Maker's Mark with their signature red wax at the Maker's Mark Distillery plant in Loretto, Kentucky. January 4, 2011.

It’s a banner week for bourbon distillery Maker’s Mark. Aside from heading into the bourbon-soaked Kentucky Derby weekend, the company reported a 44% jump in sales, while parent company Beam Inc. said net income rose to $114.5 million in the first quarter. That profit represents a 45% increase from $79.1 million last year during the same period.

Maker’s Mark sparked public outrage earlier this year after announcing that the company would begin watering down its trademark red-wax-sealed bourbon to keep up with growing demand. Bourbon fans and brand loyalists took to the Twittersphere and other social media sites to decry the Maker’s announcement to dilute the 90-proof whiskey to 84 proof, ultimately convincing the family-owned brand to reverse its decision.

(MORE: Maker’s Mark Reverses Decision to Water Down Whiskey)

But when it comes to marketing, scare tactics seem to work. The public relations fiasco turned out to be a boon for Maker’s Mark, offsetting some decline in Beam’s other spirits including Sauza tequila, Courvoisier cognac, and Kilbeggan Irish whiskey. Beam’s sales jumped 8% to $577.7 million, according to Reuters.

“There’s no doubt that with the change of the proof and then the reversal of that decision, we did see sort of a buying forward from consumers,” Beam chief executive Matthew Shattock said, according to Quartz.

But the company is not expecting more gains next quarter. While Maker’s Mark fans are no longer hoarding bottles since the reversal of the dilution blunder, the Kentucky distillery is still dealing with a supply shortage, which is why they considered reducing the alcohol content in the first place. Shattock warns not to anticipate the same outcome in the future.

“We won’t expect to see those 44% growth rates [for Maker’s Mark] sustained throughout the year, and in fact we can’t support them,” Shattock said.

MORE: Maker’s Mark Waters Down Its Whiskey, and Anger Rises

3 comments
cleverlyc
cleverlyc

It's worked on gun buyers, it works regularly on the religious...fear sells almost as quickly as sex.

This comment has been deleted

ForbesBenny
ForbesBenny

@piter first off thank you for the article. Piter! I also read that book! THE 5-STAR BUSINESS NETWORKS by Vivek Sood is doing really good on Goodreads and it is now available on local bookstores. Really thought me a lot in terms of commerce, economy and finance. I often go to his blog to check out his insights.