Bourbon Controversy: Just Add Water
Maker's Mark is watering down its whiskey. Literally.
The company announced that in response to increased global demand, it will reduce alcohol content from 45 percent to 42 percent.
In fact, water is added to ALL whiskeys. In this case, Maker's Mark, which is owned by Beam, is just going to put more in it than they used to. With the change, the company can maintain supply to meet the demand.
The question is whether demand in the U.S. will be affected by the move because backlash has been quick and angry. On Twitter, comments have ranged from the contemplative to the downright angry.
@barturtle: #MakersMark Pull back to your core markets, complete your expansion, grow stocks, then export. Keep true to your values and traditions.
@jeffrey_drake: How to lose a loyal customer 101. DUMB. #makersmark.
In an email, the company told CNBC, "Consistent with the brand's values, we proactively reached out to the Maker's Mark fan base. As we expected, we've gotten plenty of feedback—both supportive and otherwise. Maker's Mark enjoys extraordinarily strong brand equity, and we're confident in this exceptional brand's growth prospects."
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Perhaps the potential hit in the domestic market can be more than offset by having more bottles available across the world.
When talking to analysts who cover Beam and reading responses from disgruntled customers, one question kept coming up: Why not just raise prices?
"We don't want to price Maker's Mark out of reach," Bill Samuels, chairman emeritus of Maker's Mark, wrote in a letter to customers,
The thought of alienating on price was less appealing than the possibility of alienating them with alcohol content. They key will be whether the taste is compromised—something the company promises won't happen.
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This is not without precedent. In 2004, Jack Daniels reduced its alcohol content from 43 percent to 40 percent.
Ironically, Beam—which was not the parent company of Maker's Mark in 2004—used Jack Daniels' news as an opportunity to try to gain share.
"I think it's interesting that our primary competitor says they've been true to their roots, yet they've lowered their proof and altered their recipe," a company spokesperson told USA Today at the time.
The analyst community was surprised by Maker's Mark's recent move, pointing out that brands are the core asset for BEAM. But in the end, this seems to show an increased focus on growing the Maker's Mark brand overseas.
Last year, sales of Maker's increased 15 percent. If that growth slows, we might know why.
—By CNBC's Brian Shactman; Follow him on Twitter: @bshactman