Q&A with Rob and Bill Samuels of Maker's Mark on outpouring of anger over proof reduction
*It's been a remarkable week for Maker's Mark bourbon drinkers and the two men who carry the flame of the brand of booze founded by T. William Samuels Sr, first marketed in 1958. Bill Samuels Jr., who for 35 years as CEO of his father's company built the iconic red-wax dipped bourbon into a powerhouse brand sold all over the world -- when supplies permitted.
The bourbon is slow to make, sitting in specially crafted barrels for six years before being bottled. Last Saturday, Feb. 9, Maker's Mark announced it would add water to its bourbon in the bottle to make its supply stretch further. Reaction was overwhelmingly negative. Tempers flared. Just a week and a day later, Bill Samuels Jr. and his son Rob Samuels, now chief operating officer of the distillery, changed course. In this extended interview, they discuss the role parent company Beam Inc played in the decision and what customers can expect in the weeks and months ahead as the supply shortage continues to make Maker's hard to find in some parts of the country. For more coverage, check my piece from Tuesdsay at Time.com, a elegiac blog post from Friday entitled Kentucky Sad: Makers Mark Decision Risks Its Legacy TIME, and Sunday morning's coverage of the decision to change course.
Lindenberger: When will this change take place, restoring the bourbon in your bottles to 90 proof? Rob Samuels: First thing, Monday morning.
Lindenberger: How long before the 84 proof is off the shelves? RS: “Of the bourbon we produced at 84 proof, a very small amount has left the distillery. (That will take a week or two to cycle through). But a lot of customers are asking about that, there is a lot of curiosity. Based on feedback we think this may be a collector’s item.
Lindenberger: One of the rationales you gave for this decision initially was the existence of a shortage. What of that? RS: There is a shortage. The demand is simply greater than the supply we have to meet it. But one thing we heard clearly from our customers is that they would rather deal with a supply shortage than have us change their whisky. Which means moving forward, we’re going to have work extra hard to balance inventories and manage our distribution to try to keep the bourbon on the shelves.
Lindenberger: Do you plan raise prices? RS: "We’re not even thinking about is pricing strategy. What we’re thinking about is restoring our bourbon to 90 proof Monday morning."
Lindenberger: I understand. But there aren’t many tools to deal with a supply-demand problem. You’re surrendering the tool you preferred – boosting supply. That imbalance won’t go away. Will you use higher prices to tamp down demand?
Bill Samuels Jr.: “In my 35 years as CEO we had multiple times when we had out-of-sync supply and demand situations. More than 20 times. Never once did we go to the pricing tool. Now, I am retired (and don’t have the final say), but we do have a culture around here. And that culture has always been ‘Don’t abuse your customers.’”
*Rob Samuels: *"There have been shortages before. There will be shortages in the future. We’re going to have to do our very best to manage them. The thing to remember … is that the bourbon made today is hand made exactly as it always has been. That’s what my father and I were most proud of. And that hasn’t changed."
Lindenberger: One of the key strategies you used Bill, was in the 1980s to travel around to American cities where elite bartenders and restaurateurs served high quality whisky. You convinced them to try your father’s brand, and over time they did just that. I’ve talked to upscale bartenders in Houston, San Francisco and elsewhere, and they are angry. Some said they’d no longer use Maker’s for their cocktails, or maybe not at all. Did that play a role in your decision?
*Bill Samuels: *"We heard the same thing from those bartenders, and that played a role in so quickly turning us around. They are part of the family. They not only helped us, they’ve done wonderful things for the (bourbon) industry in Kentucky. We didn’t want to harm that relationship."
Lindenberger: As a Kentuckian, I know this stuff is taken seriously there. Did you hear from the Governor about this? Bill Samuels: "I received very concerning emails from not one but four governors." Lindenberger: Four sitting governors? BS: "No, one current governor and three former governors. I am not going to tell you who they were but you know all of them."
Lindenberger: Tell me how this came about, the decision to back track. Whose call was it? And at what point did the Beam Inc. folks get involved?
BS: "It took me a little longer than it did rob. Because I am the one that had spent all that time testing the taste profile making sure that the changes wouldn’t impact the taste. So I spent half a day being offended, wondering why everyone didn’t think I was as smart as I thought I was. When I finally got over it and knew we were going to have to walk this back, I went to talk to Rob; he was already there." *RS: *There was just an overwhelming response, and it’s just been a week. The customers sent us a message.
Lindenberger: But when was the decision made? RS: This was two days ago or three days ago. It was our decision.
Lindenberger: What role did Beam Inc. play from the beginning? Had they asked you to find a way to boost supply? RS: "They saw what we experienced. There had been a surge in demand that we had never experienced. One of the ways we could address that was a supply change (by watering down the bourbon) if we could keep the taste profile consistent. And that is where all our focus was. They wanted to know, do we have all of our options on the table. Do we have options we haven’t considered?
"There was only one left that we could try. When we sent our note to our ambassadors (last Saturday, announcing the initial change) we felt we had identified a change that would increase our supply without interfering with the bourbon. We were wrong. The response from our ambassadors was negative. We heard from thousands of them. And so when we told the parent company, they were already there. They agreed. We need to return to the 90 proof."
Lindenberger: *So Beam Inc. did want you to expand supply, if you could. Was it their idea? *Bill Samuels: "This is something I guided as much as anything. I asked the same thing they were asking. Do we have any options? I said, we have never explored proof. Let’s see if we have any flexibility. And we did have a little. This reduced-proof bourbon went through a significant amount of our own tasting panels – and it measured up. We did all of that. The parent company did not do it." Rob Samuels: We thought we were advising them properly. And we screwed up. And we went back to them with our tail between our legs. They had been listening to the same feedback from our customers as we had been. It was a pretty easy discussion at that point.
Lindenberger: Were they angry at the misstep? Rob Samuels: Like us, everyone there has just been so proud of our customers. We recognized that their loyalty to our brand is pretty powerful stuff. Many thousands of emails … Lindenberger: You say thousands. Literally thousands? Do you have a count, or is that maybe an exaggeration? RS: No, literally many thousands. With today’s note to the ambassadors (announcing the reversal) alone, we had so many responses within the first 15 minutes, our servers crashed.