Company Report. Corby Distilleries
...base in the future and long-term brand loyalty and equity. Polar Ice vodka is one of the Corby brands. Recently Corby Distilleries was presented with the 2002 Clear Choice award for the best package design of the Polar Ice brand. In addition, Polar Ice is the fastest-growing top-ten vodka in Canada, increasing sales in 2001 by 27% to become the fifth best-selling vodka in the country. The launch of the new package has allowed the company to reposition the product, stressing unique imagery and superior taste, ultimately encouraging marginal sales to increase. The survey results summarized in Appendix B indicate that the change in packaging of the Polar Ice brand has allowed Corby to decrease their perceived risk of the product, as the aesthetic quality of the package has increased. The success of the package redesign implies that the company is capable of expanding their product base, as well as maintaining the brand equity of the more mature products. This increases the satisfaction of consumers, and allows the stakeholders of Corby to benefit, through increased sales. Moreover, through Corby’s alliance with McCormick Distilling Co., Polar Ice is positioned to do well in the highly-competitive growth segment for imported premium vodkas in the American market as well. Corby has developed tight coordination between marketing and sales with impressive results. They have many different marketing approaches and strategies to try and reach every different market, and the possibilities are continuing to grow. “The growing integration of sales and marketing at Corby maximizes the impact of our investment in our brands…it’s the hallmark of our focused approach to business success.” According to the survey results summarized in Appendix B, the most noticeable purchase behavior was that the majority of consumers select their beverage, not only by taste, but by the advertising efforts and promotions offered by companies. The increasing awareness of the unique marketing efforts put forth by Corby is paying off as it is raising awareness of other aspects of the industry. President and CEO of Corby’s, Krystyna Hoeg, states, “We use our market strengths in both spirits and wines to leverage our presence in various sales channels, using penetration in one category to raise awareness of the rest of our industry-leading portfolio.” Corby’s success is confirmed from the results of its revenues, reflecting the positive impact of its core marketing strategies. Weaknesses The recent introduction of Canadian Club and Ginger “was especially made for guys who like the taste of rye and aren’t satisfied with vodka or rum coolers”. This product seemed like a great idea at the time, but the company advertised the product in a discriminatory manner, stating, “Being a guy just got better.” Leslie Danis, managing partner at Gendermark International, was very displeased in regards to these ads, and stated, “most women will react to advertising that isn’t targeted to them. What marketers don’t get is that women are 80% of the buying power for a reason…we’re buying for everyone, so we’re always your target.” Thus, C.C.&G. advertising has created negative publicity towards the Canadian Club brand, possibly leading to poor product positioning in the minds of the female population, as well as others who feel that the advertisements are not politically correct. This may lead consumers to dislike not only the Canadian Club brand, but also the whole line of products distributed by Corby. Repositioning may be necessary to re-establish the sophisticated image of Canadian Club beverages. A trend of the recent past has been increased sales and consumption of flavored vodkas. In 1999, flavored vodka sales grew over 7%, while traditional vodka sales increased only 4%. Despite these facts, Corby Distilleries has still not added any flavored vodkas to their product collection. Allowing this rising trend to elapse without any action may aim the attention of vodka consumers to other brands that do include flavored vodkas, such as Smirnoff. Furthermore, Corby may lose the sales of these consumers to other companies that are engaging in the production of new products in the market. The group suggests that Corby take initiative to produce flavored vodkas, as the market continues to purchase these products. Failure to do so will be detrimental to the company’s stakeholder responsibilities. Corby Distilleries encountered a problem when they discovered that they had released a product without fully declaring the contents of it on the label. “The Canadian Food Inspection Agency (CFIA) is warning people with allergies to milk protein not to consume Kahlua Ready-to-Drink brand White Russian and Original Mudslide liquor drinks as the products contain milk not declared on the labels.” This crisis caused Corby to have to recall all of these products which resulted in a major loss. Not only did it incur a loss, but it also showed a weakness in Corby’s social responsibility, which in turn, may affect their customers brand loyalty. Company Practices Corby’s largest product line is whisky, holding about 43% market share in that category in Canada. This segment of the paper will discuss various company practices in regards to whisky in areas such as: segmentation, product practices, pricing practices, distribution practices, and promotional practices. Three examples of whisky brands include: Canadian Club, Wiser’s De Luxe and Royal Reserve. For a complete list of whisky brands, please refer to Appendix D. Segmentation, Targeting, and Positioning Practices Corby’s segmenting decisions are not guided solely by an intuitive “feel” for the market, instinct must be backed by solid research and analysis, using the most advanced marketing tools. Corby’s segments its market by surrounding the consumer with products, promotional resources, and sales efforts that are finely tuned to specific regions, age groups and fashion trends.(2000,6) Corby’s sophisticated market research gives them key insights into the preferences of rye consumers. Its primary means of market segmentation is demographically by age. Corby’s strongest brand asset, Canadian Club, is targeted at a younger age group from 19 to 35 years old. The recent resurgence, in the distilling industry, over the last few years, has been a result of many companies targeting younger markets in attempts to capture brand loyalty from its consumers. Aggressive promotional efforts towards this specific market have gained impressive new momentum into one of Corby’s premier assets. Consequently, in 2001, Canadian Club saw a sales growth of 7% in a category that only grew 1% overall. Corby’s premium rye whisky brand, Wiser’s, is targeted at a 25-40 year old age group. This full-flavored whisky, has been repositioned at a more premium level with no negative impact on sales, which was evident when Corby reported a 6% growth in sales in 2001. According to Corby’s chief executive officer, Krystyna Hoeg, “the goal is to attract a younger crowd to Canadian Club, an entry-level rye, and then swing them over to the premium Wiser’s brand as they grow older and more sophisticated”. The decision to target the “echo-generation”, as Corby refers to it, comes from their research that suggests that these consumers will be “making personal brand choices, brand choices that market research tells them are often made for life”. Other brands, such as Gooderham & Worts Ltd., Lot No. 40 and Pike Creek are geographically segmented, primarily targeting retailers in smaller communities and were recently introduced into the American market. According to Jackie Watson, LCBO salesperson, these three brands, recently new to consumers have sold much better in smaller communities across the country, because it is seen as more of an old-fashion, premium whisky. Watson added that “these new brands were recently introduced into the American market because consumers knew little about the product and had no preconceptions about the brand.” The success of these brands in the U.S has really yet to be seen, but Hoeg sees this as a “huge opportunity” if these brands can follow in the footsteps of Canadian Club and Wiser’s, which are already available in 11 states. In general, a prominent targeting practice of Corby’s is going after young adult male sports fans. Corby’s vice president of marketing, Joanne Bjarnason, says the company decided target entry level male drinkers after research showed that 68% of loyal rye whisky drinkers are male. (Virginia get the source) Product Practices Whisky is a non-durable, convenience good.(VSinterview) Dan Tullio, director of marketing at Corby Distilleries, refers to whisky as part of the growth stage in Asia and Europe, although in Canada, whisky is very much in its maturity stage.(interview) Canadian Club, Corby’s number one seller within the product line, competes head to head with many of the top selling whiskies in the market. In Canada, marketing attention of whisky is often directed towards holding market share and maintaining brand loyalty and equity with its present consumers. (interview) Conversely, marketing concentration in Japan and Asia is intended to increase brand awareness, focusing on the growing proportion of repeat purchasers.(interview) In addition, Corby has begun to reposition its whisky line through image. Corby, in past years and presently, has increased its marketing spending by concentrating on the whisky line in attempt to create brand equity. This means building some of the brands it already has, but also complimenting it with niche brands.(15) In Corby’s opinion, the bottom line is this: “Whether you’re marketing a jar of L’Oreal skin treatment or a bottle of Canadian Club, when you’re dealing with very upscale, very image-oriented brands, everything you do has to relate back to the personality and equity of the brand.”(15) The packaging of whisky is directly related to the equity of the brand. Lot No. 40's packaging “reflects its old-fashioned distilling process, featuring a simple sepia-toned label slashed at an angle to make it look as if it were applied to the bottle by hand and a neck tag stating "Pure Canadian Whisky in its Simplest Form."( website) Similarly packaged, are Corby’s other premium brands, Gooderham & Worts and Pike Creek. The old-fashioned packaging stands out among other brands, stressing differentiation, which leads consumers to the perception that the brand is of higher quality, often influencing the final purchase decision. Pricing Practices The distilled spirit industry is very much a monopoly.(VS interview) The Liquor Control Board of Ontario, under the Liquor Control Act, fixes the base prices at which the various of classes, and brands of liqueur are to be sold.(lcbo.com) The idea, as indicated by Tullio, is to be above the minimum based price. (interview) In fact, whisky brand, Canadian Club, is above the base price by $2.50 on average.(interview) Certainly there are price floors on prices, but clearly there are no ceilings.(NL) Actually, 83% of the price of any bottle of whisky sold is tax.(interview) For Corby, increased liquor taxes could dramatically affect sales, as consumers may decrease their consumption of alcohol due to inflated prices. However, it will most likely not loose any market share to competitors because liquor taxes are consistent across product lines. Despite the fact that price fixing ...