As featured in The Wall Street Journal, Money Magazine, and more!
     

Maker’s Mark Adds Water

This article was written by in Consumer. 11 comments.


I’ve never had Maker’s Mark, but I do have friends who enjoy this particular brand of bourbon — or the bottles in which the bourbon is sold. With this latest piece of news, I’m wondering if the company believes the bottle is the product being sold rather than the alcohol inside.

Beam, the corporate owner of Maker’s Mark, has announced it’s reducing the alcohol content to meet demand. The alcohol content is reduced by simply adding water. Watering down liquor and selling it for the same price is a scam as old as liquor itself, yet when the CEO sends a letter to loyal customers announcing the change, you can’t say the company is misleading its wholesale buyers, distributors, retailers, or customers.

The company is retaining the same price, though each bottle will contain less of its product. Adding or removing water is a common strategy for increasing profit. In some cases, removing water from a product allows the company to justify selling small containers for the same price, like with so-called “high efficiency” laundry detergents. In others, adding water or air allows companies to use the same size packaging to sell less product at the same price, or even a higher price, as prices to increase over time.

Your typical half-gallon carton of orange juice most likely has more water in it than one from ten years ago. Some food companies introduce new products with more air for a lighter or frothier consistency, offering less manufactured product and an increased volume for the same price.

Michael Arrington bought two containers of Tang a few months apart. Both containers indicated they contain enough powder to make 22 quarts of Tang, but the old one contained 72 ounces of the product while the new container, purchased in January this year, contained only 60 ounces. The only way that 60 ounces of powder can make the same amount of drink as the higher amount is if the customer dilutes it with more water.

This particular researcher didn’t mention the prices of the containers, but it is visual example of this latest approach to food manufacturing. Food inflation usually manifests differently: selling smaller containers that look similar to the former packaging, without the manufacturer misleading customers, using marketing tricks like Tang’s above to convince customers the new packages contain the same amount of product.

Maker’s Mark missed an opportunity here. This particular drink is not a basic need, so the company’s desire to reach more customers with a diminishing supply of alcohol doesn’t seem to fit what little I know of the brand. The manufacturers could have decided to increase the price, the normal economic reaction to decreasing supply and stabilized demand. As an elite product, a price increase would keep that brand identification alive. This news, however, seems to have tarnished the brand, and inspired complaints and jokes from customers.




Matthew Yglesias points out that Maker’s Mark is at lower end in the spectrum of bourbon products offered by Beam. Raising the price — or raising the price more — would, theoretically, intrude into the territory of higher-quality bourbon, and the company would compete with itself for the same customers. Some reports say Beam already raised the price of Maker’s Mark this year, but I can’t find any hard evidence.

Beam claims that customers can’t taste the difference between the heretofore standard Maker’s Mark whiskey and the adjusted mixture containing 3 percent less alcohol. If customers can’t tell the difference, does it even matter? And if customers can’t tell the difference caused by a significantly different recipe, should they even be commenting on the product?

Update: Due to the strength of customer backlash regarding the change to Maker’s Mark, the CEO of Beam has decided to reverse the company’s plans to water down the drink.

Photo: Flickr
CNN Money

Updated February 18, 2013 and originally published February 11, 2013. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,435
Rank: Platinum
About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar jim

On a tangent : For the Tang, its possible at least theoretically that they changed the formulation of Tang so that its more highly concentrated or removed some filler product. Its probably more likely they just reduced the product resulting in a more watered down end drink. But you can of course change a product so that its more concentrated. You’d have to compare nutrition facts before and after the volume change to see what they did.

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

In the Tang example, the changed the size of the scoop. One serving was still half a scoop (24 grams in the old container, 19 grams in the new), but the nutritional information was adjusted to represent the smaller scoop size. It’s possible they also changed the chemical composition of the product but it seems like that would disrupt the manufacturing process more than just changing the size of the packaging… and that type of work would add more expense. But it’s certainly a possibility.

Reply to this comment

avatar jim

Yeah, I was mostly ‘thinking out loud’ there. I assume they just cut the product size to save costs. But its also entirely feasible they could reformulate the stuff to use less of an ingredient or two and save costs that way.

Reply to this comment

avatar Ceecee ♦53 (Newbie)

At least the company was up front about the change in the water content. Most companies seem to try to reduce the size of a package of their product while keeping the price the same. Apparently they hope that the customer won’t notice. I don’t usually drink the stuff, but I give them credit for putting the info out there.

Reply to this comment

avatar Lance

At least they told their customers rather than just trying to pass it off. I hate when companies reduce the size of the box and try to sneak it by the customers. This happens all the time with cereal.

I wonder if cake frosting companies are doing this with the newer whipped frosting. I bet they just put more air in it and sell less product for the same price.

Reply to this comment

avatar Josh

There’s a missing piece here. Demand for bourbon (and scotch, for that matter) is so high that distilleries are struggling, and in some cases, failing, to meet it. Since bourbon is typically aged for 6 years or longer, distilleries have to guess what future demand will be. 95% of the world’s bourbon is produced in a fairly small region in Kentucky by 7 distilleries, where the limestone naturally filters out the iron in the water. Increasing production of bourbon takes time. You have to build barrel houses to age it, in addition to ramping up production. And Maker’s is the only brand that rotates its barrels inside the barrel house. Temperatures vary highly inside the barrel house as you move toward the top. All other distilleries mix barrels from the bottom with barrels from the top. Maker’s rotates all of the barrels, and that’s part of their brand.

In sum, there are many variables which aren’t even touched on here. Leaving demand out of the equation opens the door to erroneous thinking.

Reply to this comment

avatar Evan

The guy at the liquor store I go was just telling me about this. I like single malt scotch and he says that he has gotten in the business the 12 year olds have been increasing in price steadily since the product wasn’t as mainstream popular in the past.

Reply to this comment

avatar Mike Collins

I give them credit for being upfront about it. If they had tried to be sneaky about the change and someone noticed it likely would have resulted in a major backlash. Smart move getting in front of the story.

That said, it is frustrating when companies charge the same for less product. I remember the first time I noticed a gallon can of paint no longer contains a full gallon, I felt like I was being ripped off!

Reply to this comment

avatar qixx ♦1,880 (Half-Dollar)

I wonder how many of the other makers of bourbon are doing the same thing and were not upfront about it? Seems like the rest should be facing similar shortages. Have there been increases in price among the various brands? Seems like there should be more to the story.

Reply to this comment

avatar Ken

I read an interesting article once about price inflation. Supposedly, If a product volume is reduced by say 10%, because of other fixed costs including packaging and shipping, the manufacturer may only receive a 4-5% bost in gross revenue from selling that product.
If thats the case then this entire senario is even more obscene. In effect we are being charged ten percent more even though that ten percent does not directly reflect the change in inflation. Are retailers and manufacturers so scared of consumer sentiment that they over-inflate there prices so that they can appear to be holding the prices steady?

Reply to this comment

avatar Josh

It turns out that the backlash from customers was so severe that the ABV decision has been reversed.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: