Fear of watered-down bourbon gave Maker’s Mark its best quarter ever
When Maker’s Mark announced in February that it was reducing the alcohol content of its famous bourbon, customers raised a ruckus. But they also headed to stores to hoard what they believed to be the last remaining bottles of 90-proof Maker’s, leading the brand and its parent company Beam Inc. to their best quarter ever.
“This was not the typical quarter for Maker’s Mark,” Beam CFO Robert Probst said today on the company’s conference call after reporting a 45% jump in first-quarter profit. Sales of Maker’s were up 44% from the same quarter a year prior. By comparison, the company’s cheaper bourbon, Jim Beam, saw a 2% decline in sales.
Maker’s Mark had initially said it would water down to 42% alcohol by volume, or 84 proof, and insisted that customers wouldn’t notice. But after a week of outcry—”consumer passion” is how Beam CEO Matthew Shattock described it today—the spirits brand reversed course. A small amount of 84-proof Maker’s was shipped to bars and liquor stores before the change of heart.
“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,” company officials told analysts, warning not to expect 44% growth in the future.
The surge in sales is ironic because the company maintains that it doesn’t have enough supply of Maker’s Mark to meet demand, which is why it watered down the drink in the first place. Bourbon, a form of American whiskey distilled from corn and other grains, is increasingly popular in the United States and some overseas markets like Germany, Australia, and Japan. But Beam sales fell slightly outside the US last quarter while surging among its loyal American customers.
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