Home » Opinion » Book review
How costly booze, image appeal to status seekers
By Ni Tao |
April 10, 2010, Saturday
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Print Edition
Print Edition
WHEN it comes to foreign liquor brands, the first thing that springs to my mind is the scene of two businessmen, dressed casually and drinking caramel-colored iced spirits after an intense archery game.
It's a scene directly from the TV commercial for Regal Royal Salute, a Scotch whisky under the Chivas brand. The message conveyed is unmistakable: consumption of this brand-name liquor is a reflection of drinkers' economic and social status.
Nowadays you'll see more such commercials on TV, mostly Western if lavishly made. In a country with a broad array of reputable indigenous liquor brands to choose from, the furious foray of Western alcoholic beverages into the Chinese market faces an uphill battle. To sharpen the competition, Western upscale distilled spirits companies are taking on the China market on a scale like that at home where the industry is experiencing rapid growth.
Noah Rothbaum's book "The Business of Spirits" is a detailed report on the spectacular revival of the US spirits industry after several decades of anemic growth. The author begins by noting that retail sales of spirits have increased nearly 60 percent from 1997 to 2005 in America.
To account for this boom, one cannot avoid mentioning the vicissitudes of US spirits industry over the past two centuries, in particular the lingering impact of the defunct National Prohibition Act on the business.
Although distilleries and spirits distributors can now take pleasure in the knowledge that the liquor business is at its best in memory, they still remember Prohibition and the temperance movement when all alcohol was banned like drugs today. Taverns and restaurants found stocking and selling moonshine then were severely punished.
Police boats patrolled waters where bootlegging activities were rife, and wouldn't hesitate to fire on any suspicious ships. Yet even though it was enforced in such harsh manner, Prohibition did very little to eradicate the so-called scourge of alcohol, blamed for widespread moral decay and corruption.
On the contrary, it only made things worse as underworld-controlled speakeasies cropped up. Crime and corruption became even more rampant, says Rothbaum.
The biggest legacy of Prohibition, which ended in 1933 after a 13-year "dry" period came to naught, is a slew of laws and regulations regarding liquor production, sales and consumption that vary wildly from state to state. Some states still stick with "blue" laws that prohibit sales of alcohol on Sundays. Barely two decades ago, liquor ads aired on TV were a rarity as its public promotion was still considered morally unacceptable.
As time went by and people's attitude toward alcohol softened, the industry began to free itself from the yoke of advertising restrictions. A growing number of TV channels carry liquor ads, provided that they apprise people of health risks posed by drinking. In 2004 came a major breakthrough. The self-imposed 55-year-old ban on advertising at races was lifted, giving distilleries a much-needed boost in broadening advertising options.
But a higher profile is only one aspect of the spirits industry's winning formula. Another is design and pricing. A breakdown of the industry's impressive growth rate during 2002 and 2005 shows overall case sales of premium spirits grew by nearly 19 percent, Rothbaum says.
Astute liquor vendors priced their products at a level that makes them typical Veblen goods, in that increasing their prices increases people's preference for them as they are seen as symbols of high status.
To this end, many distilleries gave face-lifts to their plain-looking product packages. Take vodka. As Russia's national drink, vodka's conventional, no-frills packaging and its ominous link with the country's tens of thousands of premature deaths used to diminish its appeal.
This started to change when Sidney Frank, an American businessman, packaged his vodka brand Grey Goose in a beautifully crafted frosted bottle - an ingenuous move that gave Vodka the elegant looks necessary to make inroads into Western markets. Frank also gave away lots of the product for publicity. His success has been widely replicated.
The spirits industry's growth also owes a lot to the comeback of cocktail and a change in people's tastes. Bartenders constantly invent new drinks by mixing different spirits to satisfy adventurous palates.
Moreover, liquor brands that taste sweeter and milder (with lower alcohol content) outsell those that lead to rapid intoxication. As Rothbaum argues, "One reason for the recent success of the spirits industry has been a concerted effort by manufacturers to make their products more drinkable, which usually means sweeter and smoother."
It's a scene directly from the TV commercial for Regal Royal Salute, a Scotch whisky under the Chivas brand. The message conveyed is unmistakable: consumption of this brand-name liquor is a reflection of drinkers' economic and social status.
Nowadays you'll see more such commercials on TV, mostly Western if lavishly made. In a country with a broad array of reputable indigenous liquor brands to choose from, the furious foray of Western alcoholic beverages into the Chinese market faces an uphill battle. To sharpen the competition, Western upscale distilled spirits companies are taking on the China market on a scale like that at home where the industry is experiencing rapid growth.
Noah Rothbaum's book "The Business of Spirits" is a detailed report on the spectacular revival of the US spirits industry after several decades of anemic growth. The author begins by noting that retail sales of spirits have increased nearly 60 percent from 1997 to 2005 in America.
To account for this boom, one cannot avoid mentioning the vicissitudes of US spirits industry over the past two centuries, in particular the lingering impact of the defunct National Prohibition Act on the business.
Although distilleries and spirits distributors can now take pleasure in the knowledge that the liquor business is at its best in memory, they still remember Prohibition and the temperance movement when all alcohol was banned like drugs today. Taverns and restaurants found stocking and selling moonshine then were severely punished.
Police boats patrolled waters where bootlegging activities were rife, and wouldn't hesitate to fire on any suspicious ships. Yet even though it was enforced in such harsh manner, Prohibition did very little to eradicate the so-called scourge of alcohol, blamed for widespread moral decay and corruption.
On the contrary, it only made things worse as underworld-controlled speakeasies cropped up. Crime and corruption became even more rampant, says Rothbaum.
The biggest legacy of Prohibition, which ended in 1933 after a 13-year "dry" period came to naught, is a slew of laws and regulations regarding liquor production, sales and consumption that vary wildly from state to state. Some states still stick with "blue" laws that prohibit sales of alcohol on Sundays. Barely two decades ago, liquor ads aired on TV were a rarity as its public promotion was still considered morally unacceptable.
As time went by and people's attitude toward alcohol softened, the industry began to free itself from the yoke of advertising restrictions. A growing number of TV channels carry liquor ads, provided that they apprise people of health risks posed by drinking. In 2004 came a major breakthrough. The self-imposed 55-year-old ban on advertising at races was lifted, giving distilleries a much-needed boost in broadening advertising options.
But a higher profile is only one aspect of the spirits industry's winning formula. Another is design and pricing. A breakdown of the industry's impressive growth rate during 2002 and 2005 shows overall case sales of premium spirits grew by nearly 19 percent, Rothbaum says.
Astute liquor vendors priced their products at a level that makes them typical Veblen goods, in that increasing their prices increases people's preference for them as they are seen as symbols of high status.
To this end, many distilleries gave face-lifts to their plain-looking product packages. Take vodka. As Russia's national drink, vodka's conventional, no-frills packaging and its ominous link with the country's tens of thousands of premature deaths used to diminish its appeal.
This started to change when Sidney Frank, an American businessman, packaged his vodka brand Grey Goose in a beautifully crafted frosted bottle - an ingenuous move that gave Vodka the elegant looks necessary to make inroads into Western markets. Frank also gave away lots of the product for publicity. His success has been widely replicated.
The spirits industry's growth also owes a lot to the comeback of cocktail and a change in people's tastes. Bartenders constantly invent new drinks by mixing different spirits to satisfy adventurous palates.
Moreover, liquor brands that taste sweeter and milder (with lower alcohol content) outsell those that lead to rapid intoxication. As Rothbaum argues, "One reason for the recent success of the spirits industry has been a concerted effort by manufacturers to make their products more drinkable, which usually means sweeter and smoother."
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