Even though we're in a recession, Patron Spirits Co. is launching a high-end vodka called Ultimat. Even though the premium liquor market has taken a downturn, they're still launching it for $40 a bottle. The two most expensive bottles of vodka (Ketel One and Grey Goose) have been slipping. However Patron thinks that they have history on their side when they elevated the image of tequilla with Patron Silver nearly 20 years ago. The billionaire who cofounded the hair company, John Paul Mitchell and Patron, John Paul DeJoria believes isn't worried about the launches timing. He said, "We have found that, in tough times, people like to treat themselves." They increased their spending from 25 million in 2007 to 30 million in ad spending. Sales of Ultimat have doubled at Binny's Beverage Depot, a 21-outlet chain in the Chicago area, since Patron Spirits relaunched the brand, said Brett Pontoni, specialty spirits buyer. He noted, however, that the sales remain small. Even though they're feeling confident with their launch, I don't think it's very reasonable to be selling it for more than the two leading contenders whose sales have been significantly slipping. I also believe that even though people "treat" themselves during rough times, they're most likely going to buy the cheaper vodka.
http://global.factiva.com.libproxy.txstate.edu/ga/default.aspx?imt=2
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3 comments:
Although I agree that most college students will still continue to purchase the cheap stuff, I think that this venture definitely has prospects for success. Personally though, I don't think that they should release the bottle for $40 a pop. Like you said, grey goose and Ketel One dominate the market right now, not to mention smirnoff, with that being said, they should launch it as sophisticated yet affordable. I guess when you think about it, it's kind of like the situation with coffee. Starbucks is too expensive and so now people are turning to the golden arches for their caffeine fix. The problem for this market is that alcohol, for most, is an elastic good. It can easily be substituted.
Even in a bad economy alcohol sales rise. However, I do not believe people are going out and buying $50 bottles of liquor. They want something that does the trick without breaking the bank. I do not think this is the best strategy for Patron. I agree with Damien and think they need to rethink their marketing strategies, you can never be too careful, especially now.
I'm on the fence about this matter. I do see young consumers sticking to cheap stuff-that's what we do-we're broke and in college. Also as of late, yes, everyone's seen a hit to the economy. However, there are those consumers who do still have a set income and will buy into this new product and campipagn. Have to admit, the alcohol business will never truly suffer people drink when they're happy, sad, rich or poor.
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