Reprinted by permission

January 24, 2000

No doubt about it: Changes in the bev/al business have made it more difficult for the little guy.

Difficult, but not impossible.

Take a look at what's happening at Majestic Distilling Co. The family-owned Baltimore (well, actually Lansdowne), MD, company's been around since 1941. It made a good living for the founding Cohen family and its employees for a number of years as a distiller, rectifier and bottler. In recent years Majestic has been a rectifier and bottler, letting others do the distilling.

It had a unique selling proposition: speedy turnaround on orders - three to four days from the time an order is written to shipment - let retailers and wholesalers keep less inventory on hand, make better use of space.

But the old, commodity-style business plan has a major flaw: Profits tend to be low in any commodity business. To keep wholesaler attention, it has become a lot more important to have premium brands. That means, says Harold "Corky" Graff, VP-Sales, "we need to expand our lines, strengthen our position, profitability-wise."

Graff rejoined Majestic three years ago with a mandate to develop a premium brands division. It's premium brands that carry the large margins, and that have stories to capture consumer attention.

Graff is now visiting Majestic's wholesalers in 35 states with the first three products from the premium division.

When starting up a new operation, there's only way to go: For the fastest growing segments of the business. And that's exactly what Majestic has done. Majestic's approach resembles a four-legged stool.

Leg No. 1 is Glen Kirk, a single Speyside malt, distilled and bottled in Scotland by Charles Hamilton Ltd. Majestic developed the packaging - a stunning cobalt blue label and an equally stunning cobalt blue gift canister. "We started with a single malt because single malts are growing right now," Graff told us. Retail: $24.95.

Leg No. 2 is Brilliant Vodka, five-times distilled and three-times filtered in Scotland. It's got another spectacular package - a six-sided hexagonal glass bottle, with a J.G. Durand crystal shot glass affixed to the top of each bottle. There's only one label, on the back of the bottle. But the label is printed on both sides, and looking at the bottle from the front creates the appearance of multiple labels. Retail: $22 - $25 a 750ml bottle.

Brilliant has been imported by White Diamond Spirits, of Las Vegas, NV.

Graff and Roger Baer, VP/C.O.O., White Diamond, were boyhood friends. They worked a deal under which Majestic will be "master wholesaler" of the product.

One result of the new partnership: Brilliant will be available in 100ml bottles to be used as "two-fers" in bars and restaurants. This approach will let the packaging convey the upscale image.

Leg No. 3 is to enter the super-premium Tequila category with Farias, a 100% Blue Agave. It's what Graff calls a "killer package", a unique glass bottle in the shape of a barrel, which guarantees quality and preservation of the tequila in a horizontal or vertical position. The bottle includes a wood base and wooden screw cap, all placed inside a cylindrical package.

It will be available in two varieties, a Reposado, priced at $39.95 and an Añjeo, priced at $89.95. The Reposado has nine months of aging, the Añjeo, two years.

Leg No. 4 will be introduced in April - Ballylarkin, an Irish liqueur.

Advertising Budgets

Brilliant will be supported with national and regional advertising, while Ballylarkin and Glen Kirk will be supported on a regional basis. Graff told us he doesn't expect to be advertising Farias.

Full Line Supplier

"This makes us more of a full-line supplier to our wholesalers," Graff said. It also provides a way for Majestic to obtain distribution on the west coast since a wholesaler can take delivery of both the import products and Majestic's normal line and have enough profit to more than offset the cost of shipping to California.

As a rectifier and bottler, Majestic has a broad product line. For instance, it has a portfolio of 12 to 15 vodka labels, and a couple of upscale bourbon labels. "We let the wholesaler make the choice as to what brands they carry. One might choose to carry Classic Club, while another might choose Travelers Club."

Business Goals

Graff told Kane's Beverage Week that he hopes to have 100% distribution of the premium items in his priority markets in three years, and would like to be in 20 markets within a year.

He told us the company's wholesalers played a role in its new direction. "Some pushed us into doing this. This enhances our position. We've always offered service, but now we can offer a big profit ticket."

Graff acknowledged that Majestic isn't a Seagram or Barton. "We're a small company," he said, "and we're very focused on what we sell."

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