The Destructive Obsession With the Top Line

The folks at Maker’s Mark- the bourbon people – have a problem.  Making the stuff takes a long time.  While reducing cycle time is generally a very fundamental objective for anyone in the business of making things there is no avoiding the need to age bourbon – sitting patiently while the cycle time clock ticks – five years and nine months in the case of Maker’s Mark.

The problem is they blew the forecast six years ago.  They didn’t make enough of the hooch to meet customer demand. Selling what the factory can make, however, rather than selling every bottle they possibly can, is simply not one of their options.  Come hell or high water, they are not about to pass up a possible sale.

The solution – water down the booze.  “The change will allow Maker’s Mark to boost supply by 5% to 6%.”  “[Former CEO Bill] Samuels and his son, Maker’s Mark CEO Rob Samuels, insist consumers won’t notice the change when the slightly weaker bourbon hits shelves in the next few weeks.”  They say no one will know the difference. Master Distiller Jim Rutledge wasn’t quite as absolute when he said watering down the product won’t make a “dramatic difference.”

This sort of rationalization – degrading the value of the product in order to avoid missing a sale – is right at the heart of the problem just about everyone chasing low labor costs experiences.  The quality in China/Bangladesh/Vietnam/etc… isn’t as good but it won’t make a ‘dramatic difference’ so no one will notice.

It is the same, inane mentality that drives Apple to release its latest phone with mapping so bad it can’t help you find the Pacific Ocean; and Boeing to release airplanes with incredibly unreliable batteries.  Only a fool would believe these problems weren’t well known before the product was released.  But to delay shipping to fix them would have meant missed sales, so they magnitude of them was rationalized, minimized.

I’m sure it wasn’t hard for someone at Apple to convince someone higher up that, even though the entire value of the Apple brand is based on their reputation for technical leadership and brilliance, customers won’t notice or care that it can’t match basic GPS technology that everyone and their brother has been offering for years; And someone at Boeing thought that putting out airplanes that occasionally don’t work would fly under the flying public’s radar.

And now we have Maker’s Mark asserting that “The value of Maker’s Mark isn’t set by alcohol volume“.  People don’t buy bourbon for the alcohol?  Really?  Everyone in the liquor swilling public knows that the kiss of death for a tavern is for the word to get out that it waters down the booze.  But Maker’s Mark is so desperate to avoid missing a single sale that they have convinced themselves that their customers are not as smart as the average drunk.

Let’s see how that works out for them.  Degrading the value of the product in order to preserve short term sales is always the first step in a race for the bottom.  Hard to imagine it will work out much different for Maker’s Mark.

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