October 10, 2007 -- Business Week -- Marketing

Jack Daniel's International Appeal

By sticking to its homespun, down-home story, the Tennessee sour mash whiskey has increased sales at home and abroad

For Pok Rui Bin, 29, drinking Jack Daniel's Old No. 7 after 12-hour workdays in Beijing means mixing it with green tea. The advertising copywriter's cocktail of choice is just one of many regional recipes that Global Managing Director Mike Keyes is getting used to now that his brand is available in 135 countries. What appeals to Pok about the Tennessee whiskey, he says, is the smooth smoky flavor, "and how it's hand-crafted and all comes from this one special place ... I love that American West stuff."

Allowances can be made for Pok's poor sense of direction, and for the green tea mixer, since he's never been to the U.S. But he has been to the Jack Daniel's Web site, which is translated into 14 languages. The lifting of trade barriers in several countries, a weakening U.S. dollar, and the spread of cocktail culture to cities such as Beijing, Sofia, Moscow, and New Delhi have been pushing the whiskey brand's export sales by double digits. And though several brands closely identified with America--like Marlboro (MO), Starbucks (SBUX), McDonald's (MCD), and American Express (AXP)--have been lightning rods for anti-U.S. sentiment overseas, American whiskey has remained so immune that parent company Brown-Forman (BFB) expects to sell more than 4.8 million cases abroad next year, marking the first time since its founding in 1866 that more Old No. 7 will be poured abroad than in the U.S.

Overseas Whiskey Lovers

After losing favor and showing almost no growth in the 1980s and into the 90s, whiskey sales, especially of premium and superpremium whiskeys, have been steadily climbing in the U.S.--at the expense of cheaper brands and beer. The drinking tastes of Generations X and Y are proving to be different from those of baby boomers. And that trend is found abroad, too. In Moscow, for example, bar managers say that the younger nightclub set increasingly prefers American whiskey to vodka or the more familiar Scotch whisky.

Pavel Kamakin, bar manager of the Moscow nightclub 16 Tonn, hosted a Jack Daniel's birthday concert and party earlier this month as part of a promotion by the local distributor. Kamakin says Jack is a close second in popularity to Jameson Irish Whiskey. And, he adds, customers who plan to drink a lot like those brands for their smoothness over the "hotter" Scotch whisky and ubiquitous vodka. Jack Daniel's sales are up 41% from five years ago, to 45,000 cases.

In general, overseas markets have been good to all American whiskey. Fortune Brands' (FO) Jim Beam Kentucky Bourbon, Jack Daniel's nearest rival, saw global sales reach nearly 6 million cases, with 45% of that consumed abroad. Fortune's Maker's Mark premium bourbon has shown double-digit growth for 13 straight years, with a growing following outside the U.S. But Jack Daniel's is the first major brand to become a majority exporter.

A Strong Brand Story

While a weak dollar has helped, overseas pricing still makes Jack Daniel's a premium pour, especially compared with local brands. A key growth feeder is "the consistency of the brand's story," as reflected in Jack Daniel's marketing of its small-town roots, says Allyson Stewart-Allen, a director of International Marketing Partners, who studies international brand performance. That, says, Stewart-Allen, is also one of the reasons Jack Daniel's has ducked overseas backlash against brands that are overtly American: "Jack Daniel's is less likely to experience boycotting from overseas markets because of the way it has played on the values of craftsmanship and intimacy via its use of small-town America visuals, in other words, the heartland of the U.S."

Marketing Jack Daniel's abroad doesn't differ too much from within the U.S.--with one major consideration: just how much to focus on the 19th century Lynchburg (Tenn.) home and roots. In Britain, Jack Daniel's' second-largest market outside the U.S., the story of the small town--"population 361"--and images of 19th century hillbilly distillers in straw hats and overalls are familiar to all who ride the London underground, where the folksy storytelling ads have long occupied eyeballs waiting for trains. In China, though, where sales are up 125,000 cases per year, 45% higher than five years ago, ads feature the iconic black-and-white bottle, leaving the Lynchburg story to be discovered only in the marketing background--on displays at concerts or on the Web site. "Brits relish the handcrafted, small-town story, but a lot of the young and successful in China and India have moved in from the poorer countryside and don't see the rural imagery as aspirational," says Keyes.

It's all a matter of emphasis, but Lynchburg's homey roots play some role in every market. To make sure, Brown-Forman, unlike a lot of spirits marketers, contractually has the last word on ads in all world markets and generates all ads from its U.S. agency, Arnold Worldwide, in Boston. To drive home the brand strategy, Master Distiller Jimmy Bedford travels abroad around 100 days a year, educating new hires at distributors and in the bar trade about Jack Daniel's and American whiskey, going as far as to conduct tastings of Jack Daniel's with and without its signature charcoal filtering.

The brand's marketing strategy has been the same since 1957, a consistency that is practically unheard of in advertising circles. Even the TV ads use the simple black-and-white photos rather than moving pictures. And that global consistency has been helped in no small part by Ted Simmons, who has been working on Jack Daniel's ads since 1967. First at his own St. Louis ad agency, and now as a consultant to Arnold Worldwide, Simmons says he learned long ago to avoid putting customers or celebrities in Jack ads.

"You don't want to hold a mirror up to people," says Simmons. That, he says, leaves the brand accessible to leather-clad bikers, as well as churchgoing schoolteachers, whether they are in St. Petersburg, Russia, or St. Petersburg, Fla. Both, he says, make up the brand's faithful in large numbers.

Shifting the Focus

That's not to say there aren't experiments. One rare divergence from Simmons' advice came last year when parent company Brown-Forman tried for more hipness, running a TV ad in the U.S. showing young concertgoers getting backstage access by flashing a bottle of Jack Daniel's to the security guard. If successful, the ad idea could have been translated and exported to urban export markets where clubbing is popular and where Jack Daniel's frequently sponsors concerts. But the spot was short-lived. Keyes maintains that it was a successful campaign, but he nonetheless quickly reverted to the familiar positioning, featuring photographs of Lynchburg residents and distillery employees with a narrative that describes how small-town values can be tasted in Jack Daniel's--the "smooth sippin' Tennessee whiskey."

Still, images of 19th century hillbillies and limestone caves don't always resonate right away with today's twentysomething drinkers in the U.S. or abroad. But Simmons says they don't have to, because the campaign establishes uniqueness, compared with fashion-focused ads for other spirits brands or humor-laden beer campaigns. He recalls that Taiwanese distributors in the early 1990s fought the rural Lynchburg positioning. But focus groups with young Taiwanese men showed that images depicting the purity of water from Tennessee's limestone geological shelf and charcoal filtering stayed in their heads, in part because of bad water quality in places where they had grown up. Today the limestone caves are still a fixture in Taiwanese ads. And though Taiwan is not a huge market, sales are up 21% from five years ago, to about 10,000 cases per year.

The Real McCoy

The value of being the genuine original is tough to overstate, says independent marketing and design consultant Dennis Keene of Los Angeles. "In a world of constantly changing marketing, consumers find comfort in brands that are consistent and honest, and associate those brands with anticipated experiences." What Jack Daniel's has, more than most brands, says Keene, "is a great sense of its own story... a story that people keep coming to, and coming back to." And the bottle's black-and-white label, unchanged since anyone can remember, says Keene, "evokes an almost small-batch craftsmanship that belies its enormous sales."

What's clear is that Jack Daniel's seeps into the culture more than most rival liquor brands and has the ability to translate the same message across international lines. Twenty-six percent of the 3.5 million visits to its Web site this year have come from outside the U.S., up from 20% in 2004. On MySpace, nearly 100,000 pages have references and testaments to Jack Daniel's, twice that for Absolut, 20 times that for Johnnie Walker, and five times that of Jim Beam. One reference is a video clip of John Belushi's "Bluto" character in the 1978 film Animal House, chugging a fifth of Jack Daniel's like it was iced tea. It's a familiar clip, even to Pok Rui Bin in China. Says Keyes, "Sometimes you just have to accept that the brand belongs to the consumer, and not us--and that's the case all over the world."

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