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Wilton-based beverage brands jump on the celebrity bandwagon
(Stamford Advocate, The (Stamford, CT) Via Acquire Media NewsEdge) Jan. 4--Despite the struggling economy, a Wilton-based beverage company is expecting to succeed with new products, including a line of beverages named after celebrities.
"If you're crazy enough to start a business like ours, then you're crazy enough to believe you'll prevail," said Patrick Kenny, Drinks Americas president and chief executive officer.
The company has entered agreements with personalities to produce brands such as Willie Nelson's Old Whiskey River Bourbon, Donald Trump's Trump Super Premium Vodka, and Paul Newman's Own Sparkling Fruit Drinks and Sparkling Waters.
The company, founded in 2004, also plans to introduce Kid Rock Beer next spring and is in negotiations with a golf partner to market an upscale scotch brand.
Drinks Americas recently entered into an agreement with Violator Management, which manages the music careers of hip-hop artists, to market Leyrat Cognac and Sparkling Vodka brands using celebrities such as 50 Cent and Busta Rhymes.
Last February, Drinks Americas partnered with hip-hop celebrity Dr. Dre to market a series of premium alcoholic and nonalcoholic beverages.
But are those connections enough to lure the buying public?
"We think we've proven the business model," Kenny said. "If you over-deliver on expectations, you'll get a loyal customer."
Trump Super Premium Vodka accounted for 49 percent of the company's net sales revenue of $1.7 million for May through October; Newman's Own nonalcoholic beverages accounted for 18 percent.
In
June, the company announced that sales of its Old Whiskey River Bourbon were tracking 48 percent ahead of last year, with more than $500,000 in sales through April.
It also announced that sales of Newman's Own products had spiked 38 percent from 2007 to 2008, with the sale of 85,025 cases.
Trump Premium Flavored Vodka recently won Platinum Best in Show Honors in the Flavored Vodka Category in the 2008-09 World Spirits and World Wines Competition in Geneva, Switzerland, for its grape-flavored vodka. Other flavors offered by Trump Premium Flavored Vodka include orange, lemon and raspberry.
"We'll add additional products in years to come," Kenny said.
The company, which also owns and distributes Damiana Liqueur and Aquila Tequila from Mexico, recently entered into a partnership with Leyrat Cognac's maker, Domaine Laillard and Francis Abecassis, to market it as part of Drinks Americas' "iconic business" model and ongoing portfolio expansion.
In a recent letter answering shareholders' questions, Kenny said the economy caused production to slow in the first quarter of fiscal 2009 because of tightened credit, but the $25 million company obtained the necessary cash to resume normal production levels by allowing current shareholders who held warrants to exercise them at a discounted price for a short window of time.
"The company's letter to shareholders was to assure our shareholders that we have the right brands, the right game plan and the resources to succeed in the future," he said.
In his letter, Kenny said the publicly traded firm, which has about 2,000 shareholders and 84 million issued shares, expects to grow by 300 percent over the next 12 to 18 months. He also confirmed that he suggests they approve raising the company's authorized shares from 100 million to 500 million because it expects further expansion and a number of acquisitions.
"The fact of the matter is, you can enjoy premium beverages, even if it's a tough economy," he said. "It's not like you're buying a fur coat or a 50-foot yacht. It's a nice, little luxury for a small amount of money."
Drinks Americas announced in September that it intends to buy 90 percent of Camp Hill, Pa.-based Olifant Vodka for $1.4 million.
The company announced in late September that it had entered into a 15-year agreement with Israeli distributor H. Pixel International Trade Inc. for the monthly sale of $300,00 in products. Pixel's first order, placed in December, calls for about $1.1 million in Drinks Americas' products.
Three weeks ago, Drinks Americas entered into a 15-year contract with German distributor Zwilichiovskij Import-Export to start selling its beverages to high-end bars, hotels, clubs and upscale retail accounts in Germany. The company expects the initial order will generate a minimum of $2.5 million in 2009.
Using celebrity names to market products has proven successful, particularly when the name is connected to a social cause, such as Paul Newman's Hole in the Wall Camps, said Kevin McEvoy, a marketing professor with the University of Connecticut.
"What's made Newman's Own such a huge success is that it's tied to charity," McEvoy said.
Drinks Americas will donate a portion of its proceeds from Trump Super Premium Vodka and Trump Premium Flavored Vodka sales through July 4 to the Walter Reed Society, which provides housing and resources to returning hospitalized military veterans.
"When consumers purchase Trump Vodka, they should also know they are in a small way participating in supporting our wounded veterans and their families," Donald Trump said in a statement.
Some companies have turned their founders into a celebrity to market the product, as in the cases of Orville Redenbacher's Gourmet Popping Corn and Colonel Sanders' KFC, McEvoy said.
"That works because the person becomes the icon of the product," he said.
- Staff Writer Michael C. Juliano can be reached at michael.juliano@scni.com or 964-2417.
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Copyright (c) 2009, The Stamford Advocate, Conn.
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