Wednesday, September 7, 2011

Booze marketing: entry level price signaling

One curiosity I've observed is the tendency for entry level whiskey to follow a similar price pattern, and that is also true of some other boozes.  The price pattern is as follows:  entry level flagship whiskey is 20 dollars.  From there the next highest iteration of the flagship brand increases in price and taste but other bottlings in the same genre have not clear price to taste relationship.

For example the flagship Scotch whisky is Johnnie Walker.  The entry level bottling is the red label, which is 20-25 dollars a fifth.  The black label is around 30 dollars for a fifth and is a step up in taste.  Lesser blended Scotch whiskys can be had for lesser price.  But equally good Scotches can be had for lesser price as well.

This pattern holds with American whiskies.  The entry level flagship product is Jack Daniels at roughly 20 dollars a fifth.  Irish whiskies the same, Jameson is about 20 dollars a fifth.  The entry level flagship Canadian whisky is Crown Royal, again 20 dollars for a fifth.  You can find just as good brands for lesser price:  Old Fitzgerald, Irish Manor, Canadian Club are all less expensive but equally tasty for my money.

I have even observed this to be true of Spanish Brandy.  The entry level flagship brand, Fundador, is 20 dollars for a fifth.  Perhaps this is why Spanish brandy sells so poorly here.  The flagship brand is not a solid brand, so it spoils the whole genre.  Perhaps if Veterano were sold for 20 dollars a fifth it could displace Fundador as the flagship brand, and raise the whole genre of Spanish brandy?  With the right distributor and marketing it could work, and would certainly raise the standard of cognate brands like Soberano.

So the question I have is why is it that 20 dollars for a fifth is the such an important price point for the entry level flagship whiskey?

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