TLDR: Don’t doubt Beyonce

I’m very excited to continue the posts on the new players in the spirits industry, but Beyonce’s new whisky launch is too good of a practical example to pass up.

It would be easy to write off as just another celeb liquor launch. I almost did.

But if you know what to look for, you will see that this is different. Let’s see if you have been learning anything.

For those who don’t know what I’m talking about:

Celebrity Brands

You’ve heard me rip into celebrity brands in the past. A few have been successful (Casamigos, Aviation, etc.), but the majority fail spectacularly.

Here’s why they typically miss the mark:

• No White Space: There is almost 0 room for another $40 tequila or bourbon brand at the major strategics. Even if they leverage their fame to sell product, there is no buyer at the end of the tunnel so no returns. Tequila’s rise was still very fresh when Diageo acquired Casamigos and they only had one other tequila at a different price point (Don Julio)

• Lack of Celeb Participation: You might get a few first-time buyers making a couple Instagram posts, but we know depletions and reorders are what matters. The celebs that put in time and build a culture and loyalty to the brand do much better.

• Other Stuff: Bad quality product, scandal (P Diddy & Ciroc), celebrity brand fatigue, lack of authenticity, etc.

Beyonce’s Brilliance

A few weeks back I wrote about non-white, white space (link)

The main idea is that the M&A viability of any brand is directly related to the “white space” available in the brand portfolios of strategics. Nobody wants to acquire a brand that cannibalizes the sales of their existing portfolio.

White space is often defined by the type of spirit (rum, gin, mezcal), the price point, or geographic focus.

But what really matters to a strategic is the consumer’s wallet.

If Diageo is evaluating buying a $30 tequila brand called “Trump = Jesus”, they probably don’t have to worry about cannibalization of their existing $30 tequila brand called “Kamala Forever”

So thinking about Beyonce’s SirDavis:

Who is the typical $80 Whisky drinker?

>55 year old white men.

Who loves Beyonce?

Her primary fan demographics are >70% female, racially diverse, and between 21 and 45 years old.

The majority of SirDavis bottles will probably end up on shelves without another premium brown spirit. It’s brilliant.

It’s already been “acquired”

The other amazing thing about this launch is that she’s already won.

Your typical brand has to burn cash like it’s going out of style and pound the pavement for years before getting the scale necessary to become attractive to a major strategic.

The reason a strategic can pay such a high multiple is that once a product is in their system, they print money with it (Moet Hennessy has 80% gross margins).

By partnering out of the gate with a major strategic, Beyonce’s brand gets access to LVMH’s distribution footprint, cheap manufacturing, negotiation weight with distributors, and expertise in luxury.

Big companies are notoriously bad at incubating new brands, so they don’t do this often but the size of Beyonce’s fan base and the perfect execution of finding white space made this one different

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