The Challenges Of Launching a New Brand

Posted by 18 February, 2008
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In 1996, Seagram Co. executives noticed a change in the vodka market. The popular Absolut brand of vodka, which Seagram distributed, was being replaced on the top shelf of trendy restaurants and nightspots by upstart “superpremium” vodkas like Grey Goose, Ketel One, and Belvedere. These superpremium vodkas came in tall, elegant cut-glass bottles and typically cost up to four dollars per glass more than Absolut. Research indicated that some of Absolut’s core customers had switched to the premium brands. Seagram sought to counter this trend by developing a high-end vodka in partnership with Absolut named Sundsvall after the Swedish town where it was distilled.

Sundsvall was positioned as a “super-Absolut, whose pedigree would make up for its late arrival and obliterate the rival upstarts.” Bottles of Sundsvall cost $30, twice as much as Absolut and more than four dollars more than Belvedere. While the other bottles in the category were made from either cut or frosted glass, the Sundsvall bottle was designed with clear glass and an orange shrink-wrap top in order “to stand out from the crowd.” In 1998, Absolut and Seagram launched the brand with a modest $2 million advertising budget. The companies devised what they called a “discovery” strategy, where Sundsvall was initially marketed only in eight metropolitan test markets in order to build buzz. In these markets, Sundsvall sponsored or hosted special events, such as invitation-only dinners at expensive restaurants where the brand was served exclusively.

When Sundsvall launched nationally, it garnered a lukewarm reception. One problem: premium brands like Belvedere had already been on the market for three years. Another problem was the packaging. Bartenders agreed that the product was high quality, but one bartender claimed the bottle “was too discreet for where it was competing.” Compared with the competition, Sundsvall sold at a plodding pace. For example, one Boston restaurant typically poured through two bottles a day of a competing brand, while a single bottle of Sundsvall might last three months there. In 1999, Sundsvall sold 1,000 cases of product, compared with sales of more than 100,000 cases each for Belvedere and Grey Goose.

A little more than a year after the launch, Absolut stopped production of Sundsvall and ceased all marketing activities. For a company that achieved incredible success marketing its flagship product over the last two decades, the disappointing Sundsvall brand was considered a major failure.

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[1] Shelly Branch. “Vodka on the Rocks: This High-End Brand Was an Absolut Flop.” Wall Street Journal, December 21, 2000.

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