Tag: Lee Applbaum

CMO Insights: The Right Spirit of CSR

Posted on by Drew Neisser

Stick with me here as I drift back momentarily to one of the more profound books I remember from high school–Murder in the Cathedral. In T.S. Eliot’s classic, the protagonist Thomas Becket contemplates martyrdom and the possibility that just thinking about becoming a saint could disqualify him.  I believe that brands walk a similarly fine line with their Corporate Social Responsibility activities–it’s a great idea to do these things but celebrating them too loudly comes with some risk.  One person who clearly gets this conundrum is Lee Applbaum, CMO of Patrón Spirits.  When asked about CSR, Lee is very careful not to over sanctify Patrón’s activities and instead shares them with a matter of factness that is simply refreshing.  At the close of this two-part interview (check out Part 1 of this interview), you will get a sneak peak into Lee’s plans for 2015, which include a keen desire not to “eff it up!”  My guess? He has a really really good shot at it.

Drew: Let’s talk a little bit about corporate social responsibility. I know that as an industry you self-regulate and dedicate a certain amount of space and time to the “drink responsibly” message. What are you doing in the CSR area that goes beyond a “drink responsibly” message?

Obviously we do largely self-regulate and actually, being new to this industry, I’ve been incredibly impressed by the level of self-policing that goes on. I think for the most part, especially in the ultra-premium segment, you’ve more sophisticated companies, more sophisticated marketers, bigger brands that have a lot to lose. I think we always err on the side of doing the right thing, responsibly.

But I think one of the areas that we do a poor job communicating is in the sustainability space. Making alcohol, it does produce carbon dioxide—it’s a natural by-product from Mother Nature’s fermentation process. Nobody is going to tell you that’s not the case. But one thing that we turned up the dial on this this year that I am really proud of is our water ozonation and compost program.

One of the things that comes as a byproduct of making tequila is oxygen deficient water, basically waste water. If you take that water and you just pour it into a river, it has this nasty tendency to kill everything because nothing can breathe. Rather than doing that, we actually worked with a company that developed a water ozonation system for India that’s traditionally used for very serious water treatment issues. But we use this system in a proprietary manner to re-ozonate our wastewater.

When you make tequila and crush the agave plant to extract the juice, what you get is this fiber. We decided to take our re-ozonated wastewater and add it to immense amounts of this fiber and compost it. We compost it under hectares of these beautifully white, billowy tents that are like two stories high. And then we take this compost, which is some of the finest, most oxygen rich compost in the world. And we give it away to local farmers, not only agave growers, but the men and women who locally farm in the area. All of that is done without PR, under the radar. We just do it because it’s the right thing.

It’s our responsibility to ensure that the land that we work, our most precious asset other than our people, will endure. And that’s really important to us. I don’t want to stand here and tell you that we get a halo and wings, because making tequila does emit carbon dioxide, my toilet still has a lot of water when it flushes and we don’t have solar power all over the place, but we do do our part to make sure that we’re ecologically responsible in the way we make our tequila.

Drew: What you’re talking about is interesting to me because I think a lot of companies do struggle with when to talk about the good things that you do and when not to talk about them, right? As a marketer, when do you toot your own horn and talk about the good things that you do?

I think you pick the moments. I’ll give you a practical example. We ran an ad on Earth Day and the headline was, “This Earth Day, drink responsibly.” It was not only about the fact that every day we want to encourage you consume it responsibly, but to remind consumers that our bottles are made with recycled glass. This refers to all of our core tequila bottles, which is a vast majority of our sales volume.

I think if we had just made wide-open statements about what great global citizens we are, it could have been problematic. Instead, we were very focused on the couple of things that we do really, really well and that we are immensely proud of. It’s funny because we’re this big brand with a lot of cache and swagger, but when it comes to some of the charitable things that we do, we just are always very quiet and very humble. There is an immense amount of humility. And I think people appreciate that about us, even if it’s not conscious.

Drew: What’s on your wish list for accomplishments in 2015?

I think we still have a task in front of us, which is continuing to drive home the handcrafted artisanal nature of all of our products. It’s funny, we have these consumers who say, “Oh, it’s so cool that you’re making this handcrafted tequila.” And we respond, “Hold on a second, all of our tequila is handcrafted. Roca is one that is just hyper handcrafted.” But we’ve got to continue to drive that message.

The innovation group in our company reports into me and I challenge them to not just come up with product for product’s sake, but to reimagine artisanal tequila and what it could. We’ve got some really special limited edition stuff that will hopefully help consumers reimagine the category.

At the end of the day, we enjoy this tremendous market share. We just got our most recent brand audit back and the numbers would be almost unbelievable if they weren’t longitudinal. Brand awareness, brand consideration, brand loyalty — they’re numbers that I’ve never seen at Coke or anywhere. And so to be quite candid with you, it’s as much about not screwing it up as anything else, because there is like 98 percent to get wrong and about 2 percent to do better. So my task is to just make sure that we do what we’re doing better. For us, it’s like “just don’t eff it up Applbaum”.

Drew: That’s hilarious. The truth is that there is a lot of hungry competitors out there that would gladly steal share. And as the leader in the category, you either compete with yourself or someone else will do it for you, right?

Oh absolutely. Our tendency as CMOs is to walk in say, “What can we change? How do I put my mark on the brand?” But I think this is really a situation where there is so much right. We continue to gain share, lead the marketplace. The brand health is at its highest it has ever been. It’s really about the emotional intelligence to say, let’s amplify what’s working, let’s refine what’s not working really well and maybe we shed the very few things that are even remotely close to broken. It’s much more about having the emotional intelligence to resist changing for the sake of change, because so much is right.

If my legacy here is just making what I inherited a little bit better, man, I am happy. That is fine by me. I don’t need to do a 180-degree pivot on this brand. That would be wrong. There are other opportunities in this company. There are other categories. And by the way, there is a whole marketing organization to shape. So those things are really where I’m spending most of my time, on your people development, organization development and design, rather than deciding how to make the next pretty tequila ad.

CMO Insights: How to Launch a New Product

Posted on by Drew Neisser

Many CMOs make it their mission to leave a mark on their brand and take the company in an entirely new direction. This is not Lee’s mission. Lee Applbaum, CMO of Patrón Spirits, will be the first to admit that when he took over marketing for Patrón just last year he was sticking with a “don’t fix what’s not broken” model. In Part 1 of this interview, Lee discusses how he has been able to amplify what’s been working for Patrón while also showcasing his own talent — specifically with the Roca Patrón launch, which happened this past July. Lee shares his experiential marketing success story, “Roca on the Rails”, where he was able to create a retro experience in a world of digital marketing and explains the ever so trendy garden-to-glass movement to me. With a guy as innovative as Lee, it’s not wonder he was a recipient The CMO Club’s Creativity Award.

Drew: You were nominated in the creativity category. There are a lot of different ways to consider oneself creative – whether it’s how you problem-solve or the ability to inspire, creative thinking or creative marketing campaigns. So it would be helpful for me to understand how you are being creative in your current role, and how is that helping your overall marketing efforts?

It’s a very fair question with great kind of background context because there are the very traditional definitions of creative. But I think we are being particularly creative in the way in which we are thinking about and re-imagining the conversation both in our category, which is ultra-premium wine and spirits and, more specifically, tequila.

When I think about creativity, I usually use a different word – innovation – and try to reimagine how to interact with our consumers. It’s not just about another page in a magazine or another billboard with clever imagery or copy. It’s what can we do that’s disruptive in digital, social, mobile ecosystem, what can we do that’s innovative and creative in experiential marketing, for example.

Drew: Can you point to one or two programs you’ve done, say in the digital, social or mobile spaces, which are innovative or disruptive that you’re proud of?

We recently launched a new line of artisanal tequilas called the Roca Patrón, which means rock in Spanish. Historically, we haven’t launched new products very often or in a very thoughtful, very strategic way. When we launched this line a few months ago, we were introducing three tequilas that had been in development for many, many years.

The traditional approach for this brand and for the industry would have been to splash it out in magazines, maybe advertise a little on T.V. and you’re off to the races. But we quickly realized and understood that a majority of media is being consumed digitally, which presented a unique opportunity here.

One of the things that is very true within the spirits industry is the consumer’s interest in sharing stories and experiences. We latched onto the insight that consumers in the luxury space now feel that it’s not just enough to have a big bold logo. Consumers want to know the backstory. They want to know the history, they want to understand the authenticity and integrity of a brand.. And maybe equally importantly, they want to share that backstory with others because it gives them inherent credibility.

To leverage this knowledge, we rebuilt all of our web assets, including building experiential microsites (all mobile optimized) for Roca Patrón to help consumers learn about the product. We explained the artisanal process that goes into making Roca Patrón through a series of vignettes and then allowed that content to be curated and shared. We also created a tool that allows both consumers and the trade to share and comment on cocktail recipes featuring Roca Patrón.

Drew: And how has the response been?

Short-term, we look at sales. Long-term, we look at sales, profit and brand health. It’s too short-term right now to be able to be able to gauge the long-term impact on perceptions of our brand but from paying attention to the social conversation, the initial response has been nothing short of phenomenal.

We launched it in July and we’ve already beaten our annualized sales goal by 50 percent. Now is that attributable to the digital piece alone? No. But I absolutely think that having really innovative and contextually relevant messaging helped to drive early acceptance of the new line.

Drew: You created this digital experience where consumers and industry players can make and use these dynamic tools. Did you then rely on organic discovery of the site or did you “market” the marketing?

Yes we did market the marketing. Obviously with the spirits business, we don’t sell direct to consumers. We don’t sell directly to spirits retailers or restaurants and bars. In some cases there are two layers within our media. We marketed the marketing to distributors who in turn marketed our marketing to the retailers, on and off premise.

We wanted to inspire confidence for a bar-owner, restaurateur or spirit storeowner that there’s going to be an ample amount of media gravity owned, earned and paid for out there that’s going to help me pull this through, sell it through once I bring it in. We make the selling easy for them.

Drew: It’s interesting that you talked about this story becoming social currency. Can you explain this idea a bit more?

This particular launch for this particular product line was rooted in this handmade, artisanal, very traditional production process. We’re talking to a very specific artisanal audience; the same people who follow the farm-to-table movement. This is a garden-to-glass movement.

We’re unapologetic about the success of our marketing. There are cynics who believe that, because the core product can’t deliver, they just have to be clever. But the truth is we don’t. We’ve got a very honest, real, great artisanal product, and we developed really great marketing to go with it. We wanted to make sure that everything was really rooted in authenticity, and that we never got accused of just fancy window-dressing.

Drew: What exactly is “garden to glass?” 

I don’t know who coined it. The farm-to-table movement is obviously big. Garden-to-glass is the mixology version. It’s the idea of using fresh ingredients that are locally procured, really kind of honest cocktails, rather than just the premixed stuff. Our tequila is authentically made in Jalisco, Mexico, from the earth.

We see mixologists doing amazing things that are linked to the style and ingredients of the area. In Charleston, South Carolina, you might find a reinterpreted Old Fashioned coming right out of the south. You might find a Bloody Mary reinterpreted as a Bloody Maria in San Francisco with cocktail juice made from fresh clam juice. All leveraging locally procured ingredients.

Drew: If you were to look at your body of work so far, is there one specific program that’s your baby and that you feel is really cool?

Here’s one cool thing we just completed yesterday. As a brand, we own a 1927 vintage rail car that Clarke Gable and Huey Long and FDR rode on. We gutted and restored it in a very cool, very authentic style. This thing makes the Orient Express look like a railcar in the subways of New York. It’s over the top opulent.

We then developed a program using the rail car called Roca on the Rails. We took Roca and the train into cities all over the U.S. where we got an iconic chef from the city and leading mixologists to come out and create these beautiful bespoke dinners and tastings on and off the train. Then we harnessed and captured that content and shared it on social media, where we have over 3 million Facebook likes and are the number one spirit globally on Twitter . We have this huge social footprint and were able to give consumers a behind the velvet rope look at what happened with Roca on the Rails. We also encouraged the attendees of these events, who were culinary writers, journalists, consumers and bartenders to blog and post and Tweet about it as well.

Drew: I imagine there was a fair amount of press related to it as well.

Yeah, the media was sort of phenomenal. It was everybody from the local foodie journalist to the big publications The best thing we can get are the big mixologists who carry a ton of credibility with consumers, and with their fellow mixologists. What I really want are the credible, objective mixologists coming to an event and telling their friends and customers, “Holy shit, I just tasted this new Roca Patrón at this event and it is sensational”. That’s going to carry a lot more weight than any message that I send.