Building a No 1 Global Drinks Brand with John McDonnell – Episode 23

Building a Global Brand with John McDonnell

Building a global brand is a speciality of John McDonnell’s and he outlines some valuable brand building information here outlining the steps he took when building a global brand, or should I say global brands! It was a really interesting conversation.

Nathaniel Schooler
I have got another really exciting interview with a chap called john McDonnell. He has launched and marketed a number of successful global drinks brands. And is highly regarded as a leader in in the drinks industry. He used to be European VP of sales for Seagrams, which was a huge business. And he used to lead $1.1 Billion of sales in in Europe.

He also grew the expansion of Patron in the world into over 130 countries and islands. And Patron became the world’s number one tequila brand. He’s now actually managing director of international for Tito’s Handmade vodka.

They are now in over 130 countries in just five years with his with his experience, and he’s heavily involved with charities and things and in fact grew the Patron Tequila brand it into I believe it’s 150 countries. Is that right? John?

John McDonnell
It was very close to 150 countries and became a global brand.

Nathaniel Schooler
For anyone that doesn’t know it. It’s got a really nice iconic bottle. You also I believe launched Did you launch a coffee version of it as well?

John McDonnell
Yes, Patron XO Cafe, that was the coffee version.

Nathaniel Schooler
I remember drinking a few a few of those few years ago! I certainly didn’t get any get any sleep

How did you how did you actually get that into 150 or 100 close to 150 countries? What was your first kind of thing you did? You sat down probably, and put a plan together. And what did you do?

John McDonnell
Well, the light bulb went on when I was flying through different airports. And I looked at the duty free selection in the in the spirits section. And what I observed was all the duty free customers had high price Scotches, Canadian Whiskeys and Cognac. And then I looked at the Tequila section, and they had, you know, $8 bottles of tequila. And they’re not going to keep the store open, or the lifetime selling $8 bottles of Tequila. So I went to them. I said, Why don’t you try this proposition? You know, Patron were priced about $40- $45

Why don’t you up-sell all you have to consumers. So all the duty free customers bought into that concept. And then once we started making headway in the duty free shops, we went to the different countries and they looked at the business we’re doing and duty free, we’d like to, you know, get you to start focusing on our premium Tequila.

So that’s pretty much the long and the short of it. But the game changer was in 2009, the economy in the US was tanking. So what to drink industry companies do when the things get tough, the first thing they do is they slash marketing.

So while all these big companies will slashing their marketing spend, I called up our billboard company Clear Channel Communications and then I went to all the major magazines and I said I want to buy all the back covers that all these companies have given up and I want the best billboards in every major city in the USA. And we slap patrol on those billboards and magazines and then people said, what you said to me earlier, oh my, this brand’s everywhere. It wasn’t that we were everywhere. We just bought the best locations in the best back covers of magazines. So that’s what really changed the game on ultra premium Tequila.

Nathaniel Schooler
Because it sort of came from nowhere didn’t it, a strong brand, it was sort of one day it was Jose Cuervo. There was like another brand. I mean, I’m talking about in the United Kingdom here in in sort of independent off licenses and stuff. Because I used to work in in the independent off-licenses back in the day, you know, when I was studying wine. I mean, there were two tequilas, it was just I think or three there might have been Jose Cuervo which was just awful stuff. And then there was the gold version of that. And then there was this Mescal in a sort of funny square rectangular shaped bottle with the worm you know.

John McDonnell
right, and then in Europe, you find a brand called Sierra tequila with the little Mexican sombrero on it. So the other thing is when instinctively when you mentioned the word “Tequila,” if you’re in a group of people, somebody will pop up in immediately start telling you about this horrible experience. By shooting tequila, and then they didn’t feel well, got sick, woke up with an awful headache. So when we were building Patron, we didn’t talk about Tequila.

We said, “We want you to try an ultra premium white spirit.” And after they sampled they’d go:- “Whoa, what is this?”

“Oh, that happens to be Tequila.” And then most people would go, oh my God, I don’t remember Tequila tasting so good. And so all these components together is what really propelled it to become a global iconic brand,

Nathaniel Schooler
Right? I’m sitting here nodding away. It takes me back to to my old drinks industry days, you know, and it’s it’s a fantastic industry to be in.

So patrol would you call it like a sipping Tequila?

John McDonnell
Yes, it’s a sipping tequila. But a lot of the people still consume petrol in shots or in a Margarita.

Nathaniel Schooler
But did they do the sort of sort of salt and lemon stuff with Patron or not?

John McDonnell
If you understand the quality of the brand, you wouldn’t do the salt and the lime but I know a lot of people that are, you know, the entry level drinking person probably still would revert to salt and lime.

Nathaniel Schooler
It’s really unfortunate, isn’t it, because that’s actually for hiding the awful tequilas, right exactly, you’re masking the taste, dreadful it’s dreadful!

John McDonnell
it was a great brand but now you know Patron is starting to lose a lot of its distribution in bars and restaurants, because a lot of a lot of people in the business field it’s too mainstream and they started cutting they started cutting the price and chasing volume

Nathaniel Schooler
It’s always the way isn’t it in the drinks industry, they sort of start out going into all the really great bars with the sort of really kind of the posher more up market locations and then it becomes mainstream doesn’t it and then and then there’s that price war isn’t there?

John McDonnell
you just nailed it that’s exactly what happens

Nathaniel Schooler
Then the the premium outlets just turn around and say “Well if it’s going to be stocked in the supermarkets, i’m not buying anymore” or if it’s in you know a big company, a chain of bars then they go well we don’t want it anymore right because it takes like the exclusivity

is that is that how you put it?a

John McDonnell
When you go when you go to you know big box type of outlets and in price cutting supermarkets like you have in the UK, then it takes the profitability out of the brand So that’s why you have to be careful and you have to sell different sizes to different channels, so that people you know in today’s day and age you can price comparison any product or category.

Nathaniel Schooler
It is often the way isn’t it when they just sort of they have like a different label for for in the on-licensing for like the bars and then a different label for the for the sort of off-trade you know like supermarkets and places like that right

John McDonnell
There’s a lot of a lot of supermarkets do private labelling to differentiate from them the other brands you know when you see a brand like Absolut in the product life cycle there at the point where they are price cutting substantially, so now that I work for Tito’s Handmade Vodka you know I don’t want to fall victim to that in stat chasing them, because then it becomes a race to the bottom in price, so we’re maintaining our premium positioning in the marketplace.

Nathaniel Schooler
So with your premium positioning on on the Tito’s vodka right

Is that down to like the process that you that you guys use when you when you actually distill that an age and it or what you what?

John McDonnell
Tito’s Handmade Vodka is six times distilled and we use the only grain we use is corn, it’s 100% corn based which makes it naturally gluten free and in Tito whose last name happens to be beverage just spelt slightly different, you can’t make this stuff up. He built this first still that he used to make Tito’s Handmade Vodka and his focus, when he started to make the vodka was, he wanted to make a vodka that women could enjoy straight up on the rocks without any mixers.

You’ll find a lot of people that have consumed Tito’s globally just drink it on the rocks, or what a splash room club soda.

That’s that point of differentiation. You know a lot of people out there that might be listening to this will say, oh, all spirits a gluten free and that’s not the case because you can’t guarantee that you’ve just filled out the gluten of all the different brands that are out there. So we have a certificate that supports that this brand is 100% gluten free.

Nathaniel Schooler
Well, but I think six times distilling it gives it a massive differentiator anyway, doesn’t it because of the smooth smooth flavors right?

John McDonnell
Yes, yeah, you’re spot on it. Yeah, and Tito’s, just straight up I mean, it’s like, chill it down. It’s just so smooth!

Nathaniel Schooler
Right. Right. So So how many countries over there at the moment? You’re so you’re you’re managing director of international business over there right now, right?

John McDonnell
Yes, I handle everything with the exception of Canada and us domestic business. So you know, duty free and all the markets outside the US and Canada.

Nathaniel Schooler
Fantastic. So how many countries are you currently in then with with Tito’s?

John McDonnell
Tito’s, we just launched it countries and islands totallling 145

Nathaniel Schooler
Wow, fantastic. And how big is the is the distillery? I mean, how, what sort of volume Are you you kind of going for? Can you talk about that?

John McDonnell
No it’s a private company. So we don’t disclose revenue or cases, it continues to be a favorite among the US population.

Nathaniel Schooler
Wow, fantastic. So in terms of in terms of kind of building a global brand, right, you know, we were talking a bit earlier about business successes and this kind of stuff. And we both we both sort of agreed that when people get things wrong in business, that’s generally the sort of important lessons.

Yeah, because everyone talks about business success. But in fact, without having something go wrong. Reaching success is very difficult, isn’t it? So what do you want to talk about anything that sort of went wrong, that that really created success in in in your career?

John McDonnell
Yeah, I could, I could point to when I worked for Patrol Tequila, we wanted to branch into another category. So we purchased the Vodka and the name of the brand was Ultimate Vodka and you know, it fitted in that $40 price position in a very cool, sleek looking package.

But the consumers, you know, couldn’t differentiate. Here we were an ultra premium tequila company, Why were we in Vodka?

So, it just put a tremendous strain on the organization, trying to branch out. And what we should have done was just stay focused on what we did well, which was making Tequila so you know.

I learned a valuable lesson in that. So at Tito’s Handmade Vodka, we’re not into any other categories. We do not make flavours, we do what we do well, and that’s produce, sell and market Tito’s Handmade Vodka.

We are not branching out.

Nathaniel Schooler
It makes a lot of sense because they come along, don’t they? And they, and they sort of dilute the brand, right. I mean, because Absolut, you watched Absolut right. It came along. It was a great vodka. Yeah. And then they were like, are, well, how are we going to stretch this out? I know, we’re going to launch like an apple flavor. And then, you know, and all these kind of cheap sort of flavours. .

And that’s a quick way to, like, dilute the quality of the brand. Right?

John McDonnell
Right. Well, I mean, Smirnoff went so far, is they were making flavors like birthday cake and cupcake. I mean, you know, and then finally, the consumer said, Enough is enough. You know, it was a cotton candy vodka. I mean, so then you’re right. You dilute the base brand.

Nathaniel Schooler
Yeah. Yeah. I mean, over here in the UK, right. Now, everyone’s everyone’s going into distilling, like, there’s just a mad upsurge in in in in new companies distilling spirits, right. And we’ve got this thing with the micro breweries as well.

But the but the problem is, is that in fact, the amount of domestic consumption of beer is actually quite low. When when you when you when you think about how many microbreweries there are, so then everyone just racing to drop the price to the bottom, and there’s a big problem with micro breweries. And I personally think that actually with distilleries in the UK, I think that is probably going to start happening in this category probably within I would say 10 years actually might take 10 years maybe 5 but I think I think that you know, when you think of you’ve got you’ve got the big big brewers who have got stills that you’ve got Adnams they’ve got their own still and and then you’ve got all these little sort of niche producers and it’s a bit like the Wild West really the way it’s going over here right now.

John McDonnell
Yeah, if one more person talks to me about gin it just makes me crazy there’s so many gins the proliferation of gins is just mind blowing!

Nathaniel Schooler
Yeah, I’m really pleased you said that, because actually I was having this conversation prob how many months ago probably about three months ago I was talking to a friend of mine. He started a distillery with with, with his with a couple of partners, it’s, you know, a small, small distillery. But they have they’ve launched a gin. But the thing is, their branding really fits with a gin because they’re like, right near the coast. They’re near Portsmouth, they’ve, they’ve sort of targeted the right people to sell their gin and they and they do very small volume and this kind of stuff. But, they’re actually doing a rum as well. And I think I think rum is a category that you know, in the next five to 10 years is going to then be the next will, it won’t be the next Gin that quickly. But I think in 10 years, we might have another conversation and a new and I’ll be like, cor look at this rum category now, do you know what I mean ?

John McDonnell
yeah, it’s definitely the consumers continue to change and move. So every category will have its day. The big category now that’s growing in the states is rye whiskey. That brand like most people’s grandfather used to drink is making a resurgence in the States. Yeah, the cocktail culture. And I see cocktail culture growing around the globe as well.

Nathaniel Schooler
Interesting. I mean, I think over here, we’re so focused on our beer but we and we love wine as well, really, I think in the UK. But it’s an interesting, it’s an interesting market. I mean, I think there’s so much potential globally, I think that’s the major problem with people is that they don’t look globally they actually just look locally to sell their product. And there’s so much opportunity out there. I mean, if you use the high quality ingredients, right? I mean, you know, you guys want to use real ingredients, there’s nothing artificial in there is there and you distil four times, right?

John McDonnell
Six times distilled!

Nathaniel Schooler
To reach that, that sort of high quality I think people are really interested in like, the traceability of the ingredients. I mean, I think that’s the, that’s the most important thing. I mean, certainly in the category of rum. I mean, I’ve been learning recently a bit about rum and like, you know, molasses is like poison and rum is you know unfortunately, some rum is made still from molasses, and the consumer doesn’t really know and that’s and that’s a major problem that we’ve got in in many, many drinks categories, you know?

John McDonnell
Yes, the high sugar.

Nathaniel Schooler
It should be made from sugar cane they’ve launched a new distillery in Grenada which looks quite interesting, because what they’re doing they’re actually harvesting the the sugarcane and then they distill it on the same day, which I find, which I find hugely, interesting, because, then it preserves the quality of the of the sugarcane right.

John McDonnell
Mm-hmm, yeah that’s a good story.

Nathaniel Schooler
Yeah It really is. It really ii, so in terms of like your your your spirit does it does it actually go to China Do you do ship out there?

John McDonnell
Yes, we shipped to China, we’re we’re in virtually every single Asian market, and most of all of Western Europe.

So yeah, it doesn’t matter you know, Millennials have the same characteristics no matter which country you go to in the world and you know with social media, you have the opportunity to market your brand and they’re all every Millennial is using that medium on their smartphone and these Millennials pick up there smartphone a minimum of 300 times a day and they they spend about five hours per day on those devices that gives us the opportunity to build a global brand.

Nathaniel Schooler
Okay, so what do you sort of doing then with with with Tito’s if you don’t mind me asking? I mean, I haven’t I let you I have not looked at Tito’s social media accounts at all. So what do you what do you sort of doing you kind of posting pictures of having fun with Tito’s or what?

John McDonnell
Well we’re known as the vodka for dog people, so you know we spend a tremendous amount of time supporting pet welfare so a lot of a lot of the postings will see are you know people with their pets that have you know, a Tito’s leech or a Tito’s dog bowl, toys and you know people post that in and this has growing globally.

It’s a wonderful thing, at our offices our headquarters is in Austin Texas and all our employees base there bring their dogs to work every day then our backyard is a doggie playground and the companies they’ve, you know, picked up 35 to 40 stray dogs and then the employees find homes for the dogs and, you know, this is this is part of a cultures it wasn’t a marketing ploy. So, you know, around the globe, you know, instead of happy hours we have yappy hours. Giving back is very important, you know, to the company. So, we support a lot of charitable causes around the globe.

Building a global brand and using social media is so important…

Nathaniel Schooler
Wow, that’s really interesting. I’m having a little look here on Twitter. It’s really quite cool. You’ve got like, you’ve got like the what is the dress up your dog day.

It really cool. It’s really, really cool. And you’ve kind of featured, whoever’s taking the pictures is doing a great job. Because you’ve you’ve kind of featured the Tito’s orange behind the dogs and stuff. And then you’ve got, you know, you’ve got lots of. So you’ve actually even got Tito’s dog warmer. Yeah. You know,

Really, really cool. You got your cocktails on there. And yeah, that’s really, really cool. Really, really cool. So just sort of thinking, thinking about so in terms of like, success in in business. If you if you could, like, leave people with three things that they should do to become more successful in whatever business they’re in? What What would you What would you say?

John McDonnell
Well, integrity is number one, and two is to be real authentic with people. And the third piece of advice I would give is, be direct and honest, a lot of people can’t handle someone that gives them direct feedback. But it’s very important, because if you don’t give people direct feedback, then you know, they can’t improve. So I like to tell people when it’s time for performance review evaluations, you might take the maximum of five minutes, because everybody knows where they stand. It’s not a surprise,

Nathaniel Schooler
I quite like that approach. Because it’s, it’s pointless, having people that are too emotional in there. I mean, I think that’s, that’s kind of a major, major problem in in business is the emotion needs to sort of come out of it a lot, you know.

John McDonnell
I like to share my experiences, public speaking, whenever I get the opportunity, anybody wants to hit me on LinkedIn, love to accept them. And I just really appreciate you taking the time out of your schedule to have a chat with me. Get John Here on LinkedIn 

Nathaniel Schooler
Yeah, no worries, it’s you. You’ve come highly recommended. I mean, Jimmy Starr recommended you and he’s he’s got this web show. He’s got like, four and a half million listeners a week now, or something absolutely ridiculous. And yeah, I think it’s, I think it’s absolutely just crazy, crazy stuff, really. And it’s just really nice to talk to you because you’ve got so much sort of international business experience in the, in the drinks industry. And I like I like your approach, you know, just sort of finding, finding the duty free and then just going straight in straight in from there, right. Whilst it’s time consuming, there’s a lot of travelling involved. It’s quite, it’s quite a simple process. It’s not, it’s not complicated. And that’s something that I’ve realised, you know, is that in this kind of fragmented world, we sort of think everything’s so complicated, but, but actually, if we stick to the simplicity of it, then things just seem to work really well don’t they?

John McDonnell
You’re correct, it’s this isn’t rocket science. It’s pretty simple. It’s all about execution.

My Outro Done By My Sister Heidi Schooler who is amazing!
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