Suzy Bibko is editor of Families in Business.
In the past ten years, cocktails have made a comeback – and it's in no small part due to a spirits company with ten generations behind it. Suzy Bibko talks unconventional marketing with the Nolet family and how it has paid off in the success of their Ketel One Vodka
James Bond made them all the rage in the sixties. Carrie Bradshaw and her Sex and the City pals rediscovered them in the nineties. But despite the vodka martini's longevity as a glamourous drink, its main component was anything but – vodka was just vodka, and no-one seemed to know the difference between one make and another. No more. Today, people ask for vodka by brand – preferably Ketel One, if the Nolets have anything to say about it.
Over 300 years ago, the Nolet family began distilling vodka in Schiedam, Holland, just outside Rotterdam. What seems like an unlikely spot for spirit production soon proved to be one of the central hubs of the industry: by the 19th century, the city had nearly 400 distilleries. Today, the Nolets are the only surviving company, headed by tenth generation owner Carl Nolet Sr (Carl Sr).
Carl Sr has reinvented the company, from a family business making many products to a strong, professional company with an internationally recognised brand. Ketel One is hailed as the smoothest vodka on the market, and people ask for it by name. So, how did Carl Sr turn around the business and build a brand in just 40 years? Step-by-step – or sip-by-sip.
When Carl Sr joined the company in 1962, there were 40 other distillers in Schiedam who all made the same products as his father's company and there wasn't any export of the products. The second world war had hit the industry hard, and everyone was left with equipment and buildings, but no business relationships. As a result, spirit prices were plummeting. Knowing that something had to be done to stay in business, Carl Sr and his father decided to do something different, something drastic: a complete halt on production of the 45 different products the Nolet Distillery made. Carl Sr then focused on making something better. He looked at the recipes from the past (stored in a vault in the distillery's historic offices, even today) as well as what customers demanded. What did they want? Quality.
Was Carl Sr nervous about taking such a plunge? Not at all. "I looked around for 15 years (from the early 1960s to the mid-1970s) and I knew what I had to do to have success," explains Carl Sr. "I had to do something completely different from any other distiller in Holland."
The product Carl Sr created was a super premium geneva gin for the Dutch market. It's a national drink, sold only in Holland. Carl Sr was convinced it was the best available on the market, but he had a problem finding consumers in Holland who agreed with him and would buy it. So again, Carl Sr dared to be different. He decided on a new marketing strategy that wouldn't involve the usual sales force driving all over the country, knocking on doors to sell the spirits. Instead, Carl Sr decided to stay put. "I stayed here at the distillery," recalls Carl Sr, "and had an ad page in the [spirits] industry magazine explaining that there was a new product, distilled by myself in the old pot stills. The ad said that I would open the door of the distillery to any consumer to look around and see what we were doing here. It explained that I would not be coming to visit the buyer and that if he wanted this beautiful product, he would have to call me personally. Then, once he called, if he agreed with me that this was a super premium product, if he agreed that he was not going to discount it and if he agreed that he'd pay the bill up front, then I'd send him an agreement to sign and send back. Only then would I deliver the bottle he wanted. It was quite a new approach to sales and marketing."
Selling without a sales force? A novel approach indeed. Carl Sr's father was understandably wary of his son's new methods, and was afraid the approach could last for years. But that was partly the point. "We had to take time and build the business slowly, step-by-step," says Carl Sr of his efforts. "But all of a sudden we realised the tremendous success of this new approach, because almost every hour a retailer would call up in response to the ad. There were 2,500 independent store owners in Holland at that time, and in about seven years, all of them had called up and they all ended up selling our geneva gin." Soon store owners and customers were talking about the product to everyone, including Nolet competitors.
The next logical step for the company's geeneva gin might have been to take it outside Holland. After all, if the Dutch loved it so much, others would surely enjoy it. But staying true to form, the Nolet's opted for the opposite. "It's very much a local product and we like to keep it that way," explains Carl Sr's son Bob, executive vice-president for Holland. "We don't want to overexpose the product."
So, Carl Sr turned his efforts to vodka. The result was Ketel One Vodka, today hailed as the smoothest vodka on the market – quite an accolade in a competitive market. Ketel One was developed by Carl Sr in the same way as their geneva gin, looking back at the old recipes and improving them until a super premium product was achieved. However, unlike the Nolet's geneva gin, Ketel One would be sold outside Holland. Would Carl Sr's unorthodox marketing tactics work in the US where slick television ads and pricey print campaigns bombard consumers every second? You betcha.
But it wasn't as easy as it might sound. Yes, most people's ears perk up when you ask them if they'd like to sample some free vodka. But reaching the right people took a lot of hard work – and a little bit of luck. For seven years, Carl Sr researched the US market, to see if it was the right place for a Dutch vodka. In 1991, he sent his son Carl Jr (now executive vice-president for North America) to New York, to pound the pavement selling Ketel One through the discovery marketing method. "We realised the US market was already a very competitive market in the early 1990s, and we discovered that there were other important brands arriving in the US from other countries," recounts Carl Sr. "We soon realised that we would have to market our product in a different way – the opposite way – to everyone else."
"We learned how to gain attention without going through the normal advertising routes," explains Bob. "My father created this marketing philosophy, allowing people to taste the product, to hear about the story behind the product, to compare it with another vodka, so they can see, feel and taste the difference. Then they can say whether they like the other product or Ketel One – 99.9% like ours."
Carl Sr's plan stated that if they could persuade just 25 establishments in a big city to buy the vodka, they'd make money. But 25 was a lot, especially when the mantra of the time was, 'I don't need another vodka' – especially from Holland.
One of the first breaks they got was in New York at the members-only 21 Club. The food and beverage director there didn't have the time of day for Carl Jr and wouldn't waste his time tasting Ketel One, even though the club's bartender had tasted it and loved it. So, Carl Jr left the meeting without a much-hoped-for sale. However, on the way out of the building, a club member in the lobby asked him why he was so down. "I told him we were selling vodka," recalls Carl Jr. "And the man said that that's all he drinks and asked to taste it – 'I'll tell you if it's any good.' I poured him a glass and he said it was the best vodka he'd ever tasted and asked how many bottles the club had bought, because this is the vodka he was going to drink from now on. Of course, I said that they hadn't bought any. So, he called the food and beverage director and told him to order our vodka (he had plenty of clout: he turned out to be the National Football League (NFL) commissioner). I went back up to the director's office and he agreed to order a case. But I told him that he's not going to get any Ketel One without holding a seminar on our product. I wanted staff training for all his bartenders and waiting staff, and I wanted to do taste tests just like I had done with his bartender earlier – and I wanted 30 minutes of his time. He said that this would be impossible – he didn't have the time. So I said he couldn't have the vodka. It might sound crazy as I was potentially jeopardising a sale, but I was doing exactly what my dad had told me – not making a sale without a seminar and taste test so clients and staff understood what the product is. At that time, vodka was just vodka, no-one called it by brand. We were really in the pioneer stages of having people ask for a brand name."
The Nolets also set up their own import company in America but, in true Nolet style, they did so in a different way to their competitors. Many US importers are located in the New York, New Jersey and Connecticut area, where they are close to Europe and a good distribution network. But the Nolets chose California, the polar opposite of New York in more ways than one. Why start their own company, when so many well-established companies already existed with excellent distribution networks? "The US market is such a huge market that we wanted to invest in it with our own people," says Carl Sr. In other countries with smaller markets, the Nolets operate a bit more traditionally, using local importers, but still retaining a Ketel One ambassador on their payroll to keep a close eye on the product.
Ketel One has gone from strength to strength: from sales of just 7,500 cases in the first year it was launched (1991), which had its competitors laughing, the company now sells over 1.5 million cases a year. Ketel One also accounts for about 95% total sales for the company, while it's geneva gin brings in only 5% of the sales. Carl Sr stresses, however, that while "Ketel One is far more important [in terms of sales], geneva gin made it possible for us to expand – it built the foundation for what we are doing now."
The success of Carl Sr's geneva gin and Ketel One Vodka has meant that the distillery has had to physically expand. Carl Sr began negotiations with his neighbours to buy their land so the distillery could stay in the same location as it had for the past several centuries. "Our old distillery was very important," said Carl Sr of the expansion plans. "You walk into it and in a split second you realise that this is a true marketing story – this is history. It would have been a lot easier to have a modern building somewhere else, but we decided to have everything right here." Indeed, as soon as you walk into the company's reception area, you see the spotless bottling facilities. The effect is dramatic, as it's a harmonious melding of old and new, and you realise that the company is dedicated to perfection in every aspect of its business.
Do the Nolets plan to conquer the cocktail world with any more products? "For now, we don't think so," says Bob. "We think what we're doing now is right and it's working well."
"A big part of our success," concurs his brother Carl Jr, "is that we only have Ketel One, and that's all we've had for many years."
That being said, the Nolets have, however, expanded to one other product: Ketel One Citroen, a lemon-flavoured vodka. While competitors like Absolut have jumped onto the flavour train in a big way, churning out a new flavour almost every year, the Nolets insist they aren't in that business. "The only flavour category that is solid is the Citroen category," emphasises Carl Jr. "At the end of the day, we like to be successful, we don't like to make mistakes. It took us two and a half years to achieve the exceptional quality of Ketel One Citroen. We had orders for it long before we ever launched it!"
The quality over quick profits approach is a hallmark of successul, family-owned companies. Rebuilding a company with fewer, better products was a winning strategy for Carl Sr and his sons, though it might have been thought risky by previous generations. However, the night before Carl Sr's father passed away, he shared a drink of Ketel One with his son. After enjoying the vodka, he put his thumb up and said, "Great product, Carl. I love it."
That's the spirit!