Frank Berger, founder and chairman of Viceroy Imports Inc. in Ramsey, N.J., says he would love to design a car that gets 150 miles to the gallon, has a roomy interior, and rides on tires that never wear out. So far, he admits, he hasn't discovered a product with such "tremendous U.S.P.," marketing jargon for Unique Selling Proposition. In the meantime, however, he has developed an extraordinary talent for taking goods with no particular distinction and converting them into top-selling brands.
Such products include wine and spirits, soda, and cosmetics -- the kind of items that "sell on image," says Berger, who speaks from direct experience. Three years ago, he left his job as president of Joseph E. Seagram & Sons Inc.'s North American sales and marketing organization to start his own investment and consulting business.The new company's first move was to buy Hazel Bishop Industries Inc., an ailing cosmetics company, which Berger restored to health within a year. Recently, he reentered the wine and spirits industry by forming his own importing company, which was well capitalized with bank loans, institutional investments, and his own resources. Berger, 45, had no specific product in mind when he started Viceroy Imports in August 1981. What he did have, besides 17 years' experience at Seagram building such top-selling brands as Glenlivet and Chivas Regal, was a dogged determination to carve out a market niche in the liquor industry.
Within the burgeoning table-wine business, Berger quickly homed in on a relatively small, but rapidly emerging, market segment: imported sparkling wines. Case sales of these bubblies had increased approximately 260% from 1970 to 1980. Berger also noted that, despite inroads by a few sparkling wines -- particularly Freixenet, from Spain, and Martini & Rossi's Asti Spumante, from Italy -- no company had as yet gained the market share Berger believed possible.
"The category was small enough -- about 11 million cases sold annually -- that big companies were reluctant to gamble in a field" where potential sales volume was still unproven, says Berger. "Smaller companies didn't have the advertising dollars or the marketing know-how and distributor connections to gain a significant share." By last fall, Berger determined not only to gamble on the category by introducing his own brand of sparkling white wine but also to risk substantial losses by investing heavily in television advertising -- more than $500,000 just for the product's initial rollout in New York, New Jersey, Connecticut, and Florida.
Berger; Richard Keller, Viceroy's newly appointed president; and Alan Portney, vicepresident, searched for their first offering, a competitively priced product that would win over current consumers of sparkling wine accustomed to paying $4 to $10 for medium-price brands. Viceroy would also have to capture a large number of white wine drinkers by marketing its product as an elegant libation suitable for any occasion. The typical consumer of white table wine cut a demographic profile with some attractive characteristics: He or she was 25 to 49 years old, a middle-income, well-educated adult who represented the fastest-growing segment of the population in terms of both absolute numbers and income.
Developing a wine with a taste to suit the target group's palate and a concept that appealed to its collective psyche was based on painstaking research. "What consumers said they liked and what they actually preferred in blind tastings weren't always the same," says Berger. Although most white wine consumers said they preferred "very, very dry wine," they chose sweeter varieties in taste sessions. Because research showed that French imports had the greatest cachet with the average consumer, Viceroy's officers decided to import the wine from France but travel overseas themselves to develop a formula rather than rely on a foreign producer. That way, they could blend a product that conformed to their tastetest findings, and assure that the grapes selected were plentiful enough to meet anticipated demand.
By April, Viceroy had its introductory product, a sparkling wine with a suggested retail price of $5.99, called Champs D'ore, packaged in an elegant champagne bottle with a cork that popped, a gold foil wrapper, and a wire basket around the neck. Berger paid attention to every packaging detail, down to the number of times -- seven -- France is mentioned on the label.
He also dealt with the discrepancy between what consumers said they liked and what they really preferred by allowing the maximum amount of sugar (1 1/2%) for his product to qualify as a brut, the driest classification of champagne and sparkling wine. However, the television advertising message, which began airing in Viceroy's four introductory markets in mid-May, emphasized the very, very dry quality of the wine, following the marketing axiom: Sell the sizzle, not the steak.
So far, Viceroy has concentrated its promotion exclusively on television. "Although magazines and newspapers allow you to pinpoint your target audience better and make for a more indepth explanation of a product, television gets the message out faster and to more people," says Eliot Glazer, account supervisor at Cadwell Davis, Savage/Advertising, Viceroy's advertising agency in New York City.
In addition, Glazer notes, television reinforces the message that Champs D'ore is a drink anyone can feel comfortable serving any time of the year, because the commercial spots reach a wide range of people and avoid any tie-in to a holiday season. Moreover, "television gives a product acceptability," says Glazer. "People tend to think if it's on TV, it's got to be right."
Besides a strong ad campaign, Berger can rely on the personal relationships he built up in the wine and spirits industry during his years with Seagrams. By the end of September, Berger projects, Champs D'ore will be selling in 35 states, distributed through a network of about 70 wholesalers, many of whom are friends of Berger's.
Such strong distributor support depends not just on Berger's ties in the industry but also on Viceroy's ability to help wholesalers and retailers sell Champs D'ore effectively. For example, the company will advise a distributor where to place the product on the floor or give a restaurateur a menu clip-on promoting the merchandise. At the wholesale level, Viceroy provides sales brochures, shelf labels, stickers, and case cards with the same selling message it uses at retail and consumer levels. Consistency of selling points, such as "very, very dry," frequently repeated on materials that are inexpensive and easy to display, makes it easier for distributors and retailers to sell the product. It also reinforces the message the consumer has heard on television.
Berger argues that strong distributor support, together with Viceroy's ongoing advertising campaign and competitive product price, will make the company a "fierce competitor." He cites E. & J. Gallo Winery as a "private, well-run company with high spending levels and low price points that drives everybody in the public companies that compete with them just crazy." Because Viceroy Imports is small and privately held, Berger has another trump card: "I can operate with smaller margins because I don't have to worry about a board of directors or shareholders asking me about quarterly profits."
For the next 5 to 10 years, in fact, Berger plans to plow 100% of any gross margin on Champs D'ore back into advertising. He concedes that there will probably be no profits for some time: "If I have a major brand doing 5 to 10 million cases in 10 years and haven't made any money on it yet," he notes, "I'd be happy."