Creating a luxury brand is no easy feat. It’s often a challenge because provenance—the story, or the heritage, behind luxury brands—can’t be made overnight. No matter how much a company invests in the branding of their luxury clothing line, Audrey Hepburn isn’t going to wear it. Coco Chanel, on the other hand, can produce any number of pictures with Hepburn wearing their clothing.
However, despite the challenges, there are plenty of examples to show that a luxury brand can be made from the ground up. For example, Toyota created the Lexus brand to compete with Mercedes and BMW and in the early 1990s. Just 20 years before, Toyota cars had been the but of jokes for their perceived poor quality. Nobody laughs when you pull up to the traffic lights in a Lexus.
In consumer goods, perhaps there’s no better example than Grey Goose vodka. Created by the late drinks entrepreneur Sidney Frank in 1996, Grey Goose is now synonymous with luxury. In a market dominated by Russian brands and Sweden’s Absolut Vodka, its rise to prominence and a $2 billion sale to Bacardi in less than 10 years is a luxury branding masterclass.
Mr. Frank, who had previously made a fortune from the Jägermeister brand, saw the potential in creating a French vodka brand. People intuitively associate France with high-quality food and drink. Then, instead of competing with Absolut on price, he decided it was better to blow its price out of the water. Absolut cost $17 a bottle; Grey Goose charged nearly double: $30.
Absolut had made its bottle – an iconic shape taken from old Swedish medicine bottles – central to its marketing. Grey Goose was no different. It put a small French flag on the bottle as a reminder of its provenance, froze the glass to give it a certain allure, and even put netting around it, mimicking high-class bottles of wine. Also like wine, it features a replaceable cork.
Of course, after going to all this effort, the vodka itself also had to be high quality. Grey Goose is produced using an elaborate distillation process, which includes “calcium rich” spring water taken from a well in the famous Cognac region and “superior bread-making wheat.” Nobody wants to pay $30 for a bottle of vodka if the wheat is secondary quality, after all.
When the final product was ready to consume, Mr. Frank carefully chose product placement. HBO’s phenomenally successful Sex & the City was selected, showing its four protagonists ordering it in New York’s trendiest bars. Grey Goose was now the most expensive vodka on the market, supposedly the best quality and the choice of the most beautiful people.
Product placement didn’t stop there. Sidney Frank also sought out the wealthy and sophisticated at charity galas: “We gave away Grey Goose to any charity that wanted vodka at its bar. The people at charity events are the people who are our target audience. Sales started to zoom. In 2004 we sold 1.5 million cases.”
In 2008, with the reputation of his luxury brand firmly established, Sidney Frank was able to sell his luxury brand to Bacardi for a cool $2 billion. The “people’s drink” of Poland and Russia – so-called because it was so affordable to so many – had been converted into something highly prestigious in fewer than 10 years.
Ten years later, and Grey Goose features in the lyrics of a plethora of rap stars, from Jay Z to Kanye West – a sure sign that it possesses luxury appeal. Its formula has been repeated several times but never with the same success. In 2016, it sold 3.98 million 9-liter cases, netting Bacardi estimated net profits of several hundred million, doing well on their original $2 billion investment.
When a new luxury brand is starting out, creating a story is key to success.
Even Sidney Frank himself admitted afterward that producing vodka was far more straightforward than other drinks: “The nice thing about vodka is you make it today, you sell it tomorrow. You don’t have to put your money into buildings and machines and warehouses.” So there was no magic to creating a luxury brand. He just had to convince everyone else that there was.
There are three key takeaways from the success of Grey Goose that anyone can apply when building a luxury brand on the way up:
- Never stray from the message: It’s easier to see Grey Goose as a luxury brand when it never once moved away from that message. Every promotion, every product placement, and every distributor relationship was all based on the premise that Grey Goose signals luxury.
- Create a story: The whole idea of a brand with provenance is that it has a story. Evian isn’t the best-selling water because it tastes better; it’s the best-selling water because it’s from the foothills of the Alps, evoking images of purity, and well, wealth. When a new luxury brand is starting out, creating a story is key to success.
- Dare to be different: Sidney Frank deserves enormous credit by virtue of the fact that he went against conventional thinking (albeit, using a sound logic). There were already dozens of luxury Polish and Russian vodka brands. By creating a French vodka brand, he was not only adding to the brand’s story but also signaling originality.