COMMENT: Diageo reforms and reformulates
Diageo will alter the manufacturing process of the Smirnoff Ice to comply with state legislation in Oregon restricting the distilled alcohol content of drinks sold in grocery stores. Although Diageo insists the taste will not change, the case raises questions about whether consumers are buying a drink made to a certain recipe, or a brand image where the product recipe is malleable.
Under a 2003 Oregon state legislature measure shortly due to come into effect, drinks with more than 0.5% distilled alcohol content will not be legally available in state grocery stores beyond the end of the year.
'Malternatives' - drinks that start as brewed malt beverages and are then flavoured with distilled spirits - will fall foul of this law and, as such, will only be legally available in state liquor stores.
As a result of such a change in classification, these products will see a rise in the rate of taxation and will obviously become less accessible to consumers.
To remain on the shelves of grocery stores, most malternatives will have to undergo a change in their manufacturing processes to reduce the proportion of alcohol that comes from distilled spirits, and increase the amount from fermentation.
In response, Diageo-Guinness USA filed a lawsuit against the state's liquor commission in mid-October, but has now announced that it will change its recipe. Other brewers, such as Anheuser-Busch, have already agreed to reformulate their affected beverages.
The introduction of malternatives to the US has prompted a number of marketing, distribution and formulation battles across the country, but this latest U-turn by Diageo again raises the question as to what exactly is on sale: the beverage and its particular taste, or the brand and its particular image?
Indeed, given that Diageo has promised that the taste of its reformulated Smirnoff Ice will remain the same, it is unclear what the company was trying to achieve through its lawsuit - one can only assume an evasion of the costly reformulation process. In choosing to reconsider the latter option, Diageo will now be hoping that consumers' faith in the Smirnoff Ice brand is sufficiently strong to sustain sales of the altered drink.
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