Thursday, June 10, 2010

Frat and Facebook "Icing" idiocy means big bucks for Smirnoff and Diageo

The New York Times reported on June 8, 2010, on its business pages how sales of an alcoholic beverage ("Smirnoff Ice") that one icing fool called a "pretty terrible" drink are growing because fraternity brothers -- those great judges of the next cool and sophisticated thing (after puking) -- supposedly started a drinking game, "icing" that has gone viral. If I approach you with a bottle of "Smirnoff Ice," and you don't have one, you "have" to go down on one knee and drink the whole thing down. But, if you have a bottle of Smirnoff Ice, then I have to drink BOTH of them. Cool! Cutting edge! And how do I learn this? Via Facebook and the Web.

Who benefits from spreading the idea that making your friends chug a disgusting bottle of booze they would not voluntarily drink is a good idea? The owners of shares in the world's largest spirits company, for sure, and booze retailers. Diageo, Inc., which makes "Smirnoff Ice" is raking in the dough as socially insecure fools get suckered by the "icing" fad.

Diageo, America's biggest spirits seller, told its investors on May 19, 2010 that it is using blogging and social marketing.

Diageo told its investors in May, "We understand consumers globally." Diageo's spending on advertising and promotion of Smirnoff is more than 17 percent of sales revenue, the second highest rate for all of Diageo's brands. North American sales are responsible for about 40 percent of Diageo's profits. Diageo sells about $14 billion in spirits in the U.S. annually! And they bragged to investors on May 19, 2010 about their "Great consumer connections"

Of course, an anonymous company spokesperson denied any involvement, according to The New York Times. But the Smirnoff home page says, "This summer Smirnoff will crash your party."

Diageo's shares listed on the New York Stock Exchange have been trading in the range of $60 to $70 per share since the beginning of the year. In 2009, Diageo's share performance was substantially above that of the S&P 500, which was performing very well. But in February 2010 -- shortly before the "icing" craze appeared "out of nowhere," Diageo's shares plummeted. Since early March, Diageo's shares have been trading below the S&P 500, except for a couple of weeks at the end of March.

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