Seagram Co.

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In 1928, Samuel Bronfman and his three brothers merged their Distillers Corp. with Joseph E. Seagram & Sons, an Ontario whiskey distillery known for its V.O. and 83 brands. The new enterprise adopted the name Distillers Corp.-Seagrams (changed in 1974 to Seagram Co.); its first-year profits were a hefty $2.2 million.

During the early 1920s, the Bronfmans, operating mainly in Canada's prairie provinces, sold whiskey to "export houses" whose agents, in turn, smuggled it into U.S. border states.

The repeal of Prohibition in the U.S. in 1933 presented Seagram with a unique marketing opportunity, for unlike most of its American competitors, Seagram had large supplies of aged whiskeys on hand. In 1933, the marketer expanded into the U.S. with the purchase of Rossville Union Distilleries in Indiana and, shortly thereafter, Maryland-based Calvert Distilling Co. To operate the facilities and to market Canadian whiskey in the U.S., the company formed an American subsidiary, Joseph E. Seagram & Sons.

Boosting whiskey's image

The American sales network's initial marketing strategy stressed the superiority of longer-aged, blended Canadian whiskeys over "straights" and American bourbons. Seagram also campaigned to overhaul whiskey's low-brow image to one embodying cosmopolitanism, craftsmanship, aristocratic elegance and social responsibility.

In 1934, the company introduced in the U.S. its Five Crown and Seven Crown brands, which soon afterward became sales leaders in their categories. Notable ad campaigns during the 1930s and '40s included "Say Seagram's and Be Sure"; the "Man of Distinction" series, consisting of endorsements from movie stars, sports heroes and European royalty; and V.O.'s "Exclusively Canadian" series, which featured vignettes from Canada, such as ice hockey

Also in 1934, Seagram launched its "Moderation" ad campaign via the Blackman Agency, which won the account that same year. Combining the themes of gracious living and responsible drinking, Blackman's ads sought to alleviate lingering public concerns over the increased accessibility of alcohol. Ads warned against drinking and driving, buying liquor instead of necessities and appearing drunk before one's children.

Fearing public disapproval, Seagram and other liquor marketers opposed sales appeals directed to women and, until 1958, the U.S. Distilled Spirits Institute's code of ethics banned the appearance of women in liquor ads.

By the early 1950s, Seagram had consolidated its position as North America's leading liquor marketer. The company's annual sales, 90% of which were outside Canada, reached $700 million, easily eclipsing the $425 million of its chief rival, Schenley Corp.

Seagram began to expand into other beverage markets and, in 1942, it bought Paul Masson vineyards and two years later created Captain Morgan Rum Co. In 1949, Seagram acquired Scotch whisky marketer Chivas Brothers and three years later bought champagne producers G.H. Mumm and Perrier-Jouet. In 1954, it added wine marketer Barton & Guestier to its growing list of acquisitions. By then, Seagram's spirits and wine operations encompassed Europe, Central and South America and the West Indies in addition to North America.

Shifting trends

However, in the 1950s and '60s, some consumer trends proved disadvantageous to Seagram, the most notable of which were the shift from blended to straight whiskeys and the growing popularity of vodka. In 1946, the consumption of blended whiskey in the U.S. stood at 160 million gallons, compared to some 20 million gallons for straight whiskeys. By 1957, however, sales of each were roughly equal at 70 million gallons each.

In addition, Mr. Bronfman disparaged straight whiskeys and vodkas, which left Seagram poorly positioned to capitalize on those growing markets. In 1956, Seagram bought Wolfschmidt vodka but gave it minimal promotion, thus allowing Smirnoff to capture the bulk of that market. Similarly, when light Scotch whiskies such as Cutty Sark and J&B gained in popularity, Seagram, with dark, heavy-bodied brands such as Chivas Regal, again found itself poorly positioned.

Seagram's U.S. advertising in the 1960s was handled by Doyle Dane Bernbach, which convinced Mr. Bronfman to add irony and humor to Seagram's ad pitches, notably for Chivas Regal and Calvert Extra.

Because Mr. Bronfman distrusted most marketing experts, the company did little market research until the early 1960s, when his son, Edgar, became president-CEO of Seagram's American operation.

In the 1980s and '90s, Seagram diversified beyond the spirits and wine sectors. In 1980, it bought 20% of E.I. du Pont de Nemours & Co., becoming its largest shareholder. In 1993, it spent $2.8 billion to acquire 15% of Time Warner. Two years later, Seagram sold its Du Pont interest to finance the $5.7 billion takeover of MCA Corp., the parent of Universal Pictures, later renamed Universal Studios. Seagram capped its strategy of acquisitions in 1998 with the $10.4 billion purchase of music giant Polygram. Soon after, Seagram combined the music businesses of Polygram and Universal to form Universal Music Group, the world's largest music company.

In June 2000, Vivendi and Canal Plus entered into a merger agreement with Seagram. The new company, called Vivendi Universal, was interested only in Seagram's media holdings, however, and sold off the alcohol side of the business in December 2001 to Diageo and Pernod Ricard. With the sale, Seagram ceased to exist as a unique entity.

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