Stoli SVP Of Innovation Intent On Getting ‘Liquid To Lips’

As part of a corporate transformation, the company proactively consolidated its agencies and has increased its focus on creative execution. “We needed to get the Millennial demographic,” explained Mike Oringer.

Mike Oringer jokes that he has syrup running through his veins. The veteran marketing leader, who spent 17 years at Coca-Cola, always dreamed of starting his own soft drink company. And eight years ago he did, creating a beverage R&D company that introduced, among other packaged beverages, a frozen energy drink.

Today, Oringer has moved on to the hard stuff as senior vice president of innovation and trade marketing for Stoli Group USA. But even there, his soft-drink roots are showing, having convinced the company’s leaders to launch a Stoli ginger beer brand to help the vodka maker capitalize on the Moscow mule cocktail trend.

The changes at Stoli’s marketing group go beyond that one-off campaign. As part of a corporate transformation, the company proactively consolidated its agencies and has increased its focus on creative execution.

CMO.com talked to Oringer about the value of starting fresh and executing well, the role of product innovation in accelerating sales volume, the benefits of an ownership mentality, and the challenges of getting “liquid to lips” today.

CMO.com: You started at P&G and spent the majority of your career at Coca-Cola. How has that influenced your approach to marketing and innovation?

Oringer: I worked my way through the marketing department at Coca-Cola: brand manager, director of marketing, VP of marketing, sports and entertainment marketing, product innovation. I left for two years to work in new business development with CBS Interactive.

Coke wanted me back, and I missed it. But I knew I didn’t want to go back to a huge company. I’d always been very entrepreneurial and did a lot of product innovation. That’s my passion. When I was at Coca-Cola, the mission statement was to be the No. 1 soft drink company in the world. I started seeing the obesity issue growing and the introduction of sugar and container taxes. We were also sitting in the backyard of brands like Snapple and Arizona Iced Tea. I’d always been part of a team at Coke that looked at product innovation, and I didn’t think being the No. 1 carbonated soft drink company was sustainable. We’d missed the boat with Red Bull, and Pepsi got Starbucks iced coffee products. I thought we needed to give customers a wider portfolio of choices. But everyone was focused on Coke and Diet Coke plans. Coke wasn’t nimble enough to do low-volume, high-margin products.

I had dreams of starting my own beverage company, and Coca-Cola funded us to create new ideas. We bought them a number of energy and nutrition drinks.

Then three years ago, Stoli approached me after they had taken control of their products in the U.S. back from William Grant. I had opportunity to lead innovation and trade marketing to create new pipelines for the business.

CMO.com: What are the biggest challenges in the beverage space today?

Oringer: The biggest challenge is defining who your consumer is and how to go after them. Everyone has finite resources—whether you have a Coca-Cola budget, a Stoli budget, or a startup budget. You have to manage your resources well in order to move your business plan forward.

The key is to surround yourself with a great team. Here at Stoli, we now have a team of 85 internally. We’ve created an incredible distribution network by realigning with a core group of distributors to form collaborative relationships. They understand what drives our business from a win-win standpoint. We have 1,000 sales reps who promote and sell our brand. We also partner with creative, social, and PR agencies, along with the sampling companies.

No matter where I’ve worked, I’ve always felt like an owner, and that’s how I operate here. We had hundreds of millions of dollars to play with at Coke. At my startup, every $100,000 counted. I always scrutinize everything because I have experience working with a range of budgets.

CMO: What was the biggest challenge facing Stoli’s U.S. business when you joined the company?

Oringer: We had a great new leader, the former CEO of Bacardi who’d brought Grey Goose into that fold. He’s a genius in the business of spirits.

Even as the vodka business was growing, Stoli vodka sales had been declining year over year. The new CEO stopped doing business with the marketing and distribution agency that had been handling the U.S. market and asked me to build a new distribution network. He thought, if we’re going to lose volume in the double digits every year, we at least want to control our own destiny.

We cleaned house. We found the best distributors in each market—those that could maximize volumes and build the brand. A lot of distributors are focused on the short term. Anyone can create a reason to buy with discounts and coupons. We needed to create a reason to drink. That requires long-term vision. You need to appeal to consumers psychologically. You need to create connections with retail partners and the community. When I joined, we were seeing Stoli selling for $15 at Costco when it should have been $29. That was destroying the brand.

CMO.com: What was the company’s biggest asset?

Oringer: The brand itself and our storied heritage. Stoli has 80 years of authenticity. The company was established in 1938, and we’ve been using the same “farm-to-table” process to bring the product to market since then. We’ve owned the farms and the bottling and now own the distribution. Stoli was craft before craft was cool. Most vodka brands are less than 20 years old; Stoli stands out. With all of those credentials, we decided to make “THE Vodka” our message platform, as in Stoli is not just a vodka; it’s THE vodka. We tied that to other comparisons, such as a party vs. THE party.

The majority of our business is “on-trade”—in restaurants and bars. We are the bartender’s choice, but we weren’t on the cocktail menus. And if you looked at our demographics, our consumer was older—35-year-olds to Baby Boomers. We needed to get the Millennial demographic.

It’s tough to turn a cruise ship around in a lake, but we needed to try some different tactics. We have finite resources currently, but we would like to do more advertising and point-of-sale down the road.

CMO.com: So what have you been able to change?

Oringer: We started holding people accountable—our internal team and our partners. We also created the expectation among our agencies that we need to be fast and nimble like a startup, while also creating processes that will support future growth. We’re a small company, but we need to establish large company processes.

CMO.com: One of your biggest priorities has been creative execution. Why?

Oringer: A lot of agencies have a lot of fat. We had some great below-the-line agencies that did creative work, but it was disconnected from production. It was difficult to execute their ideas in the marketplace. They would create beautiful displays with no idea how to build them. We were shipping $500 displays to the stores that were too difficult to erect.

We eliminated a lot of those agencies, which instantly saved us a lot of money. Instead we started working with InnerWorkings, which served as a one-stop shop for us. Our goal was to start fresh and execute big. InnerWorkings had the industry knowledge to create the best ideas and make them work. And, because we work with them so closely, they bring us new ideas on a regular basis–oftentimes unprompted.

Before, we were investing nearly 100% of our marketing dollars on the 40% of our business that is off-trade. If we wanted to generate volume, we needed to focus more on our on-trade business. That’s where we needed to build the brand because that’s where our core customer does business with us. We needed to get liquid to lips with Millennials, not just with eye-catching displays in a store but with 365-degree efforts to market Stoli on cocktail menus and in bars, delivering the message that Stoli is the vodka all across the spectrum.

CMO.com: How did you sell the idea of a Stoli-branded soft drink?

Oringer: One night I was out with our then-CEO and brought up the growing Moscow Mule trend. It’s like the Cosmo was 15 years ago. We could own this and call it the Stoli mule. We could have partnered with an existing manufacturer, but it would be much more beneficial to create our own Stoli ginger beer. The CEO said we didn’t have the time or the money because, as a veteran of the highly regulated spirits industry, he thought it would take years. I told him to give me four months.

We only had seven employees, but we did it—not to be in the ginger-beer business but to promote Stoli. It’s been a huge catalyst in helping us rebuild and sell the Stoli brand. We’ve got great displays in hundreds of WalMart stores. We’re on cocktail menus across the country. We created branded Stoli mule mugs, which patrons were stealing out of bars. We now sell a premium mug and a party pitcher online at mymule.com. We did it all at break-even to get our vodka in front of consumers, but now we’re now selling a quarter-million cases a year on it.

We’ve also introduced gluten-free vodka, which has gotten a tremendous reception from consumers, retailers, and distributers. Innovation—and that no longer means flavors alone—is a core part of our success and growth.

CMO.com: What’s your best piece of advice for fellow marketers?

Oringer: Find partners who are truly partners. I get 10 calls a day from suppliers, but I don’t want a supplier. They say they can save me 20 cents a pop on the mule mugs. I’m interested in savings, but I know my partner can bring me savings and new ideas. They know how to negotiate and, if I give them good information, they can move fast and deliver great returns. They are the brand police, out there telling me when things are not right in the marketplace. Then we fix it together because we all have skin in the game.