CLEAR THINKING

TAKING STOCK OF A NATIONAL LAUGHINGSTOCK.DRINK YUP! WHY ZIMA IS THE DRINK EVERYONE LOVES TO HATE.

From "The Top Ten Signs Your U.S. Senator Is Nuts." Number 9: Breakfast, lunch and dinner? Zima.

When David Letterman jokes about an alcoholic beverage night after night, something's going on. Just what, exactly, isn't clear--unlike the drink itself.

Coors Brewing Company, the nation's number-three brewer, devoted one and a half years--and a reported $3.5 million--to developing what it terms an "alternative" alcoholic beverage. But that was just the start of Coors's investment. The beer company backed its fledgling brand with an advertising budget rumored to be as high as $50 million because, unlike with new beers, the brewery had to explain what Zima was--and what it wasn't. It wasn't a beer. It wasn't a wine cooler. With Zima, Coors claimed it had established a new alcoholic beverage category altogether: the clearmalt.

Through direct marketing, interactive focus groups and 1-800 hotline calls, Coors said it had discovered that 59 percent of the adult drinking population was dissatisfied with the current alcoholic beverage choices, including the twenty Coors products (not including seasonal beers) distributed in this country. "Consumers told us they wanted something easy to drink with a light, refreshing taste," says Mark Lee, Zima's brand manager. "They wanted their drink to have a mild alcohol content, to be convenient but not too sweet, and have no aftertaste. So we took those characteristics and went back to our research and design folks, who came up with literally hundreds of prototypes. Then we took samples out to different markets across the country and asked consumers, `Does this product deliver what you want?'"

Chemists, flavorists, carbonation experts and research teams spent months conjuring up prototypes and sending them out to be tested by focus groups before Coors hit on Zima's current genetic makeup. Though the company won't detail exactly what's in Zima's fizzy, foam-free formula, the brewery will say that its "unique alcohol beverage" is first brewed like a beer, then goes through a special filtration process to remove any similarities to beer--except, of course, for the alcohol content. Finally, natural flavors are added to give the drink a mild citrus taste.

A 12-ounce serving of Zima has 147 calories, 0 fat grams, 13.4 carbohydrate grams, 18 milligrams of sodium and an alcohol content of 4.7 by volume, essentially the same as a regular beer.

Once it pinned down its top-secret formula, Coors needed a name for its new beverage. "We researched various names, because the product established a new category of alternative alcohol beverages, so we wanted to identify the product with a name that was unique but that also described its characteristics," Coors spokeswoman Lori Handfelt explains.

After consulting research-and-marketing firms, Coors decided to christen its new beverage Zima. The Russian word for winter, Zima was a name the company thought would convey the idea of refreshment as cool and crisp as the Siberian snow.

Letterman on Russian president Boris Yeltsin's five-day visit to the U.S. in the fall of 1994: "Yeltsin said he accomplished every goal of his visit except getting to try that Zima stuff."

After almost two years locked inside the lab, the clear glass-ribbed bottle, now dressed in a minimalist blue-and-black logo, was ready to break into a few test markets. In September 1992 Zima was introduced in Nashville, Sacramento and Syracuse. Coors chose medium-sized cities with a high population of young professionals between the ages of 21 and 34--the Generation X group it had targeted as Zima's market, people who like to "experiment and try new things," according to the brand team. This group also couldn't balk at paying premium prices, since Zima's suggested retail tag is $4.99 a six-pack.

When Zima tested well, Coors bought a brewery in Memphis from Stroh's and went into full-scale production. According to the Arizona Republic (Coors declined to provide detailed financial records for Zima to Westword), the company spent $38.3 million--nearly one third of its entire advertising budget--on the roll-out campaign of a drink that wound up accounting for 6.4 percent of the brewery's sales.

The Denver Post estimated Zima's advertising budget for 1994 at $50 million, which is as much as Coors spent in 1993 on its lead brand, Coors Light. With plenty of money behind it and a major ad campaign touting the drink, Zima was finally ready for its national debut.

Then you tasted it.
"A flat Sprite...a weak gin and tonic... Fresca with a shot of vodka...icky beer... tonic water and antifreeze," dissatisfied drinkers moaned.

"Zima is basically a sissy drink for people who don't drink or don't like the taste of alcohol," says Karen Chreene, a bartender at the Wynkoop Brewing Company. "Young women who just turned drinking age and those who don't drink alcohol like it."

"If Coors asked me, I would tell them that the younger generation is very attracted to it," says Kirk Iikeda, manager of Boulder's Liquor Mart. "She would buy Zima," he adds, pointing to a skinny blonde wearing a Pearl Jam T-shirt. "The average Zima drinker is 21 or 22. Wine-cooler people also like it, and generally more women than men buy it. But Zima's not our bestseller. We sell around ten cases of Zima on a weekend night compared to a hundred cases of Coors Light."

"I never see anybody drinking Zima," says Douglas Lynch, manager of Taylor's Bar and Grille in Boulder. "I had to shove the product down my customers' throats. I had two cases, which lasted two months. It just didn't sell. I even put it on special for $2 and it still didn't sell. We don't carry Zima anymore."

And liquor store and bar owners weren't the only ones to doubt Zima's value.
Coors received complaints from people in at least ten states--from concerned parents and school boardmembers to police officers--worried that kids would start drinking Zima because it tasted more like soda pop than an alcoholic beverage. Rumors also circulated that Zima couldn't be detected by a breathalyzer. "There have been perceptions that Zima is a fad with teens," says Bart Alexander, group manager of alcohol issues at Coors. "We were a little confused by that. Zima is sold as a unique alcoholic beverage, and each bottle says it's a unique alcoholic beverage.

"There was some concern because it was clear," he continues, "but if kids want to sneak something clear in their drinks, they can mix vodka with orange juice and rum with Coke. We don't want any underage consumers."

From "The Top Ten Signs You Are a Shopaholic." Number 3: You've even bought some of that Zima stuff.

On June 29, 1995, Coors released its second-quarter returns. The company reported a net income of $15.2 million, or 40 cents per share, down 36.5 percent from $23.9 million, or 63 cents per share, a year earlier. Net sales for the second quarter were $399.5 million, down 7.6 percent from $432.2 million in the second quarter of 1994.

The brewery blamed some of the recent loss on increased costs, but it fingered Zima as the real culprit. "The company's lower results for the second quarter of 1995 were primarily attributable to a decrease in Zima Clearmalt volume, as well as higher aluminum and other packaging-material costs," Coors announced in releasing the figures. "Zima Clearmalt sales volume in the second quarter of 1995 declined approximately 60 percent from a year earlier. As a result, total Coors Brewing Company sales volume of malt beverages for the second quarter of 1995 was 4,842,000 barrels, down 6.3 percent from a record 5,166,000 barrels sold a year earlier."

The Zima Beverage Company, an operating unit of Coors set up to market the clearmalt beverage, thinks the parent company sold its baby short with that announcement. "The company is coming back and trying to repeat last year's numbers," Lee says. "But when you don't have the benefit of all that trial and you've shaken down to a base of committed users, it's quite natural that the brand dropped off to a level of consistent use."

Coors CEO Peter Coors did offer a brief rationale for Zima's decline in the earnings announcement, but since it was buried four paragraphs down in the release, many people missed it. "Since Zima is a higher-margin profit," Coors said, "the decline in volume compared to last year hurt our profitability through the second quarter."

Over the past six months, however, Zima has held on to a 0.8 share of the beer market, according to data from A.C. Nielsen, which tracks liquor sales. Zima also still outsells Beck's, Rolling Rock, Samuel Adams and Molson Ice. And it is currently the leader of the wine coolers.

"It's unfortunate the way Zima was positioned in that announcement," says Zima's assistant brand manager, Julie Demlow. "I think the combination of the media and the announcement, which certainly put a lot of focus on Zima's performance, were equally at fault. Zima is still a very respectable piece of business that is making the company a profit."

Zima also marks one of the few times--perhaps the only time--Coors has forced the competition to their drawing boards. "Zima had such an amazing trial. I don't know of any other alcoholic beverage in the past decade that had nearly half of all alcohol consumers try it," Lee says. "Our trial curve was so huge we almost hit 1.3 million barrels last year."

Zima's competition has a long way to go before it gets anywhere close to that. Miller is testing its version of a clearmalt called Qube in Providence and Sacramento, but it has yet to launch the brand nationally. And although Stroh's has introduced Clash, a malt that is targeted toward men and women between the ages of 21 and 25, the brand is still in the test-market phase.

From "The Top Ten Things New York City Cab Drivers Want for Christmas." Number 8: Zima, the clearmalt beverage.

If Zima's numbers are respectable, why does everyone from local bartenders to Letterman rip into the drink?

"Making fun of Zima comes from a number of places," says Scott Rabschnuck of Foote, Cone & Belding, the San Francisco advertising agency that handles Zima's account. "Honestly, alcohol beverages are still a male-dominated world. It's how guys prove themselves and show how much chest hair they have. Men like traditionally more masculine, powerful beverages--anything from beers to bourbons. Wine coolers and light beers are for the less serious drinker or females. Well, Zima falls more into that camp. Zima is clear, it's got a citrusy taste. The packaging is upscale. It's very neatly designed. It's pretty. When you add all that up, it's definitely not seen as a hardcore, traditionally masculine drink, so it's invited to be seen as wussy. For all you guys who can't drink and for all you women who used to drink wine coolers, here's the drink for you. And once something like that happens, it spirals."

In some ways, assistant brand manager Demlow says, Coors asked for trouble by promoting the drink so heavily at the start. "All the hype that bordered around Zima when it was first introduced and the instant celebrity status Zima took on totally fed into people not wanting to accept it," she theorizes. "In America, when something becomes a hot topic of conversation and also is so visible yet shrouded in mystery like Zima was, people tend to say that they don't want to be a part of it. Here's where that self-directed individualism comes into play: `You know what you want and what you like to drink, so none of this is an issue for you.'

"I think everyone was waiting for Zima to fail," she continues. "Everyone wanted it to be a fad. They thought it was going to bomb, but it continues to exist and thrive. At this point, we're kind of like, leave the little thing alone; it's only an alcoholic beverage."

Even if its maker keeps insisting it's a "unique" alcohol beverage. "It's important not to try to be all things to all consumers," Rabschnuck adds. "That's when you get ridiculed, when you try to market something to someone who has rejected your product. If they say it's too light or too sweet or it looks too pretty and they're not going to hold it in their hand at a bar, then don't go after that guy anymore. Let him have his Sam Adams."

And then, of course, there was that early advertising. Foote, Cone & Belding admits it may share some of the blame for Zima's image problem. The initial ad campaign featured comedian Roger Kabler with his goofy hat and Z-speak that was entertaining for about a nanosecond. "With Roger, we wanted someone who was going to be different from what you see in general beer advertising," Rabschnuck says. "We wanted someone fun and kind of funny and a little bit quirky. This wasn't a person who you would meet at parties, but he could definitely be a Web guy. We wanted a person who was going to make an impression on you, tell you about something new and then move aside to let you try things for yourself. The intention with Roger was definitely to make him out of the ordinary, but we are guilty of overdoing it, because it went from different and unique to being eccentric and weird."

And the butt of lots of Letterman jokes.
In the beginning, Rabschnuck says, getting all that publicity from Letterman was an unexpected boost. "But then some people on the public-relations end may have misread the whole thing and encouraged Letterman by sending him cases of Zima," he admits. "And not all publicity is good publicity. Just ask Hugh Grant. I'm sure in spite of all the media coverage he received, he would have loved for that whole mess not to have happened.

"My latest idea was for Grant to be a spokesperson for Zima, and I was only half kidding."

As far as Demlow is concerned, though, all that attention was nothing but good for Zima. "Why not let Dave jab us?" she says. "Let's just sit back here in Golden and have the top-rated talk-show host in the country incorporate us into his routine. It was quite an honor to be part of the show."

According to Letterman's home office in New York City--not Sioux City, Iowa--the jabs at Zima were nothing personal. Letterman's goal, a spokesperson says, is simply to make people laugh. Once a joke loses its punch, the show gives it a rest.

Maybe that's why no one's heard a zinger about Zima lately.

From "The Top Ten Santa Pick-up Lines." Number 6: Buy you a Zima?

From the beginning, one of the most frequently heard complaints about Zima was that it was too light and too soft for real men who want their booze to pack a kick. "A whole bunch of people who tried Zima said that they liked the concept of a clear malt beverage but didn't like the taste of this product," brand manager Lee says. "They wanted something that had a much stronger taste. So we listened to them and created a product that was oriented to people who like darker, stronger goods, and that's how Zima Gold was born."

Zima Gold was stronger than Zima (5.4 percent alcohol by volume, instead of 4.7 percent) and bolder (colors of crimson, gold and black rather than blue and silver); the target market was men between the ages of 21 and 34. "Gold is a much more polarized product," Demlow says. "We wanted to attract some of the younger guys who drink heavier-flavored products. We had a lot of trial from Zima drinkers who weren't excited about Gold's flavor, and that has a lot to do with the fact that if they are drinking Zima, which is light and clear, and then they try Zima Gold, which is more like a dark-based distilled spirit like a bourbon, they're not going to say both taste fabulous. I guess some guys just like their beer too much."

In February Gold was introduced in Omaha and Tucson with little fanfare. According to Handfelt, since Zima had already established the clearmalt category, Gold didn't need a hefty advertising budget. The national rollout started May 1 in bars and restaurants; by May 15 Zima Gold was available in supermarkets and at liquor stores.

And those may be the only places you can find Zima Gold today. Citing disappointing sales, last month Coors announced that it would no longer ship Zima Gold. Handfelt says some fans keep calling Coors to find the drink; their only option is to find a store that hasn't sold out its entire stock.

Actually, that may not be too difficult.

From "The Top Ten Signs You Are a Bad Surgeon General." Number 1: Your cure for heart disease is Zima.

But Coors isn't about to give up on Zima. Its Gold incarnation may be dead, but the original version is going global. "We just launched Zima in Puerto Rico, and it's doing extremely well there," Lee says. "Now we're working on the U.K. and all over Europe."

And local bartenders can vouch for Zima's international appeal. "Foreigners tend to really like Zima; they think drinking it is a hip thing to do," says Karen Zaczkowsi, a bartender at Gate 12. "A bunch of Koreans were just here and ordered it. I think the advertising makes them want to buy it."

Closer to home, though, Coors may have to work harder. Although Zima sells well in the Midwest, and even better in parts of the South, it's a bust in urban California--home of all those hip Generation Xers.

"The challenge for Coors now with Zima is to figure out how to keep it fresh," says Michael Bellas, president of Beverage Marketing Corporation in New York. "The initial trial period is a natural high. Now Coors may need to add more flavors, since the low-alcohol refresher category is not a long-lasting one.

"The consumer is young and will move on to the next product. Zima had its peak; now Coors needs to rekindle interest," says Bellas.

The brewery is working hard to lure Generations X-ers back to the bottle. Today Zima not only has new ads, it has a new slogan. No longer is the drink "zomething different"; instead, it represents a group that has "zomething in common." The latest campaign, also designed by Foote, Cone & Belding, consists of a series of stylish black-and-white spots featuring Generation X-ers playing co-ed football and eating in a diner. There's no dialogue, only music by San Francisco composer Michael Boyd.

Consumers can have their say about Zima by calling the hotline number printed right on the bottle. The recorded voice on the other end of that number asks the caller's age and about his drinking habits, then lets him listen to nine people give their opinions about Zima. After that, the caller has fifteen seconds to quickly add his own two cents' worth. Zima customer-service reps report that most phone inquiries concern Zima's caloric and alcohol content.

And in keeping with its emphasis on attracting hip young drinkers, Zima not only has its own e-mail address (fans have suggested new flavors of mandarin orange and raspberry via e-mail), but also a page on the World Wide Web (see sidebar, page 26).

"Just imagine a big Victorian house with a wraparound porch that sits on the ocean near Santa Cruz," says Jim Davis, creator of the Zima web site. "There are chairs outside on the porch and some candles. It's about 7:40 p.m. and the sun is just about to set. It's the magic hour. The candles are just starting to have a life of their own, and there's just enough daylight left for you to see each other. You are sitting outside enjoying the sound of the waves and the people you're with. Next to your side sits a big, tin washbasin of icy-cold Zima bottles. That's what the Zima lifestyle is all about."

(Try telling that to Francisco Barren, a stocky towerman for the Burlington Northern railroad. "Zima is my last drink after a night on the town," he says. "When I want my last round, I want a Zima. It's not too strong and it goes down smooth, like brandy after dinner. At the end of the night my buddies and I know when to look at each other and say, `It's Zima time.'")

"Zima is a very sensual drink," Davis says. "I think the archetypal Zima drinker is Rachel that Jennifer Aniston plays on Friends. Rachel has a very strong, comfortable sense of her own sensuality. She is a bubbly, effervescent, warm, loving person. She's not dumb and flighty like Phoebe and she's not as serious and self-dedicated as Monica. Rachel's more of a mixture of Monica's maturity and Phoebe's flightiness."

But then, Coors is banking on people like the characters on Friends and the twentysomethings who love the sitcom to consume Zima. In fact, Lee jokes that he wishes the brand team could afford to pay the Friends crew enough money to drink Zima on the show.

"A lot of the cast of Friends is very typical of the Zima personality," Lee says. "Zima is really about an understated confidence. Zima is not about arrogance; it's not about showing off. Zima drinkers are confident in themselves, and they don't feel like doing things just because everybody else does. These people make their own choices because individuality is important to them.

"Zima is about choice. It's not steeped in tradition like beer."

From "The Top Ten Things Overheard on Elvis's Sixtieth Birthday." Number 7: I just heard that Elvis's ghost signed an endorsement deal with Zima.

Last Wednesday Coors announced that it was restructuring its sales, marketing and operations units--the better to focus on the business of selling beer.

Among other things, the changes mean that the new product development unit--which created Zima--will be placed under the same marketing structure responsible for the established brands.

According to Handfelt, the move was merely a matter of "integration and internal restructuring" that would allow the company to "better leverage resources." According to industry observers, Coors realized it was investing too much time and money in new products at the expense of its tried-and-true beers.

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