80-proof payoff | They said he couldn't compete in the high-end vodka market. They said his marketing wouldn't work. They said he'd fail. One problem: No one told Paul Coulombe. Now his Three Olives vodka brand is fueling one of Maine's fastest-rising com

When Coulombe, owner of White Rock Distilleries, in 1999 entered the high-end vodka market with Three Olives Vodka, a lot of folks in the industry doubted the product would amount to much. A little company headquartered in Lewiston, Maine, of all places, is going to run with the glamorous big boys? Didn't Coulombe realize, they asked, how fiercely competitive the vodka market is?

Some of that skepticism was aired in the publication you're now reading. In a 2003 article on White Rock, Seymour Leikind, owner of a New York consulting firm specializing in liquor distribution and marketing, pretty much scoffed at the prospect of Three Olives competing with established vodkas such as Belvedere and Grey Goose. "They're not in the same league," he said then, before also critiquing a Three Olives advertising campaign devised by Portland's Swardlick Marketing Group. "Pretty girls in a martini glass — that's not how you sell this high-priced stuff."

At that time, White Rock was selling about 200,000 cases of Three Olives a year. This year, White Rock expects to sell more than 1 million cases of the brand. In 2003, White Rock had annual revenues of $120 million; in 2006, the company had revenues of $160 million, with Three Olives products accounting for nearly half of the total.

Now with 10 varieties, including watermelon and chocolate flavors, Three Olives vodka is demanding a significant amount of shelf space at liquor stores nationally — and the liquor industry is noticing the product's popularity. "My take is more positive now," Leikind says. "They went into a strong flavor strategy, and they've done well with it." And though he initially didn't like the campaign, Leikind noted White Rock in recent years has spent $10 million in advertising annually. "They really stepped up to the plate," he says. "That's not a little bit of money. Smirnoff only spent $10 million."

Those marketing dollars have bought a regular slate of advertising in mainstream magazines like Time, Sports Illustrated, Cosmopolitan and Glamour.

The response? Even Coulombe says he's surprised by the growth of Three Olives, though he says he always thought the product would find a niche and succeed. And he's set to launch another product — an energy vodka — he hopes will set the bars and clubs afire. "If I had listened to the naysayers on Three Olives, I wouldn't be here talking to you," he says. "Sometimes you have to be willing to take a chance."

Family biz goes global
White Rock Distilleries has a long history. Founded in 1937, it was purchased by Ray and Cecile Coulombe, Paul Coulombe's parents, in 1971. At that time, it was a small-potatoes operation, employing three people and shipping just 25,000 cases of liquor per year.

For many years, the Coulombe family built the company mostly by making knock-off products of already established brands, appealing to customers and bar owners who wanted to save some money. (For those who want to pay less than the going rate of $20 for Baileys Irish Cream, for example, White Rock sells San Francisco Cookies and Cream for 11 bucks a bottle.) By doing so, the company built an impressively large list of titles and brands, some it produces in Lewiston and others it imports and packages. Coulombe says the company now distributes about 140 products, including drinks such as Bowmore Single Malt Scotch, Maui Sour Apple Schnapps and El Chico Tequila.

White Rock grew slowly, and through acquisition, buying other small New England distributors in 1974, 1981 and 1989. But Coulombe says the company struggled to build a national distribution network, because distributors are generally resistant to handling products from smaller or unknown companies. It wasn't until 1990 that White Rock could truthfully claim to be a truly national operation.

Today, fueled by double-digit annual growth over the last 15 years, the company is truly international, distributed in all 50 states and 20 countries. It has administrative and marketing offices in Portland; four buildings in Lewiston, all in the vicinity of the city's industrial park; a plant in New Hampshire, near the Manchester airport; and a sales office in Columbus, Ohio. And not all of its growth comes from Three Olives. Sales of other liquors, such as Pinnacle, a French vodka launched four years ago, also are increasing. "Three Olives has been the most obvious one," says Joe Werda, White Rock's director of operations. "But we've had success in other areas that aren't as dramatic."

In recent years, White Rock has had two turning points. The first was Coulombe's 2005 buyout of his three sibling co-owners. The move put the business in his hands and in his control — and ended familial squabbling. "I don't have to argue with anyone anymore," says Coulombe, 53. "I get up in the morning and decide what I want to do."

The other turning point was the introduction of Three Olives, which is imported from England. The vodka put the company firmly on the industry map and, to Coulombe, drove home the point that advertising, marketing and packaging can work together to create demand for a product. (Three Olives comes in a frosted-glass bottle featuring a clear cut-out to an interior image. Its print advertising campaign features attractive women sitting in martini glasses, along with the tagline, "What's in your martini?")

Not that Coulombe had been unaware that packaging could generate buzz. In 2001, White Rock garnered attention for its Cabana Boy line of flavored rums, which has packaging featuring buff and lightly clothed men (The company has since changed the line's name to Cabana Bay.) The wrapping made the product popular with gay men, and landed it a front-page story in the Wall Street Journal. "Packaging is everything in my book," Coulombe says. "You have to look cool. Having a standard label and a standard bottle isn't going to get you there today."

Pretty packaging also results in an attractive bottom line. Put your vodka in a flashy bottle and you can charge much more for it, says Coulombe, who is clearly proud of what his company has recently accomplished. "I'm not Procter & Gamble, and I'm not G.E.," he says. "But in terms of Maine, we're probably one of the top 20 companies."

A martini era
White Rock launched Three Olives at an opportune moment, just as vodka was soaring in popularity. The spirit has been the industry's top seller in the U.S. since the 1970s, when it overtook bourbon in popularity, but its sales have soared since the mid-1990s. The increase is largely attributed to the drink's growing popularity with women; many in the industry, believe it or not, widely attribute the bump to the cosmopolitan-swilling women on "Sex and the City."

Just look at the numbers. In 1995, Americans bought 32.1 million cases of vodka, according to the Distilled Spirits Council of the United States. By 2005, consumption had risen to 46.2 million cases. And the trend isn't abating: overall U.S. vodka sales rose 11% in 2006, to $4 billion.

But while demand increased, so did the competition. There have been roughly 300 new vodka lines introduced in the last three years alone, according to those in the industry. Most, says Leikind, the industry consultant, will fail, because they are all so similar. "Why should any consumer move from Absolut or Grey Goose to another vodka that's coming out that's basically the same thing, except that it has a pretty bottle?" he asks. "It has to have some uniqueness to it."

So what's unique about Three Olives? It's flavors. "It was something the marketplace needed when we entered it," says Scott Coulombe, Paul Coulombe's 33-year-old nephew and White Rock's plant manager. "The flavored vodkas were bringing a lot of hype, and we were pretty early into it." Leikind agrees, noting that each time Three Olives introduces another flavor, it renews attention to the brand — and boosts sales.

That's by design, Paul Coulombe says. The days when a liquor drinker chose his poison and remained loyal to it for decades are apparently long gone; today's drinker is maddeningly fickle, with a short attention span to boot. "Today, people switch [drinks] not even monthly, but weekly," Coulombe says. "You have to be more versatile and more willing to react."

In eastern and northern Europe, there's a long tradition of flavoring vodkas with herbs and spices. But you'd have to assume that vodka traditionalists wrinkle their foreheads at the sight of citrus- or pomegranate-flavored vodkas — both offered by White Rock. But the drinks, say Coulombe, are well tailored to younger taste buds. "They grew up on cherry soda and grape soda," Coulombe says. "And it just seemed obvious to me that we should develop that [with vodka], because the newer generation of drinkers would welcome it with open arms."

Buzz marketing
Of course, grape and cherry sodas have been losing ground in recent years to highly caffeinated drinks such as Mountain Dew and Red Bull. And Red Bull has become a popular mixer with vodka — for those who want the buzz without the drowsy.

All that got Coulombe and others at White Rock to thinking. The result of that thinking is a caffeinated product called Volta, a "high-energy" vodka which will be released in May or June. It'll come in an entirely black bottle, and will be nearly flavorless. It's White Rock's latest attempt to capture what it hopes will be an emerging market niche. "It's a little cutting edge, unique and off center," Coulombe says. "But I think it has possibilities."

The energy vodka makes sense to Leikind. "He's trading on a trend that exists already. He's saying, 'This is happening. How could I capitalize on that?'" Leikind says, adding that White Rock is well positioned to chase marketplace fashions. "The nice thing about a smaller company is that they move much quicker. When you're a smaller company, it's a more entrepreneurial company, so they can launch onto a trend quickly."

Volta won't be the first energy vodka on the market. That distinction belongs to p.i.n.k., an 80-proof vodka with an annoyingly spelled name that, according to its marketing department, is "flawlessly infused with caffeine and guarana." The high-minded folks at liquorsnob.com liked the stuff, saying in a recent blog post that "it means we can now drink our vodka right out of the bottle and have a wide-awake drunk."

Coulombe, though, has been less impressed and thinks p.i.n.k., which has been followed into the marketplace by an energy vodka called Zygo, has failed to establish itself with drinkers. Leikind agrees: "When you walk into a bar, you make a statement," he says. "Certainly, a guy's not going to walk in and say, 'I want p.i.n.k. vodka.' And if a woman orders p.i.n.k. vodka, she's not very sophisticated."

Coulombe says Volta's entrance will be low-key. There will be little advertising; instead, the product will be introduced with event marketing nights at trendy bars and clubs in big cities like Los Angeles and Chicago. He hopes to sell 25,000 cases of the beverage in its first year and 50,000 to 100,000 cases in 2008. The White Rock CEO says he considered attaching the energy vodka to the Three Olives brand, but decided against it. "I thought it needed its own identity," he says. "I thought that it would be better for it to succeed on its own terms. I might be wrong."

Yes, he might be. And it's possible Volta could hit the market with a thud. It could be an embarrassing failure. Maybe drinkers don't want to be wide awake while drunk; one can assume that local police departments would prefer that they not be. Maybe vodka drinkers will think an all-black bottle is cheesy. Maybe they prefer their vodka with a little flavor.

But after the surprising success of Three Olives, few in the industry seem willing to assume Coulombe is wrong. And few are willing to bet against the little liquor company from Lewiston, Maine.