Martini Money

American Demographics, July 1, 1998 by Bill Stoneman

Just when it seemed that every last American had gotten the message that healthy habits make for healthy lives, steakhouses are hot, cocktail lounges are sprouting up everywhere, and true celebrity is conferred to medium-profile entertainers and unknown moguls by cover stories in Cigar Aficionado magazine. Consumers are flocking to products and places that are carefully positioned by entrepreneurs with a sharp eye for what's cool. "People are sick of the lifestyle police telling us what we can do," says Cathleen Burke, vice president and director of marketing for Kobrand Corporation, a wine merchant in New York City with one of the nation's fastest-growing distilled-spirits products in its portfolio.

Indeed, consumers are shelling out good money for indulgences that come with government warnings or draw the wrath of volunteer health organizations. For example, even as the volume of spirits consumption declined 0.5 percent from 1996 to 1997, according to industry watcher Adams Liquor Handbook, sales revenue was up 2.2 percent to $34.1 billion. "High-end products, such as cognac, single-malt Scotch, imported gin and vodka, and super-premium brands across all categories had increased sales," the trade publication reported, along with an annual list of the fastest-growing beer, wine, and liquor brands for the one-year period.

Here are three stories of businesses bucking the decades-long gospel that says watch your cholesterol, be careful about alcohol, and always shun tobacco.

PORTERHOUSE, MEDIUM RARE

Filet mignon and prime rib move quickly at Lone Star Steakhouse & Saloon, Inc. of Wichita, Kansas, where attire is strictly casual. With checks averaging $18 per person, Lone Star, like a host of other chain steakhouses, is attracting patrons from a wide swath of the market.

Although 80 percent of entrees sold are steak dinners, the menu shares the spotlight with a cultivated Texas roadhouse atmosphere. Country & Western music plays in the background, and the wait staff breaks out in an occasional line dance on Friday nights in Colonie, New York, an Albany suburb far from the Lone Star State in every way.

The concept has worked so well that the company has grown from a single location in 1989 to 268 Lone Star Steakhouses in the U.S. and 38 abroad. In addition, development plans call for nearly 20 new restaurants in 1998. The chain only recently opened its first restaurant on the West Coast, in Los Angeles.

But even with the huge West Coast market unserved by the chain, almost 4 percent of adults surveyed in 1997 by Mediamark Research said they had dined at a Lone Star in the previous six months. Reflecting its accessibility to families with kids, Lone Star's patronage is spread fairly evenly among a range of ages: 12 percent aged 18 to 24; 22 percent aged 25 to 34, 27 percent aged 35 to 44; 22 percent aged 45 to 54; and 13 percent aged 55 to 64. Lone Star cultivates a middle-market image, but many of its clients are upscale-32 percent have household incomes of more than $75,000.

The company has its eyes on much more than the family market. It is rolling out two new higher-end steakhouse formats, taking aim with one at the downtown business entertainment market. Five Sullivan's Steakhouse restaurants, featuring certified Angus beef and live jazz most nights of the week, were open for business in April 1998, and six to eight more were on the drawing board. Checks average $50 per person at Sullivan's. Three Del Frisco's Double Eagle Steak Houses, with checks averaging $60, were open, and three or four more are in the works. One will be in the McGraw-Hill Building at Sixth Avenue and 49th Street in Manhattan.

"Our most direct competitor will be Morton's of Chicago," says John White, chief financial officer for Lone Star Steakhouse & Saloon, adding that beef never lost as much favor in restaurants as it did at home. In fact, he says, Lone Star capitalized on an opportunity created by Ponderosa, Sizzler, and downscale steakhouses that began to de-emphasize steak a decade ago.

BOMBAY MARTINI WITH TWO OLIVES

Look for the bright gold and red bottles of Alize at the next backyard barbecue you go to this summer.They may be there if you're in the company of trendy women aged 21 to 35. Although 70 percent of its sales are through liquor stores, the cognac and passion fruit juice mix is also selling to women who enjoy their nights out at retro-chic cocktail lounges, says Burke, the marketing director at Kobrand.

And sell it does. Kobrand moved 475,000 cases of Alize last year, according to Adams Liquor Handbook. That is dwarfed by Absolut vodka's 3.4 million cases or Jack Daniel's 3.1 million cases. But those longer-established brands can't touch Alize's growth. Sales in 1997 were up almost 19 percent from the previous year. The brand was discovered in France by a Kobrand executive 12 years ago, and it's posted annual compound growth of 80 percent since 1993. Burke says she expects at least several more years of double-digit increases. Sales are strongest in big cities, she says, but are coming from all corners of the country and across the racial and ethnic spectrum. Alize 's appeal drops off for women older than age 35, primarily because they are less likely than younger women to go out to bars and to keep up with fashionable concoctions, she says.