BIZ WATCH
By SAM ALLIS, BERNARD BAUMOHL, JOHN GREENWALD AND VALERIE MARCHANT
THE DOW LIFTS SOME SPIRITS
Not many packaged-goods makers would get excited over a 0.3% increase in sales, but for the liquor industry it's something to celebrate, albeit quietly. Yes, the figures say Americans increased consumption of whiskey, gin and other distilled spirits ever so slightly last year, breaking a 15-year decline. Some 135 million cases of the stuff went down, according to Impact, an industry trade journal. "With the economy being fairly buoyant, people are in a position to indulge themselves more," says Jamie Prusak, vice president of Schieffelin & Somerset, a liquor distributor. The increase also reflects--note all those lighted cigars--a revolt against the saintly life, known as the "pleasure revenge."
The biggest sellers last year were Seagram's Absolut vodka (3.3 million cases, up 5.2%) and Grand Met's Jose Cuervo tequila (2.5 million cases, up 6%), brands that are heavily marketed. And therein lies a potential problem: Congress is contemplating hearings on the advertising of alcoholic beverages.
AT DEC, SOMEONE IS BREATHING ON THE PHONE LINE
How's this for a switch? Digital Equipment Corp. is replacing computers with humans. Digital has hired 90 people to do something computers do badly: answer the damned phone. The company unplugged its automated system in Littleton, Massachusetts, where potential customers inquire about products and services. DEC is not going warm and fuzzy on us. The company made the change for the same reason it installed the automated system in the first place: to improve efficiency. "By firing the computer and bringing in live people to handle customer calls, we've dramatically increased both customer satisfaction and sales and marketing performance," says Debbie Miller, a DEC executive.
Customer satisfaction, as measured by reaching the right person, shot up from 73% to 97%. The rate of misdirected calls has fallen to just 1%. And each caller who is misdirected now receives an apology--yes, a personal one--from the person who did the misdirecting.
THE DOLLAR IS MIGHTY ONCE AGAIN
What a beast! The pumped-up U.S. dollar has been kicking sand in the face of the yen and the mark. Last week the greenback climbed past 123 Japanese yen, a four-year high, and traded 1.65 against the German mark, a 2 1/2-year peak. Barely two years ago the U.S. currency traded at its postwar low. Europe and Japan love a strong dollar, since it lowers the price of their exports, which can stimulate more sales for their struggling economies. But cheaper Toyotas aren't good for everyone--for instance, General Motors and Chrysler reported weak sales last week. Partly in response, Treasury Secretary Robert Rubin, long a strong-dollar man, indicated that the Administration may have ended its two-year drive to buttress the buck.
ROCK 'N' ROLL IS HERE TO PAY
As an orange-haired, androgynous icon of the 1970s and '80s, singer-songwriter David Bowie proved himself one of rock's more adaptable creatures. Now 50, the creator of such best-selling albums as The Rise and Fall of Ziggy Stardust and The Spiders from Mars has become the first entertainer of any stripe to "securitize" himself. Last month staid insurance companies turned into rock-bond groupies, excitedly buying up $55 million of so-called Bowie Bonds privately placed by Fahnestock & Co., a New York City investment firm.
The 7.9%, 10-year average-life bonds sport a single-A Moody's rating (they liked the beat?) and are backed by future royalties from 25 albums that Bowie recorded before 1990. According to David Pullman, the Fahnestock managing director who put together the deal, Bowie still sells more than 1 million albums a year.
In effect, the bond sale allows Bowie, who reportedly is worth more than $100 million, to collect his royalties up front. And by using some of the proceeds to buy out a former manager, Bowie will gain total control of his music--a rarity for an artist. With advantages like that, can Frank Sinatra Securities or Stephen King Coupons be far off?