In Vodka Ver­i­tas

Don­ald Trump’s failed booze brand of­fers clues to his deal­mak­ing

Bloomberg Businessweek (Europe) - - NEWS - By Max Abel­son Pho­to­graph by Eric Hel­gas

“Trump steaks,” said Don­ald Trump. “Where are the steaks? Do we have steaks? We have Trump steaks.” The bil­lion­aire Repub­li­can pres­i­den­tial can­di­date was giv­ing a vic­tory speech in Florida in early March, af­ter the Michi­gan pri­mary. Be­hind him were Amer­i­can flags; be­side him, a dis­play ta­ble piled high with Trump­branded mer­chan­dise for sale. “We make the finest wine, as good a wine as you can get,” Trump said of the dozens of bot­tles of Trump wine. “I sup­ply the wa­ter for all my places, and it’s good—but it’s very good,” he said about the shrink-wrapped cases of Trump wa­ter. Trump men­tioned Trump Vodka, too. But there’s no Trump Vodka on the ta­ble for the TV cam­eras to zoom in on.

One week later, on St. Pa­trick’s Day, J. Pa­trick Kenny, the cre­ator of Trump Vodka, is sit­ting in his New York of­fice, sip­ping a Diet Coke and ex­plain­ing what had gone wrong. Not even he has a bot­tle of the stuff left. “There used to be one here, but it’s gone,” Kenny says. “The com­pany cratered.” Trump Vodka had prob­lems, from dis­tillery to bot­tling to fi­nance. Even so, it would be just an­other celebrity’s doomed foray into liquor if it weren’t the project of a po­ten­tial pres­i­dent. With no po­lit­i­cal ré­sumé to speak of, the only way to eval­u­ate the ca­pa­bil­i­ties of Trump is by once again pok­ing around in his ex­ploits in com­merce. Like his bank­rupt casi­nos, closed col­lege, and other dead-end brand jour­neys, Trump Vodka was a flam­boy­ant ex­er­cise in fail­ure. Trump, nat­u­rally, in­sists it was a tri­umph, though good luck find­ing a bot­tle to­day. Its slo­gan was “Suc­cess Dis­tilled.”

Kenny, a hefty man who walks with a cane, was work­ing for the global liquor gi­ant Sea­gram in the 1980s when he had an epiphany. He watched TV com­mer­cials star­ring Bruce Wil­lis, then at the zenith of his Moon­light­ing-era charms, twirling in one of them around a hot South­ern porch, singing about wine cool­ers into a bot­tle he held like a mi­cro­phone. Some­how, Wil­lis made the bev­er­age seem tempt­ing. “I saw the star power,” Kenny says. “I saw the role it could play.” He left Sea­gram in 2000 and helped cre­ate a web­site for ado­les­cent girls called Sweet16, which counted Brit­ney Spears as an in­vestor, but the In­ter­net bub­ble burst a few months later. In 2002 he started an­other com­pany, Drinks Amer­i­cas, with the idea of shap­ing spe­cific bev­er­ages around celebri­ties. A mu­tual friend, for­mer Bloom­ing­dale’s head Marvin Traub, took Kenny to pitch Trump.

The mogul’s real es­tate and casino busi­ness had surged in the 1980s and al­most top­pled in the early ’90s. Af­ter Trump re­bounded, he of­ten li­censed his name to other peo­ple’s build­ings and mer­chan­dise, giv­ing his fans Don­ald Trump the Fra­grance and Trump pin­stripe suits. Then there was golf, re­sorts, books, a cou­ple of tow­ers. Trump was a per­fect can­di­date for Kenny’s line of branded bev­er­ages. The pair’s first meet­ing took place in Trump’s of­fice, then in its Apprentice hey­day.

“As he was say­ing, ‘I’m go­ing to ne­go­ti­ate the s--- out of you,’ klieg lights went on and tele­vi­sion cam­eras started film­ing,” Kenny says. “I was like, ‘Wow, our mo­ment of greatness.’ ” Trump lent his name in ex­change for about half the prof­its, with min­i­mum roy­al­ties of $2 mil­lion by Novem­ber 2008 and more to come later.

Trump didn’t seem to mind that shares of Drinks Amer­i­cas had been sell­ing for less than a dol­lar each. (Kenny had ex­e­cuted a re­verse merger with

a com­pany that made jalapeño mus­tard to get it listed.) That put it in the penny-stock cor­ner of the mar­ket. Even when listings there aren’t bo­gus or close to col­lapse, as many are, they’re long shots. Drinks Amer­i­cas wasn’t fil­ing re­ports to reg­u­la­tors on time. It wasn’t a glam­orous op­er­a­tion. The phone num­ber for its of­fice in Con­necti­cut had be­longed to a pizza par­lor, and call­ers would get up­set when they couldn’t or­der cal­zones.

Trump Vodka joined a Drinks Amer­i­cas prod­uct ros­ter that in­cluded Wil­lie Nel­son’s bour­bon and chef Roy Ya­m­aguchi’s sake. The drink was an­nounced pub­licly at the end of 2005. “By the sum­mer of ’06,” Trump said in a news re­lease, “I fully ex­pect the most called-for cocktail in Amer­ica to be the ‘T&T’ or the ‘Trump and tonic.’ ” But Drinks Amer­i­cas had yet to find a dis­tillery to make the booze. Kenny vowed in the same re­lease to search the globe to de­velop “the very best su­per-pre­mium vodka.”

Rene Vriends man­aged a small dis­tillery in the Nether­lands called Wan­ders. Busi­ness was slow, but when he got a chance to get in on Trump Vodka, he said some­thing dif­fer­ent. “I in­tro­duced my­self as the best vodka pro­ducer,” Vriends says. “I have a big mouth. I’m just like Don­ald Trump.” He got the job. “We had a big prob­lem be­cause we didn’t have the tanks for that,” Vriends says. He started pro­duc­ing what he could.

Mean­while, back in Trump Tower, where Trump lives and works, there was an­other com­pli­ca­tion: The vodka’s name­sake wouldn’t drink it. Trump, a tee­to­taler whose late brother was an al­co­holic, told Don Imus on the air in 2005 that it was a con­tra­dic­tion. “I know it’s like to­bacco com­pa­nies mak­ing cig­a­rettes and then ad­ver­tis­ing ‘Don’t smoke,’ ” he said. “But it’s a le­gal prod­uct, and if I don’t sell it, some­one else will.” He told Larry King in 2006 that he wasn’t a big fan of im­bibers in gen­eral. “You see them be­ing car­ried out of an of­fice, they’re to­tally bombed, and you to­tally lose re­spect for them,” he said. “So I’m not a pro­po­nent of drink­ing.” Trump told King that he’d do­nate some vodka prof­its to ad­dic­tion re­search.

In­vestors didn’t mind. “It was just a laugh among men, that’s all,” says Bruce Klein, then chair­man of Drinks Amer­i­cas. “I don’t drink lemon­ade, but we sold a lot of sparkling lemon­ade.”

Trump did get in­volved in the bot­tle’s de­sign, meet­ing with Mil­ton Glaser, best known for cre­at­ing the “I NY” logo. “I knew he was a wheeler-dealer,” says Glaser, now 86. “He came to the of­fice, he sat down, we talked a lit­tle bit about what he wanted.” The bot­tle Glaser crafted re­sem­bled a sky­scraper, with four sides and the neck as a spire, although it also re­sem­bled a broad-shoul­dered ath­lete, wider at the top than at the base. Two sides were trans­par­ent, two were golden, and there were cap­i­tal T-shaped lo­gos on all four.

Glaser can’t vouch for what was in­side. Nei­ther can the dis­tiller. “I don’t know if it tasted so good,” Vriends says. “I’m not a vodka drinker.”

When cases of Trump Vodka made it from the Nether­lands to New York in Oc­to­ber 2006, they were un­loaded by men in black tie and white gloves. There were pro­mo­tional par­ties in Man­hat­tan, Mi­ami Beach, and Hol­ly­wood, where at­ten­dees in­cluded adult-film ac­tresses Stormy Daniels and Tera Pa­trick. “It’s a smooth vodka, it’s a great-tast­ing vodka,” Trump said at the Jan­uary 2007 party in L.A. He called it “very high-level, very high-style.” Kim Kar­dashian was there, a few weeks be­fore the sex-tape leak that would vault her to fame.

A bot­tle of Trump Vodka cost about $30, more than Ab­so­lut, Svedka, or Smirnoff. C.J. Ei­ras, a dis­trib­u­tor, says drinkers need a rea­son to spend that much. “Why do peo­ple like Louis Vuit­ton?” Ei­ras says. “Who is Louis Vuit­ton? He’s prob­a­bly some French guy from 200 years ago. … It’s brand recog­ni­tion, and recog­ni­tion is of ul­ti­mate im­por­tance in the mar­ket­ing of goods, pe­riod.”

That Fe­bru­ary, Kenny an­nounced a $100 edi­tion of Trump Vodka, with a 24-karat gold-leaf la­bel. “We think clubs look­ing to dis­tin­guish them­selves and mar­ket to a very spe­cial clien­tele will be thrilled to have the bot­tle sold in their es­tab­lish­ments,” Trump said then, via a news re­lease. “The Trump 24K gold is now truly a su­per pre­mium gold stan­dard!”

At first, the mar­ket­ing worked. Drinks Amer­i­cas re­ported sales of 40,000 cases of Trump Vodka by the end of Jan­uary 2007, for $4.3 mil­lion. Later that year the com­pany an­nounced an ex­pan­sion to Rus­sia, promis­ing an ini­tial 10,000case or­der worth more than $1.5 mil­lion. “Tremen­dous,” Trump said in a press re­lease. An ad for that mar­ket, made in the post-Soviet sen­sory-over­load style, sent gold-hued cutouts zoom­ing across the screen: Trump, a tiger, a buxom woman, plus Vladimir Lenin and the words “MONEY MONEY MONEY” in faux-Cyril­lic. The ad ends with a Trump Vodka bot­tle thrust­ing sky­ward in a light­ning storm, as lit­tle T-shaped hail pel­lets rain down. The au­dio track is For the Love of Money, the theme song from The Apprentice.

Drinks Amer­i­cas an­nounced it was mov­ing bot­tle pro­duc­tion to China from Europe and cut­ting costs. Trump skipped Trump Vodka–spon­sored fes­tiv­i­ties at the 2008 Su­per Bowl, record­ing a video mes­sage in­stead. “Have fun, but not too much fun,” he said, “and en­joy our great vodka.” Brody Jen­ner

from MTV’s The Hills guest-bar­tended. Paris Hil­ton at­tended, and so did Den­nis Rod­man and Khloé Kar­dashian, a few months be­fore tap­ing their sea­son of The Celebrity Apprentice. A party photo shows a blonde lick­ing a gi­gan­tic block of ice that says TRUMP VODKA. An­other shot shows a top­less young woman with the drink’s logo on her chest. TMZ said af­ter­ward that she was 17 years old and serv­ing vodka. “We are ap­palled,” a Trump rep­re­sen­ta­tive said at the time. “Given the cir­cum­stances, we can only guess that she crashed the event to seek pub­lic­ity.”

Maybe the best piece of pub­lic­ity came from a fa­vor­able re­view. Spirit Jour­nal awarded four stars, call­ing it “in­tensely breakfast ce­real-like and bis­cu­ity,” which is praise. Even so, the vodka started to stall. In the six months be­fore Hal­loween 2008, as the U.S. fi­nan­cial sys­tem was tee­ter­ing on the edge of col­lapse, Trump Vodka did just $805,000 in sales, down by half from a year ear­lier. Drinks Amer­i­cas warned share­hold­ers that it had low­ered the price of Trump Vodka; that a new 1.75-liter bot­tle was less prof­itable; and that dis­trib­u­tors in Cal­i­for­nia and Chicago had “is­sues.”

Just be­fore Christ­mas, Kenny an­nounced the com­pany was hav­ing a dif­fi­cult time with its lender, Sov­er­eign Bank. “When you spend all this money, and it’s not re­turn­ing what you need, ob­vi­ously you’re start­ing to show losses,” says Fred Schul­man, an in­vestor in Drinks Amer­i­cas. “And, yeah, the bank pulled the credit.”

In April 2009, Celebrity Apprentice view­ers watched Trump “fire” Khloé Kar­dashian be­cause she’d flown back to Cal­i­for­nia to take classes as­signed af­ter a DUI ar­rest. In the New York Post, a Ge­orgi Vodka ex­ec­u­tive of­fered to hire her. Trump told the pa­per his ri­val’s med­dling was a com­pli­ment. “It just shows how well Trump Vodka is do­ing,” he said.

Trump Vodka was not do­ing well. “We couldn’t buy the glass be­cause we didn’t have the money to buy the glass,” Kenny says of the bot­tles. “If we couldn’t buy the glass, we couldn’t pro­duce it. If we couldn’t pro­duce it, we couldn’t ship it.” The chief fi­nan­cial of­fi­cer quit and wasn’t re­placed.

The orig­i­nal glass­maker, Bruni Glass, run by Roberto Del Bon, sued over un­paid in­voices. He melted half a mil­lion Trump Vodka mini-bot­tles, he says, cast­ing them back into the fire. Other law­suits over money came from a sales­man, a ven­dor, and even­tu­ally, in March 2011, Trump him­self. He said he wasn’t paid the roy­al­ties he was promised, and he wanted $4.8 mil­lion plus in­ter­est.

Trump Vodka sold 184 cases in the three months be­fore Hal­loween 2010, or two a day. The Dutch dis­tillery went bank­rupt that year. Drinks Amer­i­cas an­nounced in 2011 that it was sell­ing about half of it­self to a com­pany con­nected to Fed­erico Cabo, who ran beer and tequila com­pa­nies in Mex­ico. Kenny re­signed a year later, and Cabo be­came chief ex­ec­u­tive of­fi­cer. The com­pany that made Trump Vodka was now pro­mot­ing drinks with names like Mex­i­cali and Chili Beer.

“When do we beat Mex­ico at the bor­der?” Trump said when he an­nounced his pres­i­den­tial run last year. “They’re laugh­ing at us, at our stupidity. And now they are beat­ing us eco­nom­i­cally. They are not our friend, be­lieve me.”

In the U.S., Trump Vodka is dead, ex­cept for bot­tles that show up on EBay and, ev­ery now and then, in the back of ran­dom liquor stores. And yet, far away, Trump Vodka lived on. At the height of the 2008 fi­nan­cial cri­sis, Kenny struck an agree­ment to have the liquor sold in Is­rael. Trump com­plained about it in his law­suit, say­ing it was unau­tho­rized, and he an­nounced his own deal for Is­raeli sales in 2011. The Jerusalem Post re­ported this month that Is­rael’s ghost in­car­na­tion of Trump Vodka, made in Ger­many, ended up find­ing a once-a-year hol­i­day niche as a vodka that’s marked as kosher for Passover—though the re­porter said three sam­pled bot­tles weren’t ac­tu­ally kosher.

Drinks Amer­i­cas said in one of its most re­cent fil­ings that its set­tle­ment li­a­bil­i­ties, which in­clude Trump Vodka roy­al­ties, were $1.5 mil­lion. Klein, the for­mer chair­man, holds no grudge about the whole thing. “I smile ev­ery time I talk about it,” he says. “I’m smil­ing right now.” Be­tween the an­nounce­ment of Trump Vodka in 2005 and Kenny’s exit in 2012, the stock fell 99.9 per­cent.

Although there was never any vodka in Trump, there was a lot of Trump in the vodka. Ad­mir­ers saw the busi­ness’s flaws as virtues. Sell­ing vodka de­spite de­spis­ing drunk­en­ness? That’s not hypocrisy, Klein sug­gests, just flex­i­bil­ity. Part­ner­ing with a small group that lacked ba­sic funds? The man be­lieves in the Amer­i­can dream, Schul­man says.

Trump may not be the per­son to blame for Trump Vodka’s bad tim­ing, over­matched dis­tillery, top­less teenager, melted mini-bot­tles, re­treat to China, or lost credit. But in his of­fice a decade ago, af­ter mak­ing sure the cam­eras were rolling, he chose to do a deal with peo­ple who didn’t have the money or ex­pe­ri­ence be­hind them to win.

Trump de­clined to be in­ter­viewed, but his spokes­woman, Hope Hicks, e-mailed a state­ment from Trump about Trump Vodka. “It was a suc­cess­ful prod­uct, which con­tin­ues to be pop­u­lar abroad, and ul­ti­mately mor­phed into ex­pand­ing my in­ter­ests in the spir­its in­dus­try,” Trump said. “I now own the largest win­ery on the east coast, Trump Win­ery in Char­lottesville, Va., for­merly known as the Kluge Es­tate. It is an un­be­liev­able piece of prop­erty and a tremen­dously suc­cess­ful busi­ness—a deal which you re­ally should be writ­ing about.”

He re­mains sober. “I’ve never had a drink,” Trump said at a town hall this year in New York. “I’ve seen so many bril­liant young chil­dren of won­der­ful par­ents de­stroyed.”

It’s get­ting late on St. Pa­trick’s Day in New York when Kenny, who now does con­sult­ing work, says he still feels proud of Trump Vodka. “Yeah, yeah,” he says. “I mean, within the con­text of what you can feel good about.” <BW>

Trump Vodka puts in an ap­pear­ance at the Mil­lion­aire Fair in Moscow in Novem­ber 2007

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