Why the notion of scarcity raises value of a product

Kenya Wine Agencies Limited brand ambassadors pose with the new Viceroy 10 during the launch in Nairobi on July 7, 2017. PHOTO | FRANCIS NDERITU | NMG
Kenya Wine Agencies Limited brand ambassadors pose with the new Viceroy 10 during the launch in Nairobi on July 7, 2017. PHOTO | FRANCIS NDERITU | NMG 

Kenya Wine Agencies Ltd (KWAL) earlier this month launched Viceroy 10, a limited edition vintage brandy that is double distilled and matured in French oak barrels for 10 years, unlike other Viceroy brands matured for five years.

The Viceroy 10 has only been launched in the Kenyan market, despite the fact that Van Ryn distillery, which manufactures the brandy, is an internationally acclaimed firm.

This is bound to pique consumer interest and attention as product exclusivity has been found to increase the value and attractiveness of a commodity in limited supply.

“A limited edition product creates a sense of urgency in consumers in that they will want to purchase it when it hits the market and belong to a unique group of consumer that owns that particular commodity despite its price tag,” said Bruce Gumo, a marketing analyst at Biz Trace, a market solutions company.

The recommended retail price for the Viceroy 10 is Sh3,000, more than double the price of the original Viceroy which retails at Sh1,200.

‘‘To most Kenyan brandy drinkers, Viceroy is a well-known household name. It, therefore, made perfect sense to be the first market to launch the 10-year-old brand. We are thrilled with this development; Viceroy 10 is a unique premium smooth brandy that has been double distilled and matured in French oak barrels since 2007.

‘‘Like all good things, it has taken time, patience and skill to make something of which we are very proud,” said Christine Ethangatta, KWAL Marketing Manager.

“We are constantly on the lookout for opportunities to grow and expand our portfolio based on the evolving Kenyan market. Adding Viceroy 10 to the portfolio will offer additional value to our consumers given the heritage and craftsmanship of the variant.” Psychologists Stephen Worcliel, Jerry Lee and Akanbi Adewole found that exclusivity does indeed raise value.

“Consumers are constantly bombarded by advertising aimed at increasing their desire to buy certain objects. In order to enhance the attractiveness of their product, marketers use several strategies such as pairing the object with a well-known figure. Another effective method for selling a product is to suggest that it is scarce or in limited supply.

‘‘Limited editions of products continually appear on the market, and they often cost as much as four times more than the everyday product,” reported the psychologists. “This point suggests that there is something about scarcity that increases the attractiveness or value of the limited product.”

An example of a company that successfully used this tactic is American manufacturer of spirits, Beam Suntory.

Last year, it released a limited edition of Booker’s Rye whiskey that had been aged for 13 years, unlike other whiskeys that are aged for six to eight years.

It was estimated that the company released 10,000 bottles which retailed at $300 (Sh30,900) each, three times more expensive than its original whiskey, which retails at $100 (Sh10,300).

Industry experts described it as one of the hardest bottles of whiskey to find in the market with Rob Mason, the Vice President for Jim Beam Suntory bourbon division, telling Forbes Magazine: “Booker’s Rye is a one-time-only release and features a never-before-released rye mash bill, unique only to this batch. Once it is gone, it is gone for good.”

On that basis, it won the World Whisky of the Year in 2017 in Jim Murray’s Whisky Bible, the world’s leading whisky guide, after being tasted alongside 1,247 new whiskies.

The judges described it as “simply a staggering example of a magnificent rye showing exactly what genius in terms of whiskey actually means”.