(The Wall Street Journal) ? Last month, Bermuda-based Bacardi Ltd. made a $2 billion bet on a small, but gold-plated, vodka brand. Now it must be careful not to kill the goose that laid it.

Liquor importer Sidney Frank Importing Co. of New Rochelle, N.Y., turned Grey Goose vodka into a top seller by portraying it as a drink for wealthy people with impeccable taste. Now Bacardi faces the classic test of an industry giant acquiring an entrepreneurial business: how to make the little brand much bigger without damaging the fragile formula that made it grow in the first place.

Bacardi acquired Grey Goose from Sidney Frank because it wants to broaden its presence in premium vodkas, one of the fastest-growing segments of the liquor market. While annual sales of Bacardi rum are far larger than those of Grey Goose ? eight million cases vs. 1.4 million cases ? rum sales are growing much more slowly.

In 2002, Bacardi rolled out a superpremium vodka,Turi, from Estonia, but analysts say Turi has yet to gain traction. As for Grey Goose, it faces considerable hurdles: As the brand becomes more popular, it risks losing the marketing sizzle that gave it cachet in the first place. At the same time, an array of competing high-end vodkas have lately come to the market.

?That is the thing Bacardi will have to be both careful and realistic about?, says Bryan Spillane, analyst for Banc of America Securities. ?Vodka is a very fickle category. Grey Goose has some staying power. It?s a good product with good packaging, but people are always looking for that next thing.?

Bacardi insists it is well equipped to continue the growth of Grey Goose. The company, with world headquarters in Hamilton, has a giant distribution network that will help it boost sales in markets where Grey Goose is now weak, like California. And while Bacardi is better known for mass-market liquors than high-end drinks, it had success with Bombay Sapphire, a premium gin it bought in 1998.

?We are a very strong marketing company. This is something we have been doing since 1862 ... I think that this is really our core,? says Ruben Rodriguez, chairman of the board of Bacardi.

Sidney Frank?s success with Grey Goose came from convincing drinkers that they were paying high prices for the best product available. To emphasise that message, the company trained bartenders to remind drinkers that Grey Goose was imported from France. He used the results of a Beverage Testing Institute blind taste test to promote Grey Goose as the world?s best-tasting vodka.

Mr. Rodriguez calls Mr. Frank?s marketing ?cutting edge? and ?brilliant?. But as Grey Goose increases its volume, consultants say the challenge will be to prevent competing brands from stealing its share of the premium vodka market. In the late ?90s, Grey Goose and other high-end vodkas entered the market priced as high as $25 a 750 ml. bottle. That compared with $17 for a 750 ml. bottle of Absolut, once considered the premier imported vodka, which subsequently lost market share.

To regain sales lost to Grey Goose, Absolut Spirits Co., the unit of Sweden?s V&S Vin & Sprit AB that makes Absolut vodka, launched Level, a superpremium vodka, in March. Similarly, Allied Domecq PLC is slowly rolling out Stolichnaya Elit, which it calls an ?ultraluxury? vodka, for $60 per 750 ml. bottle.

Darrell Jursa, a managing partner of Liquid Intelligence, a Chicago beverage-marketing agency, says Grey Goose must continue to find a way to distinguish itself from other premium vodkas. ?We are beyond the days of tastings and talking about how it?s produced. Because there are so many vodkas out there, Grey Goose continues to need to fight for share,? he says, adding that Bacardi may be able to further capitalise on Grey Goose?s flavoured vodkas.

Sidney Frank had already begun to make adjustments before selling the vodka business. Last year, Grey Goose sponsored the Golf Channel?s coverage of the British Open. As part of that deal, Sidney Frank bought Grey Goose?s first-ever TV commercials. More recently, Sidney Frank bought time for five separate commercials on several cable channels with the tagline: ?Grey Goose, the World?s Best Tasting Vodka.? Bacardi is building on these moves by adding a new holiday spot to air in December.

Grey Goose?s sales are now concentrated in Northeastern urban markets like New York, which gives Bacardi plenty of territory to expand into. In particular, Grey Goose lacks strong distribution in discount warehouse chains that account for heavy spirits sales in states like California and Arizona. Grey Goose now sells only about 150,000 cases in California, according to Impact.

In trying to make inroads into these markets, Bacardi plans to deploy tactics it developed for Bombay Sapphire gin. When it acquired that drink among others from Diageo PLC for $1.98 billion in 1998, the gin was selling roughly 250,000 cases a year based on a simple but elegant ad campaign that emphasised the brand?s famous blue bottle and an unusual, designer martini glass. Bacardi built on Bombay Sapphire?s association with the world of design by increasing its presence at major design events as well as sponsoring a global martini-glass design competition.

Bacardi also widened the array of outlets that offered Sapphire, which had been only available in small, exclusive high-end bars, and trained bartenders and wait staff on how to make cocktails such as the Buck, which combines Bombay Sapphire with lemon juice and creme de menthe. The efforts paid off as Bombay Sapphire sales grew to 650,000 cases in 2003.

In the same vein, Bacardi plans to increase Grey Goose?s association with the arts and charities by sponsoring events such as Night of Olana in New York, a benefit to preserve Olana, the historic home of landscape artist Frederic Church near Hudson, N.Y., and the Carousel of Hope, a juvenile-diabetes benefit in Los Angeles.