American whiskeys show no signs of slowing
There may never have been a time like now in the long history of American whiskey. Bourbon, of course, is on fire, and distillers are now dealing with the scramble to create greater supply, an enormous change from the bad old days of the 80s and 90s when gimmicks and discounts sustained the category.
But along with Bourbon have risen the other American whiskeys, especially Tennessee and most remarkably, rye. Add in the formidable presence of moonshine and flavored whiskies (and the steady performance of even blended whiskey) and there seems to be no end of good news for American whiskey makers and sellers.
According to the Beverage Information & Insights Group, total American whiskey – Bourbon, straights and blends – jumped more than eight percent in 2014. Since 2009, rye whiskey volumes alone have grown 536 percent, from 88,000 9-liter cases to over a half million cases (561,000) in 2014, according to DISCUS. That equals into a 609 percent jump from about $15 million in supplier revenues in 2009 to over $106 million in 2014 (approximately $300 million in retail sales).
Meanwhile, moonshine grew more than 12 percent, from 580,000 to 650,000 cases, last year. Of the 13 leading straight (non-Bourbon) American whiskeys, only three didn’t show sales increases. Numerous blends also did well. And while the volume from so-called craft distillers is generally too small individually to count, in
aggregate that niche is also growing at an impressive clip.
For the most part, Tennessee whiskey means Jack Daniel’s (4.887 million cases in 2014, up 1.7 percent), although a renewed interest by Diageo in its American whiskey portfolio promises good things for the second-largest brand, George Dickel (162,000 cases, down 4.7 percent). Jack Daniel’s has been introducing new iterations at a steady clip, with the recent high-end Sinatra Selection followed up with the nationwide release of Single Barrel Barrel Proof.
Barrel Proof, ranging from 125 to 140 proof, is the second offering in the Single Barrel Collection after Single Barrel Select, a 94-proof single barrel whiskey. The new expression will be in regular but limited release, with the focus on higher-end independent stores showing success with Gentleman Jack or Single Barrel Select.
“We see that Jack Daniel’s has a long runway, and is making a great connection in today’s consumer market,” says John Higgins, Brown-Forman’s North American marketing director for Daniel’s. “The brand has an incredibly strong following and the new extensions of the brand are meeting the current flavor profile needs of new consumers and bringing them into the portfolio.”
Packaging tweaks can soon be expected for Gentleman Jack, as well as a commemorative bottle in 2016 marking the 150th anniversary of the registration of the distillery. Coming soon is the Sinatra Century, marking the star’s 100th birthday on Dec. 12, a 100 proof expression set to be priced between $450-500 retail (the current Sinatra selection retails for about $200).
For George Dickel Whisky, the introduction of rye and a buy-the-barrel program has helped, says Dickel national brand ambassador, Doug Kragel.
“As the popularity of American whisky continues to grow, more consumers are being introduced to George Dickel and our hand-crafted approach to making whisky. George Dickel’s Barrel Program allows on- and off-premise accounts to travel to Cascade Hollow and pick out their very own barrel of nine-year-old whisky.”
While anyone can make whiskey in Tennessee, the state legislature created a legal designation in 2013, requiring whiskey to be made from 51 percent corn, aged in new oak barrels in Tennessee and charcoal mellowed. Other types of whiskey can be produced in the state, but can’t be marketed as Tennessee whiskey, with one exception: whiskey made in the state by Prichard’s.
In mid-summer, Heaven Hill released a reformulated and repackaged Pikesville Rye for national distribution, the latest milestone in the return of rye. The lone surviving major Maryland-style rye, it’s now available nationally in a six-year-old, 110 proof iteration.
“Pikesville is purely a reaction to the marketplace forces that have been creating an awful lot of demand,” says Heaven Hill’s spokesman Larry Kass. A lower proof version of the lower rye-content style spirit has been available for some time in the Maryland area, but with numerous cocktail aficionados clamoring for the product, Heaven Hill started planning as they were able to build up rye stocks.
Heaven Hill, like other major distillers, was barely able to maintain distribution of their rye; in their case, Rittenhouse Rye, which has become one of the more popular brands. “But now we’re at a point where we can expand our distribution of both. Those of us who have been looking at this category have clearly seen a passionate interest in traditional straight rye American whiskey, which was tapped out pretty quickly,” Kass says.
“The growth of rye whiskey has been phenomenal, given that as late as 2000, rye volumes were virtually nonexistent with only a handful of brands in the U.S. market,” says DISCUS Chief Economist David Ozgo. “By 2014, there were over 100 brands, and the sheer numbers tell the story. While it still represents a small share of the overall American whiskey category, its growth is skyrocketing.”
Numerous niche brands have been entering the market, and lately the bigger suppliers have followed suit. Bulleit Rye has been said to bolster the brand significantly, and Russell’s Reserve rye from Wild Turkey is in high demand. Jack Daniel’s, which has issued an unaged and a “rested” rye, plans in the next year to issue a fully-aged rye.
The halo effect of rye has even bled over to Bourbon: Beam Suntory this year released an Old Grand Dad Bottled in Bond with the label noting “high rye.” The company also upgraded Jim Beam Rye to 90 proof. Dickel’s rye has also done well. “After its launch in late 2012, George Dickel Rye continues to see solid traction and has become the number three best-selling rye in the country,” Kragel says.
There’s still more room for rye to expand, says Beam Suntory national whiskey ambassador Adam Harris; specifically higher proof and single barrel expressions. “Those looking for more whiskey flavor and proof will find it with things like Knob Creek Rye, and there’s an opportunity to get people to drink rye on the rocks. People love rye in cocktails, but we have yet to tip the scales so that people are drinking rye on the rocks.”
The Rise of Moonshine
Moonshine has boomed due to the growth in flavored varieties and the two category leaders, Ole Smoky and Junior Johnson’s Midnight Moon, are looking forward to maintaining and building share. Ole Smoky is about to launch its first major marketing initiative.
“The rate of growth has slowed somewhat and we decided it was time to create a really great marketing campaign to build both the category and our brand,” says Meg Bruno, head of marketing for Ole Smoky, which offers 20 varieties (the biggest sellers being 40 proof blackberry and apple pie and the 100 proof cherry and white lightning).
“The category still needs to prove itself; we’re still the new kid on the block and retailers who took in multiple brands may have seen it slow. Now they need more support from brands,” she adds.
Joe Michalek, president of Piedmont Distillers, maker of Catdaddy as well as Midnight Moon, says the tipping point was the inclusion of flavors in 2007, and as interest in moonshine TV programs. As flavored spirits and other cultural influences grew, so did moonshine.
“Now that there are about 75 brands with about 125 SKUs at a minimum, and some competitors with significant resources out there, we’re seeing a lot of interest,” he says. “We have close to a 50 percent share of white whiskey and a fairly loyal franchise out there with Midnight Moon, but we’re in a proverbial street fight at retail. I think this will all shake out in the next 18 to 24 months and we’ll get back down to the number of brands and offerings reflective of the volume, because right now there are more brands than there is demand for this segment of spirits.”
Midnight Moon’s leader is also apple pie, with almost 50 percent of the brand’s business, but as Michalek says, ”How many apple pie moonshines does a retailer actually need?”
Flavored whiskeys are unlikely to reach the level of variety that vodka achieved, but new flavors are still coming. Jim Beam has just introduced a green apple version, joining Beam Suntory’s Red Stag black cherry and spiced, Jim Beam maple and Kentucky Fire and Knob Creek’s Smoked Maple (the main super-premium flavored whiskey).
“If you’re the biggest Bourbon producer out there, you have to play in all the spaces,” says Beam Suntory’s Harris. “We put things like green apple flavored whiskey out there for people who want it.”
But Beam also included last year in their Beam Signature Craft series a limited edition finished with Oloroso sherry
and Spanish brandy. “It was not a barrel finish but a liquid finish, and you could honestly say it was a flavored whiskey,” he adds.
One of the flavored whiskey success stories among new suppliers is Bird Dog. Jon Holecz, vice president, marketing for brand owner Western Spirits, says the brand will pass 250,000 cases this year, up from 28,000 three years ago. Its flavor line has just added spiced and jalapeno honey to a portfolio that started with blackberry, peach, hot cinnamon, maple, apple, chocolate and a peppermint moonshine (a straight Bourbon completes the line.) Apple sells best, with peach and blackberry not too far behind.
“Retailers are still very accepting of our flavors, although we may be reaching a plateau in the category,” Holecz says. “Retailers now want more and are constantly asking for tastings and samplings to help drive it out the door.”
Bird Dog isn’t the only player in the spicey-sweet sweepstakes. Flavored whiskey pioneer Wild Turkey, which launched a honey flavor in the 1970s, now offers American Honey Sting, spiked with the infamously hot ghost pepper.
Heaven Hill, which has done very well with the Evan Williams flavored line, has recently added Raven’s Lace. It’s designed to appeal to a female base, says Kass, who points out that while flavored whiskies do attract some women, the larger consumer segment is young males.
To that end, Evan Williams has added peach to the line that includes honey, cherry and fire and two seasonals, cider in fall and eggnog in holiday. “Our flavor franchise is really, really strong, and a lot of the flavor growth has moved over from white spirits to whiskies. There’s a lot of interest and growth there and we are certainly benefiting from it. But I don’t expect many cupcakes or whipped creams – there will be a slower, more deliberate innovation to package flavors that work well with whiskeys,” he says.
While long-time blended whiskey category leader Seagram’s 7 faltered last year (down 2.1 percent to 2.130M cases), other brands in the top tier showed growth – Kessler (up 2.5 percent to 730,000 cases), Kentucky Deluxe (up 2.4 percent to 302,000 cases), McCormick Blend (up 1.1 percent to 240,000 cases), and Beam 8 Star (up 4 percent to 180,000 cases). The leading blends accounted for more than four million cases sold all told, nothing to sneeze at and a sign that this portion of the whiskey market seems to have stabilized.
“Purely because of the halo of whiskey itself, even blended whiskey is catching more eyes than it used to,” Kass says.
Concludes Beam Suntory’s Harris, “The whiskey boom has certainly brought attention to all the suppliers, big and small, of all kinds – not just those in Kentucky but all across the country. The challenge now will always be having enough whiskey.”
Jack Robertiello is the former editor of Cheers magazine and writes about beer, wine, spirits and all things liquid for numerous publications. More of his work can be found at www.jackrobertiello.com.