CALLING IRISH SPIRITS

In days of yore, the call of Irish spirits was most likely the wail of a banshee in the misty mountains or meadows of Ireland. Nowadays, the call is more likely the wail of Irish rocker Bono of the band U2 or the rhythmic clatter of the Riverdance troupe tapping their toes on stage. It’s also likely to be the sound of consumers asking for an Irish whiskey or Irish cream liqueur, their increased sales propelled in part by the growing popularity of all things Irish. America has been captivated recently by Irish music, dance, movies, poetry and literature, and places like Dublin are now hot tourist spots. Phenomena like Riverdance, U2 and The Chieftains seem to have combined the energy and enthusiasm of contemporary Ireland with much of its unique heritage.


Part of that heritage concerns Irish whiskey, which it is believed originated around the 6th century. Monks in Ireland discovered that when a mash of barley and water was fermented with yeast and then heated in an alembic (a type of pot still), they could separate and retain the alcohol in it. This whiskey was called uisge beatha, or “the water of life,” by the Celtic population. That phrase was eventually anglicized by English soldiers in the 12th century, resulting in the word whiskey.


Though there were almost 2,000 stills in Ireland by the late 1700s, only a handful of Irish whiskey brands are available in the U.S. today. All of them are growing, however, even in the face of a declining brown goods market. In the control states, the category finished the year up almost 9% compared to 1996, according to estimates from Adams Media research, and is expected to continue to grow in 1998.

 IN THE IRISH SPIRIT

No discussion of Irish spirits would be complete without due attention paid to Irish Mist, imported by Hiram Walker. Based on an ancient recipe, Irish Mist was first produced in 1947. The recipe, rediscovered by the grandson of Daniel E. Williams, for whom Tullamore Dew was named (after the initials D.E.W.), combines Irish whiskey with honey.


The popular liqueur competes with the grand classics like Drambuie, Grand Marnier and B&B, so it tends to have an older constituency. But that may soon be changing.


“We don’t want to leave our core constituency, but we’re looking for younger drinkers,” said Eric Larsen, brand manager. “There are some pockets where Irish Mist is being consumed as a shooter, and we’re looking at how we can appeal to that base as well as to a female base where consumers can enjoy Irish whiskey without all the bite.”


Grassroots support, direct mail, recipes and a partnership with the Blarney Gift Catalog may help.


The spirit of Irish independence has been responsible for the tax-dodging exploits of thousands of illicit distillers over the years. When England imposed a system of licensing in the 1600s, a number of Irishmen chose to distill their own fiery brand of whiskey rather than pay the taxman. The illicit whiskey was called poteen, which refers to the pot in which it’s distilled.


Reviving the tradition of poteen is Hackler, imported by Schieffelin & Somerset. The brand was launched in Boston last fall with plans to roll out to other markets with strong Irish-American communities this year. Support includes print ads with the tag, “Discover your Irish spirit.”


 


Whiskey’s Up


“It’s still from a relatively small base, but Irish whiskey is headed up,” said Stephen Kauffman, group product manager for brown goods at Heaven Hill Distilleries, importer of Kilbeggan and The Tyrconnell.


“The cigar phenomenon is really helping brown goods,” added Mark Levinson, vice president at A. Hardy/USA, which imports Connemara. “Single malts and cognacs have been doing well as a result. There are a huge number of people of Irish descent in this country, and I’m sure they’re curious about Irish whiskey.”


In addition, the consumer trend toward premium products, including spirits, has been another factor in favor of Irish whiskeys. In fact, said marketers, Irish whiskeys have been undermarketed in this country, and have a real opportunity for growth, particularly among younger consumers.


“A lot of consumers in the U.S. don’t want to drink what their parents do,” said Philippe Cassous, marketing director for Jameson, imported by Austin, Nichols Co. “Irish whiskey is less snobbish than Scotch and perceived to be of higher quality than Canadian whisky.”


“Consumers also are finding that Irish, of all whisky categories, is easiest to consume,” noted Roy Danis, vice president of sales and marketing at Austin, Nichols.


The production process, obviously, plays a big part in this smooth character of Irish. First, it is made with both malted and unmalted barley. The malt is then dried in a kiln — unlike Scotch whiskies which are dried over peat fires — so it doesn’t acquire the same smoky taste common to Scotch. Finally, Irish whiskey is distilled three times, once more than Scotch, resulting in a “purer” distillate. The distilled spirit is matured in sherry or bourbon casks for several years before being “vatted” or blended. The process creates a product that is lighter and smoother than most other whiskies.


 


Appealing To Younger Consumers


Hoping to capitalize on Irish whiskey’s heritage and its potential appeal to consumers, especially younger drinkers, Irish brands in the U.S. are trying to drum up more grassroots interest and support.

Leading Brands of Irish Whiskey in the Control States (Mixed Cases)

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Brands
Supplier
1996
1997*
% Change

Jameson (includes 1780)
Austin, Nichols
23,228
25,942
11.7%

Bushmills
Brown-Forman Beverages
22,155
23,057
4.1%

Tullamore Dew
Hiram Walker
3,022
3,826
26.6%

Powers
Austin, Nichols
3,466
3,338
-3.7%

Kilbeggan
Heaven Hill Distilleries
1,559
1,839
18.0%

Black Bush
Brown-Forman Beverages
1,528
1,592
4.2%

Bushmills Single Malt
Brown-Forman Beverages
900
1,073
19.2%

The Tyrconnell
Heaven Hill Distilleries
140
205
46.4%

Total Leading Brands
 
55,998
60,872
8.7%

Others
 
3
92
++

Total Irish
 
56,001
60,964
8.9%

Source: Adams Media Research Database from NABCA data.

(*) Last 12 months data ending August 1997.
(++) Greater than 100.0%.


Jameson, the category leader which topped the 1 million-case mark worldwide in 1996, grew as much as 14% in some markets last year, the company said. And sales of Jameson in the control states increased by more than 10% in 1997, according to Adams Media Research. The brand is increasing its spending to support a print and outdoor ad campaign stressing its Irish origins. A new campaign that targets a younger audience will be unveiled this year.


Brand support includes display materials themed, “Call The Shots,” for St. Patrick’s Day. But the brand is pulling away somewhat from typical St. Patrick’s Day promotions.


“We want to promote Jameson as an everyday whiskey,” said Cassous. “In 1998, we’re going to try to have only 20% of our communications devoted to St. Patrick’s Day and 80% to the rest of the year. There are 40 million people of Irish descent in the U.S., so we’ll be doing more promotion to Irish communities.”


The brand also is considering another line extension mid-year that would be positioned between Jameson and the 12-year-old Jameson 1780. The new product would give Austin, Nichols entries at five different price points — Powers at the low end (marketed primarily to on-premise accounts for Irish coffee, though it’s one of the best-selling brands in Ireland), Jameson, the as-yet-unnamed new product, Jameson 1780 and Midleton Very Rare at the very high end.


The number-two brand in the U.S., Bushmills, was up more than 4% in the control states in 1997, and expects stronger growth this year. The brand kicked off a six-month print campaign in September, its first ads in several years.


“The interest in premium spirits suggests a real opportunity for Irish whiskeys,” said David Dorsey, vice president, business planning manager, at Brown-Forman. “We’ll grow by taking share from Scotch and other brown goods.”


Though the brand as a whole should grow this year, Dorsey said, Black Bush and Bushmills Malt will grow even faster because of the interest in premium spirits. Bushmills Malt, in fact, is now among the top 10 best-selling single malts in the country, according to Dorsey.


Bushmills is hoping its heritage as the oldest licensed whiskey distillery in the world (1608) can help build the brand. In addition to the ads running in The Wall Street Journal, Bushmills offers basic point-of-sale support materials. The brand is strongly pushing grassroots programs, however, getting third party endorsements by conducting tastings wherever possible and offering local support such as training or special promotions.


Tullamore Dew has seen tremendous growth since being reintroduced to the U.S. market three years ago after a 20-year absence. The brand has rocketed to the number-three spot, growing more than 26% in the control states last year.


“In markets where we started out well, we’re still growing and expect to continue to grow,” said Guido Goldkuhle, Tullamore Dew brand manager at Hiram Walker. “When we get it into people’s mouths they’re surprised at how great it is.”


To get it into even more people’s mouths, the brand is concentrating this year on direct mail and sampling, conducting tastings in key markets like Chicago, Philadelphia and Boston. They are also intensifying marketing at the local level.


“Our key brand champions are the sales guys in the field who do the grassroots stuff,” Goldkuhle said. They make sure the brand is involved with local Irish parades, festivals and publications.


 


Smaller Brands Growing


Growing even faster than the category are the smaller independent brands that offer consumers some of the same mystique of single malt Scotches. Heaven Hill’s Kilbeggan is positioned against Powers, and though 80% of sales are to on-premise accounts, it’s gotten good reviews. The Tyrconnell, also imported by Heaven Hill, is a single malt priced slightly below Bushmills Malt, making it very competitive.


Connemara, another whiskey from the independent Cooley Distillery, broke tradition with other Irish whiskeys when it was first introduced, using malt dried over peat fires like Scotch. A single malt, Connemara has an Islay malt taste, similar to Laphroaig, according to the company.


This year Connemara sports a new package, a colorful tube overpack. For St. Patrick’s Day, the brand is offering the trade a special keychain carved out of Connemara marble. Retailers also can get shelf talkers and other p-o-s materials.


New this month is Cask-Strength Connemara, a 120-proof single malt bottled from individual casks. The exclusive whiskey will compete with other high-end single malts.


 


Cream Of The Crop


The Irish cream liqueur category was created in 1974 when Baileys was introduced. It was an immediate hit, and the brand, imported by IDV North America, is now the third best-selling liqueur in the U.S. Worldwide, the company claims that 1,000 glasses of Baileys are consumed every minute. Despite an onslaught of wannabes over the years, the Baileys brand holds more than 50% of the market, and sales of both the Original and Light versions are nearing 1 million cases annually nationwide.


A year ago, Baileys launched a web site (www.baileys.com) to target 25- to 35-year-old consumers. Last fall, the brand added a “Truth or Dare” game to the “Pleasuredome” site, giving it more interactivity, and started promoting the site with banner advertising on other home pages, including on-line versions of several newspapers.


Baileys’ other programs — including advertising, promotions that feature its popular “Yum Cups” and striking point-of-sale and display materials — have helped drive category growth. Popularity of new drinks that include Irish cream as an ingredient, like the Mudslide and Slippery Nipple, have also helped boost sales. But incursions by upstart brands at cut-rate prices are also having an impact.


“As Baileys goes, so goes the category,” said Eric Larsen, brand manager for Carolans, imported by Hiram Walker. “But there’s also the phenomenon of an influx of low-price creams. Volume-wise, they’ve given a shot in the arm to the category, but some have been very short-lived.”


While Baileys holds court in the category, a number of brands, like Carolans and Emmets (also from IDV North America), compete fiercely in the so-called “value” category, priced a little below Baileys. This middle tier of creams is feeling pressure from lower-priced brands, like IDV’s O’Darby’s, as well as a number of regionally distributed creams.


“We’re all trying to hold on to a premium image, but it’s tough in the face of all the low-price competitive pressure,” Larsen said.


 


Value Brands Hold Their Own


Carolans is the leading mid-priced brand. It grew about 3% nationally last year, making it the number-two Irish cream in the U.S. and the world, according to Larsen. Line extensions Carolans Light and Carolans Irish Coffee have a much more modest base but do well in their niches. Carolans is getting more support this year, with some outdoor trials, direct mail programs and a consumer sweepstakes for a trip to Ireland.


The fastest-growing brand in the category has been the mid-priced Saint Brendan’s Superior Irish Cream, imported by David Sherman Corp., which grew more than 8% in the control states. Though the brand is “value-priced,” it has an upscale package that gives it a premium image, according to North American regional manager Roisin O’Grady. Saint Brendan’s, which is owned by dairy company Golden Vale, actually produces all of its own cream.


Though St. Patrick’s Day is big for all Irish cream brands (and most Irish brands in general), O’Grady said Saint Brendan’s wants to concentrate on more than just one holiday this year. The brand plans to increase its visibility, and will run ads and promotions on a regional basis. Sampling is important, so Saint Brendan’s promotes its 50 ml bottles to build trial.


Another up-and-coming brand in the segment is O’Mara’s Irish Country Cream, imported by Heaven Hill. Launched just two years ago, the product has become a very strong regional contender in the Northwest and the Southeast.


The brand is positioned as the sweetest, richest cream in Ireland and features a “spokescow” in all of its sales and display materials. This year O’Mara’s is concentrating on a variety of display materials including on-pack coffee and other flavor-related samples, recipe books and a gift set.


Whether whiskey or cream, Irish spirits are lifting the spirits of consumers as they continue to grow in popularity. While the upcoming St. Patrick’s Day holiday represents a prime selling season for Irish brands, most marketers are beginning to push to keep their brands visible all year-round. As consumers continue to express more interest in Ireland and Irish heritage, Irish spirits offer retailers a tremendous sales opportunity.

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