Canadian whisky has, historically, perfomed well in several control state regions. In fact, while Canadian whisky numbers only one brand (Canadian Mist) among of the top 10 distilled spirits brands nationwide, practically every control state includes at least two, and sometimes five, Canadian whiskies among their 10 best-selling spirits brands.
Still, Canadian whisky consumption continues a slow but steady decline, both in the control states and nationally, where, according to the 1998 Adams Liquor Handbook, Canadian whisky sales dropped 2.1% in 1997. But the most recent estimates by Adams Media Research reveal that the Canadian whisky category may well be stabilizing. Estimates show that total 1998 sales of Canadian whisky were off a mere 0.7% nationally, to 15.9 million 9-liter cases. Suppliers say that Canadian whisky, the second largest spirit category on the market representing almost 12% of distilled spirit sales nationally, shows the potential for a turn-around.
Many suppliers believe that the category’s problems are centered on two fixable factors: a lack of advertising and other marketing support and, until recently, the absence of a well-developed superpremium segment. But these factors are being addressed by some companies.
For example, Allied Domecq Spirits, USA is making a significant statement by implementing a major program for Canadian Club. “The Canadian whisky category has, in the last generation, failed to really solidify itself with the consumer,” said Martin Jones, president of Allied Domecq Spirits, USA. “People continue to be loyal to some of the brands in the category, but Canadian whisky has, to some extent, become a little bit too much of a commodity. What we need to do with Canadian Club is begin redeveloping the essence that the brand represents — the strong identity for the product and the reason for the consumer to consume it. We’re launching a whole new marketing plan for Canadian Club which will cover the entire range of elements from advertising to new products to sales promotion and merchandising.”
Basic to the plan is the company’s release of three new superpremium Canadian Club line extensions: Canadian Club 100 Proof, Canadian Club 10-Year-Old Reserve and Canadian Club Sherry Cask.
“These brands address changes we’ve seen in consumers and the evolution of the category,” said Dave Waluk, vice president and group marketing director at Allied Domecq Spirits, USA. “The whisky consumer is evolving, becoming more discriminating.” This change, Waluk noted, is similar to what has happened with other beverages, such as wine, beer and coffee. “Consumers have more refined tastes,” he said. “It’s not so much a badging thing as it is being more sophisticated.”
Canadian Club, from Allied Domecq Spirits, USA, is featuring point-of-sale materials highlighting the venerable Canadian whisky and two of its new line extensions, Canadian Club Reserve and Canadian Club Sherry Cask.
Canadian Club retails for approximately $12, while the new 100 Proof will retail for about $14. Indeed, the 100 Proof has already had success in special markets, such as duty free, so it represents a real opportunity for a select consumer niche. The 10-Year-Old Reserve, which will, in some sense, replace Canadian Club Select, a brand that is currently being phased out, will retail for $15 to $16. The new 10-Year-Old Reserve is “barrel-blended,” meaning that its whiskies are blended together in a barrel at the beginning of the maturation period rather than later, as is the case with other blended whiskies. Sherry Cask, which spends part of its aging time in casks previously used for sherry, will retail for approximately $25.
“It’s actually an incredibly good-tasting product, and that’s one of the things that some of these North American whiskies need,” said Jones. “Consumers’ tastes evolve, and as they look for a richer, fuller-bodied, complex taste among whiskies, they are searching outside the Canadian whisky category to single malts, specialty bourbons, and so on. If we can show them that Canadian whisky can be as complex as any of these, then I think there is an opportunity.”
Waluk agreed. “The superpremium segment is very underdeveloped,” he said. “Canadian whisky lacked the leadership it needed over the last 20 years. There is a lot of opportunity. While the vast majority of the business will still be six-year-old whiskies, [the introduction of superpremiums] will, as happened in the Scotch and bourbon markets, generate lots of news and attract consumer attention.”
TALKING UP CANADIANS
Suppliers are stressing the different attributes of their brands. Some of the terms in circulation are:
Age Statements: Legally must be the age of the youngest whisky in the blend. Most Canadians are aged for six years or longer. In general, the longer the aging process, the smoother the whisky.
Barrel-Blended: This means that the different whiskies used in the product are blended together first and then aged, allowing more time for their flavors to marry.
Double-Casked: While most whiskies used in Canadian blends are aged separately before being blended and bottled, “double-casked” means that the whiskies are aged twice, once before being blended and then again after the blending process.
Sherry-Casked: These whiskies are aged in casks that have previously been used to age sherry, thus imparting subtle sherry flavors to the whisky.
For Canadian Club, Allied Domecq has hired Hal Riney, an advertising agency based in San Francisco, to develop a new advertising campaign. Scheduled to launch by the end of the first quarter of 1999, the campaign will target young adult consumers, described by Waluk as “entry-level cocktail users, men aged 25 to 39.”
For its part, Canadian Mist increased its advertising budget by more than 50% last year, to approximately $3 million per year. And, said Dan Kelley, general manager for the brand at Brown-Forman, “Canadian Mist has, I think, stabilized. It has been up for the last several months because it is benefiting from the renewed focus.”
Tangle Ridge, the double-casked, blended 10-year-old Canadian whisky from Jim Beam Brands, is also appealing to drinkers who’d like to trade up to superpremium whisky.
That focus includes an advertising campaign appearing in 22 magazines, as well as radio spots in seven cities and as outdoor ads in approximately 15 markets. The brand has also been doing drink promotions — such as for the Black Manhattan (made with Canadian Mist and Oblio Caffe Sambuca) — as well as cross-promotions, such as an upcoming one involving a Coleman fire-pit product. Kelley sees a lot of favorable trends for Canadian Mist and for Canadian whiskies in general. “More people are drinking whisky, as a percentage of the population,” he noted, “and young adult consumers, in their 20s and 30s, are tending to have a higher incidence of whisky consumption than they used to.” Furthermore, he pointed out that Canadians, like other spirits, are benefiting from a strong economy and from the growing recognition of the health benefits of moderate alcohol consumption.
Like many suppliers, Kelley is most optimistic about the trends involving young adult consumers. “There are good opportunities to grab the new young adult consumers in their 20s and 30s, rather than let them gravitate toward white spirits,” he said. “Canadians are a great product for that because they mix well.” Brown-Forman is currently investigating opportunities with advertising agencies to develop an image-building advertising campaign focusing on younger adult consumers.
Seagram Americas, which markets the premium Crown Royal, the number two Canadian nationally, and Seagram’s V.O., the number four brand, is also bullish on its brands’ potentials. And why not? “Crown Royal is a hot brand. It has been growing like crazy,” reported Bob Bernstein, vice president and category director of North American whiskies for the company. Annual sales of Crown Royal have just exceeded the 2 million case mark.
In a category in which many brands compete fiercely on price, Crown Royal has long outperformed its Canadian competitors because of its premium image and price level. This paradox has not been lost on Seagram or on other suppliers.
Indeed, Seagram was one of the first to introduce a superpremium brand extension, Crown Royal Special Reserve, which in 1998, Bernstein said, saw double-digit growth. The brand has also just introduced a new 375 ml size.
Canadian Mist from Brown-Forman, the top-selling Canadian in the category, is doing a cross-promotion with Coleman portable outdoor fireplaces and fire pits.
And Seagram Americas began rolling out another Canadian superpremium, V.O. Gold, in March. This specially blended product, aged eight years compared to six years for its base brand, is meant both to give current consumers an option to trade up and to appeal to consumers new to Canadian whisky. It is being supported by an advertising campaign, launched in September, that focuses on existing V.O. consumers. “They are very male, and they are not swank but are everyday people,” said Bernstein. The ads, with the tagline, “It’s what men do,” point out humorous “male-isms,” such as “They buy tools that they’ll never use,” and “They remember scores, not anniversaries.”
Some in the spirits business have their doubts about Canadian superpremiums. “Canadians are more of a working man’s drink,” noted Jack Kavanagh, at Barton Brands, a company whose Canadian whiskies, including Canadian LTD, are price/value brands. “With small-batch bourbons and single malt Scotches, [suppliers] are repositioning the entire concept [of the spirit] and are attracting a different type of consumer. Canadians are somewhat more difficult to reposition.” He pointed out, for example, that Canadians have a lighter taste than other whiskies and are most often consumed mixed, though with things such as water and ginger ale, rather than in classic cocktails.
SELECTED MARKETING PROGRAMS
(Allied Domecq Spirits, USA)
From January to March, Canadian Club will be launching its three new brand extensions, Reserve, 100 Proof and Sherry Cask. The brand is also working on a new advertising campaign, targeted at young adult consumers, for this year.
Among other cross-promotions, Canadian Mist will be running one involving a fire pit, or portable outdoor fireplace, from Coleman.
Seagram is introducing a new 375 ml size bottle for Crown Royal’s Special Reserve. Crown Royal itself is continuing with its Crown Royal Untamed & True country music tour, which, this year, will stop at 40 cities as well as continuing its sponsorship of equestrian events, from show-jumping to rodeos, across the country.
Seagram launched an advertising campaign, “It’s What Men Do,” for V.O.’s new brand, V.O. Gold. The campaign will expand to include V.O. itself this year.
(Jim Beam Brands)
Tangle Ridge is offering a variety of off-premise materials, including a bin that looks like two whisky casks and a shelf-talker.
For LTD as well as for its other Canadian brands, Barton will offer either a rebate or a book on poker strategy to consumers. Later in the year, a second book, a guide to casinos, will be offered.
(UDV North America)
Black Velvet will continue with its 26-year-old Black Velvet Lady campaign, one of the longest-running marketing campaigns in the spirits industry. Currently, the brand’s materials include a variety of p-o-s merchandising materials.
As might be expected, suppliers with superpremium entries disagree. Kathleen di Benedetto, director of superpremium brands at Jim Beam, reported that her company’s superpremium Canadian, Tangle Ridge, “has been growing at double-, almost triple-digit rates.” She added, “We’re seeing attitudinal shifts. The opportunities are endless; superpremiums are where the future is.”
Like many suppliers, di Benedetto sees the superpremium Canadians as transcending their category. “Consumers don’t recognize the whisky categories that we suppliers do,” she said.
Allied Domecq’s Waluk pointed to his company’s consumer research. “Over the years, everything we’ve seen has told us that, in Canadian whisky, ‘whisky’ is the operative word. Looking at the market strictly as Canadian whiskies has held back the category.”
Seagram’s Bernstein believes consumers make some distinctions. He described Crown Royal’s competitive set as “North American whiskies.” Canadian superpremiums do not, he believes, compete directly with single malts. “They might appeal to some single malt consumers, but generally those consumers tend to come from Scotch, which has a little more badge value,” he explained.
Seagram Americas rolled out the superpremium Seagram’s V.O. Gold last year giving consumers an option to trade up.
Meanwhile, many price/value brands in the Canadian whisky category continue to be strong performers. Indeed, in some markets, price/value Canadians are not only the top-selling brands and top selling whiskies in their category but are the top-selling spirit of any type.
Barton’s Kavanagh reported that his company’s largest Canadian, Canadian LTD, saw its sales stay even this year. “All of our brands are price/value and have, for the last couple of years, been outperforming the category.”
Kavanagh sees a lot of potential for Canadians. “We’re seeing a fair amount of usage among young adults, where before there was almost none,” he said. He speculated that, because the last generation moved so strongly to vodka, this generation is moving back toward whiskies, following the perennial tendency of younger consumers not to drink what the previous generation does.
At UDV North America, the theory about marketing Canadians is the familiar axiom, “if it works, don’t fix it.” The company continues to use its 26-year-old Black Velvet Lady marketing concept. “It’s been communicating a consistent consumer message all that time, and it continues to favorably affect the brand’s performance and image,” said Jack Shea, spokesperson for UDV. Like other suppliers, UDV is stressing its brand’s product attributes, most notably Black Velvet’s smoothness. In the on-premise market, the company is stressing the brand’s use in classic cocktails, such as the BV Manhattan and the BV Sour. The brand, with flat to slightly increased sales, has been outperforming the category as a whole, Shea said.
The trends, suppliers believe, bode well for Canadian whiskies. “There is a lot of evidence that the category is healthy: younger consumers are interested, the trends have moderated,” said Allied Domecq’s Waluk. “Now, it’s a matter of ensuring that your brands can take advantage of those trends.”
With all the new advertising and new products, the heat is on.
Cheryl Ursin is a regular contributor to StateWays and Beverage Dynamics. Her writing has also appeared in The New York Times and other publications.
LEADING BRANDS OF CANADIAN WHISKY IN THE CONTROL STATES
UDV North America
Allied Domecq Spirits, USA
Jim Beam Brands
UDV North America
Canadian Rich & Rare
Allied Domecq Spirits, USA
Jim Beam Brands
Total Leading Brands
(*) Last 12 months data ending 8/31.
Source: Adams Business Media Research Database from NABCA data.