On Top of the World


The consumer flight to quality in the brandy category that took off with such a rush last year continues. According to Adams Media research, overall brandy sales grew 6.7% nationwide in 1996. The news in the control states is just as good, as domestic brandies (up 10.7%) and imports (up 4%) both had an excellent year.

Marketers throughout the category seem to agree that quality in product and packaging may be the surest route to quantity in sales. Inspired by the performance of Paul Masson’s Grande Amber — which capped off another astounding year by almost doubling its case sales in the control states — several brandy marketers spent 1996 either taking their products upscale or, at the very least, reinforcing the upscale image of brandy. Elegance, sophistication, the financial wherewithal to indulge in fine foods, premium cigars and luxury vacations: All of these were major elements in brandy’s marketing flight plan among the major players.
To begin with, Gary Heck, president and ceo of Korbel, has taken the company’s product uphill as well as upscale with the introduction of a mountain-theme marketing concept — the Korbel Brandy Lodge — to complement a recent package redesign, product repositioning and price increase.
“We introduced our new packaging in September 1996 and ended the calendar year up 6.4%, which is pretty good for the category,” Heck said. “We have had a revolutionary rather than evolutionary change. All our components have gone upper-premium because we’ve found that people, especially in the distilled spirits market, are drinking less but drinking better. They’re moving more to premium and less to commodity.”

The new packaging began last fall with a shift from the brand’s green champagne-style bottle to a flint, Bordeaux-type bottle with a cartouche. The white face label was replaced by a two-piece, foil-embossed model in cream, deep red and gold. In-store merchandising materials proclaim “The more things change, the more they remain the same” and “New outside/Same inside” — effectively reassuring both retailers and consumers that the brand’s inherent quality has not diminished.


The concept of the Korbel Brandy Lodge, already introduced through case cards and shelf talkers, is a natural extension of the brand’s tagline “Handcrafted for Smoothness,” according to Korbel marketers.


“We’ve tried to associate Korbel with handcrafted items, cigars being one, to reinforce that message,” said Andrew Varga, senior brand manager. “Our challenge this year was to foster a continuing marketing identity…the answer was the Korbel Brandy Lodge, an ideal place that says everything about reward and relaxation. Our intention over the next five to six years is to weave all our sales promotions, public relations and advertising into the constant identity of the Lodge.”


Korbel has four programs to carry out their strategy: First, it introduced the Korbel Brandy Lodge through displays and a contest to win a trip to an actual lodge in Vail, CO. Second, it tied Korbel to snow skiing via the Lodge. Third, it continued its ongoing partnership with cigar manufacturer Hoyo de Monterey, this year for the first time connected to the Brandy Lodge concept. And fourth, the company plans a nationwide search to find the Korbel Brandy dog.


Opportunities for extending the lodge concept next year, Varga said, are endless.


 


Premium Image Benefits All

Brandy’s upscale image works to the advantage of both premium and value segments in the category. At the high end, brands like Paul Masson’s Grande Amber, E&J VSOP and Jacques Cardin XO are filling a niche created by the demand for cognac-like quality, as evidenced by their approach to promotions and packaging. This creates excitement throughout the category, allowing other brands to continue focusing on quality and value.


David Boggs, consumer-focus brand manager at Canandaigua Wine Co., which markets Paul Masson brandy, summed it up nicely: “The economy is in pretty good shape and consumers are more sophisticated than they used to be. They’re willing to pay more for something that’s truly better. It behooves us all to bring in premium products on the market because of this.”


Paul Masson’s Grande Amber is certainly a leader in the premium segment, having continued its phenomenal success with an 88% sales increase in the control states. Retailer merchandising materials stress that Grande Amber is the only domestic brandy aged three years in oak, and note the national recognition of its being named one of Adams Media’s “Fast Track Brands.”


Given Grande Amber’s recent performance, Boggs said, the company did not significantly change the brand’s packaging or marketing strategy in 1996. Wall signs and other promotional materials urged consumers to “Taste the Difference Between Good and Grande,” but the company did no tie-ins or cross-promotions. “We want people to buy us because we’re good, not because they’re going to get something [with the product],” Boggs said.


Paul Masson has, however, more than doubled its spending on print advertising — a move Boggs said is unusual for brandy.


“Currently we’re the only domestic brandy that’s doing any national print,” he said. “We think that helps. While we’re not positioning this as an ethnic product, we’re taking advantage of ethnic print — Ebony, Jet and Vibe magazines — to present Grande Amber as a premium snifter brandy.”


Steve Kauffman, group marketing manager of Heaven Hill Distilleries’ brandy portfolio — which includes Aristocrat, J. Bavet, De Ville and Coronet — agreed that new premium products and upscale packaging is generating excitement in the category. That, he said, produced a positive impact on Coronet VSQ, which is treading lightly in any move upmarket.


“Last year, sales of Coronet were fairly flat, if not slightly increased,” Kauffman said. “We had been sliding a little, so remaining flat is good. We attribute our steadiness to a packaging change: We’ve modernized our label a bit, giving a little more of an upscale look by adding horizontal lines. We don’t want to go too far upscale because we realize we’re at a low price point, and we want to stay there. We do well there.”


Heaven Hill runs rebates twice a year for its value brand: $2 on the 750 ml bottles and $3 on the 1.75 liter bottles. Promotions consist of case cards and display bins that reflect the lifestyles of younger, more active consumers — under the heading “VSQ and You” –engaged in a variety of sports and leisure activities.


 


Market Your Markets

One of the effects of brandy’s appeal is that a broader range of consumers are enticed to join the category. For example, Teddi Burris, spokesperson for E&J Gallo, observed that the continued health of the category can be attributed to an influx of younger consumers who are looking for products with upscale and classic attributes. The recent introduction of E&J VSOP brandy in its royal blue and gold labeling met that need, she said, adding that tie-ins with particular events also play an important role.


“Our current program ties E&J VSOP with jazz music, and the Chicago Jazz Festival specifically,” Burris said. “We are sponsoring a sweepstakes where we will send the winning consumers to Chicago to attend the 1997 festival. The tagline is ‘Experience the Excellence.’ We plan to continue to promote VSOP with full-figure standups, banners and shelf talkers.”


Given Gallo’s double-digit sales increases in 1996, that strategy certainly appears to be paying off.


In addition to younger consumers, ethnic markets have also been a key factor in brandy’s success. Randall Stockdale, marketing director for brandies at Domecq Importers, said that his company continues to target the Hispanic male with Presidente, the world’s largest-selling brandy, and Don Pedro. Both brands performed about the same as last year, he said, although historically Domecq has seen a 5% to 8% annual increase.


“We attribute [the slowdown] to the fact that as our consumers are getting more established in the U.S., they are consuming other spirits as well,” Stockdale explained. “In Mexico, they couldn’t afford to do that, or had no interest. However, our base of customers continues to grow.”


For many years, Domecq had placed advertising on Hispanic television networks, but decided in 1997 to focus instead on radio and outdoor advertising in local markets. In markets with large Hispanic populations, the company is running a soccer program with a case card: mailing in a pre-printed card earns the consumer a sports bag. Domecq is also running a phone card program with seven-minute phone cards shrinkwrapped on the bottle.


 


Imports Hold Strong

The brandy category has always included a strong presence of high-quality imported products from various countries; many of these brands had an excellent year in 1996.


Raynal, for example, was up 6.8% in the control states. Imported by Shaw-Ross Importers, Raynal is no newcomer to the quality concept, and has introduced a coupon offering $4 off 750 ml bottles and $10 off 1.75 liter bottles, as well as an on-pack glass and 50 ml samplers.


“Raynal’s position in the marketplace has taken 13 or 14 years to develop,” said marketing director Phil Consolo. “With campaigns like ‘Raynal and Relax’ and ‘Reach for Raynal,’ we have continually positioned ourselves as upscale. Our focus groups tell us that brandy is perceived as a sipping product, even though it is consumed in many ways.”


Consolo added that the continued strong market for cognacs has had a positive effect on brandy sales. He points to the ever-more educated brandy consumer as one of several factors in the success of brandy in general and Raynal in particular.


“Americans are looking for taste sensation and quality sensation in food and drink,” he said. “I see it in restaurants using natural herbs and spices for high flavor….We emphasize that Raynal is enjoyable straight or on the rocks. It maintains its quality and taste attributes even in a mix. Most of our ads show it in a snifter or in a tall glass with club soda.”


Other importers are also emphasizing expanded uses of brandy. In-store merchandising materials for St. Remy, for example, provide recipes of a variety of mixed drinks. David Sherman Corp., which imports St. Remy from France, has also invested in a bit of upscaling in its product’s packaging.


“The label colors are now warmer and the graphics a bit more traditional and Old World,” said Meg Syberg, director of marketing at David Sherman. “We want to reflect the history and tradition of brandy rather than going the contemporary route. We did a new creative campaign with the new label….it shows a traditional French living-room scene. In addition to a snifter, we show four or five mixed drinks with labels [suggesting] some modern usages of this traditional product.”


David Sherman has participated in regional cigar events and offered a successful on-pack of a cigar and cigar cutter. The company continues to support St. Remy with rebates, which Syberg says have gotten more aggressive. Regionally, the company has offered on-packs of 50 ml DeLuze, its cognac, and Cafe Lolita, its coffee liqueur; it also cross merchandises 50 ml bottles of St. Remy with the cognac and a coffee liqueur.


 


Promotions Galore

Because of the overall success of the brandy category, both new products and existing lines are receiving a wealth of promotional and merchandising support. Sidney Frank Importing’s Jacques Cardin XO, for example, is connected to a variety of on- and off-premise programs. In some markets, the company has hosted Jacques Cardin XO Cigar Nights to take advantage of the continuing popularity of cigars and their ties to brandy. Off-premise, the brand has case cards, shelf talkers, bins and other display materials promoting its age and method of production.


“Our brandy is aged seven years, and we invite the public to taste the difference seven years makes,” said John Frank, the company’s executive vice president. “Our on-premise promotions are mainly targeted toward taste comparisons, which usually result in instant brand conversion.”


Frank reported that the rollout of Jacques Cardin XO, which began last fall, has met with a strong response from both trade and consumers. Marketing materials ask the question “Choose Brandy Over Cognac?” and answer it with an emphatic “You Bet!” Frank said this approach “invites the consumer to acknowledge the superior taste of XO over that of a pricier cognac.”


On the domestic side, IDV North America is planning promotions to boost sales of its Christian Brothers brandy. Marketing manager Jeff Grindrod reported that, in spite of somewhat lagging sales, the company is pleased with the last 12 months, for two reasons.


“First, we jumped into the VSOP category and that helped us gain incremental shelf space, provided new exposure and revived the brand’s image,” he said. “As is true in almost every category, we’re seeing a movement toward the premium side. The consumer knows what he or she wants and is willing to pay for something better. They’re buying smarter, buying better.


“Second, we have put together a series of value-added programs based on psychographic breakouts of our customers. These involve items like CDs and movie passes.”


Christian Brothers is talking now about the possibility of hitching its brandy to the star of popular jazz musician Brian McKnight by sponsoring a tour. The company has already been successful with a mass merchandising piece that’s a self-contained waterfall, which it has introduced in limited markets. The waterfall ties in nicely with the theme line “State of Relaxation,” which is central to Christian Brothers’ marketing.


Brandy continues to be one of the strong upwardly mobile categories the in distilled spirits industry. Offering consumers premium product in quality industry packaging and using aspirational marketing strategies to link drinking brandy to living the good life, brandy suppliers are fueling the flight to quality. All indications suggest the skies are clear and that this flight will continue to be a smooth one.



 


LEADING BRANDS OF DOMESTIC
BRANDY IN THE CONTROL STATES

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(Mixed Cases)

Brand
Supplier
1995
1996
% Change

E & J
E & J Gallo Winery
358,690
402,970
12.3%

Christian Brothers
IDV North America
282,957
274,057
-3.1%

Paul Masson
Canandaigua Wine Co.
60,086
113,205
88.4%

Coronet
Heaven Hills Distilleries
29,006
27,587
-4.9%

Monarch
Monarch Importers
26,386
27,329
3.6%

Korbel
Brown-Forman Beverages
19,443
18,620
-4.2%

Hartley
Barton Brands
12,398
11,958
-3.5%

St. Charles
Jim Beam Brands
6,426
5,966
-7.2%

Jacquin 5 Star
Charles Jacquin et Cie
5,008
4,893
-2.3%

Lejon
Frank-Lin Distillers
2,254
2,280
1.2%

Total Top 10 Brands
802,654
888,865
10.7%

Others
13,887
10,854
-21.8%

Total Domestic Brandy Control States
816,541
899,719
10.2%

Total Brandy Control States
901,028
987,871
9.6%



Source: Adams Media Inc. from NABCA data



 


LEADING BRANDS OF IMPORTED
BRANDY IN THE CONTROL STATES

(Mixed Cases)

Brand
Supplier
1995
1996
% Change

Raynal
Shaw-Ross
16,915
18,060
6.8%

St. Remy
David Sherman
16,526
17,263
4.5%

Jacques Cardin
Sidney Frank
14,672
14,354
-2.2%

Presidente
Domecq Importers
6,635
8,187
23.4%

Jenkins
Jenkins Spirit Corp.
4,777
5,284
10.6%

Rothschild Napoleon
Paramount Distillers
3,783
3,050
-19.4%

Mouquin
Austin, Nichols
3,328
3,168
-4.8%

Don Pedro
Domecq Importers
1,561
2,171
39.1%

Henry Baron Napoleon
Jim Beam Brands
2,104
1,982
-5.8%

Deville VSOP Napoleon
Heaven Hill Distilleries
1,566
1,256
-19.8%

Total Top 10 Brands
71,867
74,775
4.0%

Others
12,620
13,377
6.0%

Total Imported Brandy Control States
84,487
88,152
4.3%

Source: Adams Media Inc. from NABCA data

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