Economic news, particularly the bad kind, has dominated the news for much of the past year. So it’s nice to read or hear a story that’s mostly good news these days. Even better when the story is about something as quintessentially American as – no, not apple pie – straight whiskey.
The category continued to grow in 2008, despite the downturn in the economy last fall. Total category sales were up about 1.6% nationally to nearly 19 million 9-liter cases. Though only about a fifth of that volume was in control states, sales grew an even stronger 2.5% in those states. And while a full-blown recession this year has caused sales to cool somewhat, trends all point to continued category growth for retailers.
The recession has had some interesting effects on the category. With consumers reluctant to spend discretionary income, they’re going out to bars and restaurants less frequently, so on-premise sales have suffered. But distillers say the uptick in off-premise sales as consumers entertain more at home is picking up the slack and even offsetting the softness in on-premise.
“Consumers are still going out to have a couple of drinks, but less often,” said Kelly Doss, Jim Beam category director at Beam Global. “There’s been some shift in sales from on-premise to off-premise because there’s more consumption at home.”
At the same time, on-premise exposure and sales continue to drive consumers to seek out products at their local off-premise retailers. The resurgence of interest in classic cocktails among mixologists has encouraged consumers to experience straight whiskeys in a Manhattan, Old-Fashioned, mint julep, Sidecar, on the rocks and any number of other drinks.
“On-premise is still a key to retail success,” said Joe Uranga, vice president marketing for Wild Turkey. “That’s where people try a cocktail or even a category. Consumers can experience small-batch bourbon, a Manhattan, or single-malt Scotch for only $7 or $8 in a bar. The prosperity we’ve had in the on-premise market for the past 10 or 15 years has really helped our retail business.”
American straight whiskeys in particular have benefitted as consumers expand their horizons and look for new products. More and more, consumers are looking for authenticity and heritage in the products they buy. Bourbons and other straight whiskeys handily fit the bill.
“Because bourbon is authentic, grounded and has great character, the category hasn’t suffered like those without a tradition-bound heritage,” said Bill Samuels, Jr., president of Maker’s Mark.
“Consumers want to invest their money in things they know are real, not just a luxury image,” said Tim Rutledge, vice president, director of the Americas for Jack Daniel’s.
And, as is often the case, the downturn has consumers both trading down and trading up even as they turn to a category like bourbon that offers authenticity. Consumers who are trading down to save money are turning to bourbon for both the taste experience and the product heritage. Those who can afford to splurge a little are willing to pay for quality.
“Our research shows people are seeking quality more than ever,” said Wayne Rose, brand director at Brown-Forman for Woodford Reserve. “They’re looking for substance over style, and what’s comfortable.”
Majors In The Middle
To some degree, the bourbon category for many years has been divided into what Samuels described as two markets – urban, upscale consumers looking for premium brands with heritage, and traditional, Southern, brand-loyal blue-collar bourbon drinkers. But big brands in the middle have tended to transcend the category.
“The sheer size of Jack Daniel’s and its appeal across consumer groups is more than just interest in American whiskey,” Rutledge said. “We look at our competition as all spirits, but see whiskey as the new vodka as consumers turn to brown goods. We think we’re well-positioned.”
Jack Daniel’s continued to lead the category in sales in 2008, growing about 1.0% to more than 4.7 million 9-liter cases nationally.
The brand has focused on adding perceived value to consumer purchases, with more promotion periods and more on-pack offers this year in addition to greater flexibility in pricing discussions at the local level rather than aggressive rebates.
“We’ve made more investment on a percentage basis in the off-premise market in this economy,” Rutledge said. “We continue to hear from retailers that they’re going to focus on brands with consumer pull.”
The consumer pull comes from programs as diverse as the International Barbecue Championship, support for professional bull riding, NASCAR, the Sturgis motorcycle rally, and the USO through Toast to the Troops. The investment in retailer support includes this month’s Jack Daniel’s birthday celebration, and more value-added packages come holiday time.
Gentleman Jack also will have a bigger holiday presence this year with stand-alone displays and gift packs.
And Jack Daniel’s Single Barrel gets a new look in a more elaborate decanter-style bottle with a gift carton outer pack.
Number-two category brand Jim Beam had rougher go of it in 2008, and was one of only two brands among leading straight whiskeys to show a sales decline. The brand aims to reverse that trend this year, with the big news being the introduction of Red Stag by Jim Beam this past June. The black cherry-infused bourbon is the brand’s first innovation since Jim Beam Black was introduced 10 years ago, according to Kelly Doss, category director at Beam Global. Launch support included a partnership with Kid Rock that’s ongoing, and sponsorship of his summer tour that ends this month. A consumer sweepstakes gave away a trip to a private Kid Rock concert in Las Vegas. With a smooth, subtle taste, Red Stag mixes well in a variety of cocktails.
The core Jim Beam brand was back on television last winter for only the second time in its history as a result of “The Remake” contest which challenged consumers to make a new television ad for Jim Beam. The brand received tons of submissions, the best of which were screened on the Internet, creating lots of buzz.
“We’re evaluating a number of tools to communicate with consumers,” Doss said. Those include a lot of online vehicles like blogs.
Jim Beam also is heavily invested in car racing, and has its own program to support U.S. troops and their families called Operation Homefront.
Number-three brand Evan Williams grew about 8.7% last year to more than 1.1 million cases nationally. Sales were up 8.5% in the control states to 351,025 cases.
Heaven Hill corporate communications director Larry Kass attributed much of the brand’s success to being a great product at a very competitive price point. A multimillion dollar print ad campaign assures consumers that Evan Williams Black is “aged longer to taste smoother. The brand also now sponsors two major bass fishing tournaments, including one coming up in October with national coverage on CBS and ESPN. The brand also continues to sponsor professional angler Jason Quinn.
Making Their Mark
Though smaller in size, the next tier of premium brands has really made its mark on the category. Maker’s Mark, now owned by Beam Global, got its start back in the 1950s when fourth generation distiller Bill Samuels, Sr., got back into the business after a stint in the navy. Still a family affair under the direction of Bill Samuels, Jr., Maker’s Mark grew to 770,000 9-liter cases nationally in 2008, a 6.9% gain. In the control states, the brand posted a 7.4% gain.
Word-of-mouth is still the brand’s best sales tactic, and the brand spends a lot of time and energy making friends and “hugging the friends we’ve got,” according to Samuels.
“We spend a disproportionate share of energy trying not to screw up the craft,” he said. “With business pressures in times like this, it would be easy to exploit our equity.” Guarding the brand and its heritage, though, is important.
Wild Turkey is another brand with roots that go back more than 150 years. Volume was up 8.2% nationally in 2008 to 636,000 cases. After investing a $36 million upgrade in its facilities in 2007, Pernod-Ricard sold the brand this year to Grupo Campari for $581 million. Wild Turkey now falls under the Skyy Spirits umbrella here in the U.S., where it will get attention and investment, according to Uranga.
Continuity in programs is key during the transition, he said, and if anything, the brand plans to do more of what it’s been doing – more sponsorships, more pr, more print ads and better execution.
“We need the brand to be where consumers go,” Uranga said, “at music events, motorcycle rallies, NASCAR races and more. We’re not a sponsor, but we’ll be there telling consumers ‘we’re a fan just like you.'”
Good Old Boys
The remaining leading brands tend to be value brands with a very loyal consumer base. That value proposition helped propel sales of all of them except one in 2008, and may boost sales even more this year as a result of some consumers trading down from premium brands.
Old Crow saw sales grow 3.4% nationally to nearly 400,000 cases, and 8.4% in the control states to more than 153,000 cases.
Ten High, which Constellation sold to Sazerac this year, saw relatively flat sales in 2008, while Ancient Age turned in a strong performances in 2008, up 4.1% nationally to 380,000 cases.
While Early Times saw a sales decline in 2008, the brand said it is well-positioned this year to take advantage of trends to reverse that slide.
“We offer a strong value proposition,” said Alan George, brand director at Brown-Forman. “The economy is helping brands like Early Times and Old Forester. Many consumers will stay loyal to brands that have a strong value/quality story.”
Early Times is celebrating its 150th anniversary next year, and will be gearing up for that in the coming months. In the meantime, the brand is in its fourth year of sponsoring professional angler Kevin Worth, a program that George said is beginning to pay dividends.
Old Forester also is celebrating a birthday next year, the brand’s 140th. Later this year, Old Forester will release a special Birthday Bourbon. The brand also is offering a money-where-your-mouth is money-back guarantee if it doesn’t meet consumers’ taste expectations.
Other brands that saw success last year were Ezra Brooks from Luxco, and Heaven Hill Bourbon, which saw an increase in volume of 7.4% to 290,000 cases.
Indeed, Heaven Hill Distilleries has just announced a brand-new line extension to its Evan Williams portfolio: Evan Williams Honey Reserve Liqueur. The new product marries extra-aged Evan Williams Bourbon with real, natural honey. Bottled at 70 proof and available in both a 750 ml and 50 ml size, Evan Williams Honey Reserve is now available in select markets across the country at an average retail price of $14.99 per 750 ml bottle.
Big Little Brands
If some consumers are looking for a good value/quality proposition, though, as many or more are willing to pay more for above-premium brands that deliver something special and unique. A number of brands fit the bill, and the number of offerings keeps growing as products that were distilled years ago are now bottled and brought to market.
Most of these are small, handcrafted whiskeys that are in high demand and short supply, though several distillers have added capacity in recent years to try to keep up. Knob Creek, from Beam Global, has grown so popular that the distillery recently ran out of product. Refusing to release more before its nine-year maturation date, the brand has been telling its loyal fans, “Thanks for Nothing” in a print campaign. The ads reassure consumers that the new bottling of Knob Creek will be available in November.
Woodford Reserve has been able to keep up with demand even though sales growth is still in the double digits. The official bourbon of the Kentucky Derby, Woodford Reserve celebrates the race in May with a focus on mint juleps. But brand fans can celebrate horse racing year round by following the three horses the brand owns and interact on the website as virtual “owners.”
What consumers are really having fun with is trying the growing number of products that distillers have released in the past several years. Some are consistently good small batch bourbons or specialty whiskeys like Buffalo Trace, Elijah Craig, Booker’s, Basil Hayden’s, Blanton’s and many more that have been around a while.
Others are single barrel bottlings that offer subtle variations from one barrel to another like Eagle Rare.
For consumers who like to experiment and learn all they can about a category like American straight whiskey, several distillers offer special bottlings or annual releases.
Buffalo Trace does an annual bottling of George T. Stagg. The new release was just issued last month (Aug.), and the distillery’s Antique Collection is new each fall.
Woodford Reserve has put out a Masters Collection release each fall for the past three years, including unique products like a four-grain whiskey and last year’s sweet mash.
“No one’s bottled a sweet mash bourbon in a hundred years,” said Rose.
A new Masters Collection release will be issued late this fall.
Heaven Hill offers a vintage Evan Williams Single Barrel bourbon each year. The 1999 vintage is out now. The 2000 vintage will be out in January. But consumers don’t have to wait that long for something new. The third annual Parker’s Heritage Collection release-a golden anniversary whiskey blending select barrels from each of the past five decades to celebrate Parker Bean’s 50 years as master distiller-will be out this fall. Last year’s 27 year-old was the first American whiskey ever named “best in show” at the San Francisco World Spirits Competition.
“The result of all of us starting to get it right in whiskey in the last 15 years,” Heaven Hill’s Kass said, “is the growing number of consumers who are very interested in these well-crafted, unique whiskey products. They’re eager to see what’s out there beyond bourbon.”
The innovation in the category in the past decade or longer has included more than a few single-barrel bourbons or special finishes. The products delighting consumers include wheated bourbons like Pappy Van Winkle, wheat whiskey like Bernheim’s and a growing number of rye whiskeys.
In June, Thomas H. Handy Sazerac Rye from Buffalo Trace was named “world’s best American whiskey” at Whisky magazine’s annual World Whiskies Awards competition in London, England. Part of the distillery’s Antique Collection, a new version will be released this fall.
Heaven Hill’s Rittenhouse Rye has become “a darling of on-premise mixologists,” according to Kass, and sales are now spreading to off-premise accounts as consumers take it home to play with. Both 80-proof and 100-proof versions are available. In October, the distillery is releasing 100 barrels of 25-year-old Rittenhouse Rye, priced at around $200 a bottle.
Last fall, Beam Global launched the new (r¥)1, a 92-proof premium rye whiskey in a tall, trendy package that appeals to women as well as men, according to Beam’s Doss.
In a category that not even a recession can keep from growing, the authenticity and heritage of old standbys along with innovation and new products are keeping consumers interested. And the more they learn about and experience American straight whiskeys when they go out, the more they’re turning to off-premise retailers to get their whiskey to go-go.