The global economic crisis hasn’t spared the beverage alcohol industry, but Canadian whisky is one segment that has not been hurt by the downturn. Indeed, the overall category gained 1.1% (lost 1.6% in the control states) in 2009 to more than 15.6 million cases (4.7 million cases in the control states), according to the Beverage Information Group, and end-of-year projections for 2010 suggest that the growth is continuing. Long thought of as an affordable spirit, Canadian has also leveraged its light and mixable profile to benefit as the cocktail culture evolves from primarily white spirits to include a wide range of whiskies. Additionally, Canadian whisky and beverage alcohol retailers are getting a boost from consumers’ recent preferences toward dining and drinking at home.
“It’s been a tough struggle over the past few years, but we’re doing well,” said Alan George, Canadian Mist Brand Manager with Brown-Forman. “The economy has definitely posed a lot of challenges, but it’s very encouraging that consumers are still supporting us.”
In fact, Canadian whisky suppliers have been stepping up their activity, introducing new brands and line extensions. For example, the aforementioned Canadian Mist launched its Canadian Mist Black Diamond expression in six U.S. markets in early 2010. The product was created as a result of consumer surveys that indicated people would respond positively to a slightly higher-priced product with more flavor that could be used to celebrate everyday special occasions, according to the company. Blended at 86 proof, the product boasts a higher sherry and rye content to give the whisky more flavor and a smoother finish.
“Black Diamond is really the next best thing after our classic Canadian Mist,” George said. “It’s not overwhelming, but finishes in a short and sweet fashion. We think it’s filling a very important niche for consumers.”
Canadian Mist Black Diamond retails for $15.99, slightly more than the standard Canadian Mist, which sells for approximately $11.50 for a 750 ml bottle. Brown-Forman plans to introduce the product to six additional markets by April 2011, with availability in 75% of the U.S. market by the end of 2012.
Extending Brand Portfolios
For its part, category leader Crown Royal continued as one of the most successful superpremium spirits in the U.S. market, with sales of about 4 million 9-liter cases. Beginning with the original Crown Royal Deluxe (suggested retail about $27), the brand’s increasingly pricy portfolio includes Crown Royal Reserve, Cask No. 16 and XR (Extra Reserve). And, the company recently released Crown Royal Black, an extra bold whisky with a full-bodied flavor. Blended at 90 proof, the product retails for slightly more than Crown Royal Deluxe at $29.99.
According to Yvonne Briese, Crown Royal Brand Director, the launch of Crown Royal Black helped boost sales of the entire product line. “Crown Royal net sales were flat for the full year [July 2009 – June 2010], but the brand grew strongly in the second half driven by innovation and growth of some of the higher-priced variants,” she said.
Canadian Club also features five expressions in its portfolio: the original Canadian Club 6 Year Old, Canadian Club 100 Proof, Canadian Club Sherry Cask, Canadian Club Reserve (aged 10 years) and Canadian Club Classic (aged 12 years).
Tapping Youthful Trends
Dustin Mitzel, General Manager of Happy Harry’s Bottle Shop in Fargo, ND, says that his store’s northern proximity has helped keep interest in Canadian whisky alive. However, he’s just starting to see the young adult market embrace the category.
“I think the biggest problem with Canadian whisky is a lack of excitement. People think of it as the whisky their father or grandfather drinks,” Mitzel said. “I think Crown Royal has done a good job of keeping the brand hip, more brands are starting to do initiate programs, so hopefully we’ll see a change coming soon.”
In fact, the second leading Canadian whisky in the U.S., is making such an effort. The brand’s brand packaging was completely overhauled in 2010 and now boasts a much sleeker, more contemporary bottle and label.
“We know Black Velvet has a loyal consumer base, but we saw an opportunity to target younger legal age drinkers,” said Lisa Smith, Black Velvet’s marketing director. “Our new brand image was launched specifically to target that group.”
Along with traditional promotions designed to appeal to younger consumers, Black Velvet is planning an outdoor advertising campaign in key markets to grow exposure. The company plans to focus its efforts on the Black Velvet relaunch in 2011.
For its part, Canadian Club has also received exposure from being featured in the hip, new HBO series Boardwalk Empire. The show is set in Atlantic City during the 1920s and highlights how Canadian Club was smuggled into the area during the Prohibition era.
“Retro trends are driving recognition for Prohibition brands like Canadian Club,” said Michael Cockram, Senior Director of Canadian Club. “Shows such as Mad Men and Boardwalk Empire are among the most notable examples that weave the rich heritage of Canadian Club into their backdrop and even storylines.”
When Boardwalk Empire premiered, HBO and Canadian Club featured co-branded creative in approximately 5,000 retail stores, ranging from 3D window installations and special in-store displays to on-bottle collateral and premium offerings. The promotional materials all drove consumers to enter to win in a Boardwalk Empire sweepstakes.
Below Premium, Above Premium
Clearly, below-premium-priced Canadian whisky brands continue to benefit from the slowly recovering economy; however, there is still an evolving interest in higher-end Canadian whiskeys.
One new take on traditional Canadian whisky is Phillips Distilling Company’s Revel Stoke. This spiced whisky was originally introduced back in 2000, but the brand’s limited distribution and its company’s focus on other products resulted in low visibility. The company says that increased consumer demand and resurgence in the Canadian whisky category has brought Revel Stoke back into the conversation.
The Revel Stoke that relaunched in September 2010 is identical to the previous generations, except the proof level has been raised from 80 to 90. The bold, spiced flavor makes Revel Stoke an ideal mixer with colas and ginger ales. It’s currently available in 12 states and retails for $16.99 for a 750 ml bottle.
Another new product was launched by Sazerac in April 2010, in an effort to cater to a more affluent customer base. Billed as the first-ever single barrel Canadian whisky on the market, Caribou Crossing was created from barrels selected by Sazerac’s Master Blender. The result is a bold, flavorful whisky that stands apart from many other products in this category.
“It doesn’t taste like any other Canadian whisky on the market,” said Kevin Richards, brand manager for Whiskeys and Specialty Brands with Sazerac. “A lot of Canadian whiskeys are really bland. People think of them as inexpensive and mixable, and that’s it. We wanted to raise the bar a little bit and come out with a truly great tasting whisky.”
Caribou Crossing retails for $49.99. Sazerac also launched the Royal Canadian Small Batch brand in 2010, which retails for $25. Richards indicated that the company intends to build on these two brands in 2011 and also plans to introduce additional higher-end products in the coming year.
“In spite of the general economy, there’s definitely still a buyer out there for these higher-priced brands,” he said.
Both of the new Sazerac superpremiums have extremely limited distribution. Richards said that the company’s low-end Canadian whisky brands, including Rich & Rare, Canadian Hunter and Canadian LTD, are currently thriving.
“We believe their affordable price points, enduring equity in core markets, and strong packaging has positioned them well for success,” he said.
Forty Creek, another high-end Canadian, is a combination of three single-grain whiskeys aged individually before they’re blended together, continues to expand. Two new Forty Creek expressions hit store shelves in late 2010: Double Barrel Reserve ($59.95), which is barreled for an additional three years in Kentucky Bourbon barrels; and Confederation Oak Reserve ($69.95), which is further aged in Canadian white oak barrels made from 150-year-old Canadian white oak trees.
John Hall, whisky maker of Forty Creek with Kittling Ridge Wine and Spirits, predicts that these new Forty Creek products will be part of an overall renaissance in the Canadian whisky category.
“People are drinking less, but drinking better,” he said. “When they do decide to enjoy a whisky, they want a well-made whisky. Because of the quality of Forty Creek, we have continued to experience growth throughout the unsettling economy.”
Hood River Distillers had success with one of the highest-priced Canadian whisky products of the last year. The company launched a limited edition of its Pendleton brand in September 2010. The 20-year-old Pendleton Directors’ Reserve was distributed in celebration of the Pendleton Round-Up’s 100th anniversary. Less than 5,000 bottles were available at a retail cost of $75 each.
Manufacturers of Canadian whisky have recently invested in advertising and promoting their products, which is indicative of their belief that this category has the potential for substantial growth. Diageo’s Crown Royal serves as the main sponsor of NASCAR’s No. 17 Ford Fusion, driven by Matt Kenseth.
“This provides Crown Royal a great opportunity to further advance its social responsibility messages with the millions of adult NASCAR fans, both at the track and viewing at home,” Briese said. Crown Royal also invests in numerous consumer contests, sponsors rodeo participants, and commits to service projects benefiting American servicemen and women.
Numerous companies reported actively promoting their brands through print and online advertising. Constellation Wines has a comprehensive advertising campaign in place for the Black Velvet re-launch, which includes a large outdoor campaign utilizing billboard advertising in target markets. Canadian Club recently relaunched its popular “Hide a Case” advertising campaign from the 1960s and 1970s. The revival of the campaign featured online games, consumer-generated videos, a contest, and a cash prize. More than 23,000 people registered to participate in the “Hide a Case” contest online, making the campaign an overwhelming success.
A knowledgeable sales staff remains the most surefire method of increasing sales in retail store, suppliers say.
“If retailers carry and recommend new whiskies to their customers, I believe they will begin to experience new growth in the category,” said Forty Creek’s Hall. “In addition, if they provide their staff with product knowledge on whiskeys, they will experience growth in sales and customer satisfaction.”