The Gin Game

“Gin is a spirit people drink because of its taste as opposed to its lack of taste,” said Bill Topf, VP of marketing, Diageo North America, which includes Gordon’s and the Tanqueray family of gins in its portfolio.

That juniper- and citrus-accented point of difference from the “other white spirit” is just one of gin’s advantages in the market. Loyal and sophisticated consumers, centuries of tradition, a key role in the current cocktail craze, and a bevy of new entrants aiming to win over younger consumers all bode well for the category. Although overall sales have been relatively flat for the last several years, nonetheless, many of the major players are upbeat about the category’s future.

Growth: The Glass Half Full

Unlike its lively sister white spirit, vodka, gin has been a bit of an old maid. Growth in the category is relatively flat: up just 0.1% overall in 2009, according to Beverage Information Group’s Handbook Advance 2010. The leading brands fared a bit better, up 0.6%, buoyed mainly by the gains in the value segment. In the control states, sales of 9-liter cases were down 0.8% for the category, with the leading brands showing a decrease of 1.2%.

“The category is pretty flat and has been for the five or six years we’ve been in the business,” said Andrew Auwerda, president of Philadelphia Distilling Co., producer of relative newcomer Bluecoat Gin. But, he adds, “We are growing at a steady upward slope.”

“The gin category has been fairly consistent over the past few years. It was on the decline for a little bit, but since 2006, the category has been flat to slightly growing,” said Maria Puente, senior brand manager for Beefeater and Plymouth, Pernod Ricard USA. “We are optimistic about the category.”

Topf at Diageo shares her optimism. “Gin has not fared well over the past decade or two, but over the past few years we’ve seen that improve from some declines to flat and we’re quite optimistic that will turn into growth as we move into the next year.”

Although last year was difficult for the industry, many have seen evidence of an improvement as the recession lightens and consumers gain confidence.

“The last few months have been very encouraging both for Bombay Dry and Bombay Sapphire,” said Giles Woodyer, vice president and brand director for the House of Bombay. “A lot of people have been talking about how domestic gin has been on a bit of an upswing while imports were not performing with the velocity they had in the past. But we’re delighted that our brands are performing really well in the last quarter.”

“I’m positive that gin might finally be in for the upswing that people have been predicting for quite a while,” noted Diageo’s Topf.

Fast Growers

As in virtually every spirits category during the economic downturn, consumers have been trading down. And New Amsterdam Gin, from E&J Gallo, has benefitted tremendously. On the market only a few years, the New World gin saw sales up nearly 80% overall in 2009, according to Handbook Advance 2010.

Retailers have indeed reported New Amsterdam, as well as Hendrick’s on the higher end, making a positive impact on their sales. Interestingly, one important element that New Amsterdam and Hendrick’s have in common is a taste profile that lessens the juniper component. Indeed, New Amsterdam touts its light citrus taste rather than the traditional juniper. And it seems that consumers have warmed to that taste, given New Amsterdam’s 2009 sales of 810,000 9-liter cases, more than 97,000 of which went to control states, marking an 88.9% increase in those states alone.

Several other brands in the value-priced segment demonstrated recessionary resilience, including Barton (up 5% overall) and Fleischmann’s (up 2% overall), according to Handbook Advance 2010.  Other leading brands in the value segment include Gilbey’s, Booth’s and Burnett’s White Satin.

 “At the standard price point, Gordon’s has been a solid player. It’s an amazing quality gin for an everyday price point,” said Topf about the Diageo brand. “With the premium Tanqueray we have two standard bearers in our portfolio at different ends of the price spectrum. That’s allowed us to offer something for everyone, regardless of the times.”

Clear Advantages

Gin’s distinctive flavor profile, long history, loyal consumers and relatively inexpensive price points are all clear advantages, say proponents.

“Gin adds a dimension to a cocktail that other spirits don’t,” noted Woodyer. “The unique taste profile of a brand, like Bombay Sapphire, can’t be mimicked by trading to another gin; it’s a unique proprietary recipe.”

Indeed, despite many debuts in the category, retailers have noted consumers largely stayed brand loyal.

Unlike many spirits categories, there isn’t as much of a price differential between the bottom shelf and the top. “A superpremium gin like Tanqueray is still relatively reasonably priced compared to some of the other spirits categories,” said Topf.  “If a consumer wants to step up from Gordon’s to Tanqueray, which many do, it’s not as intimidating a price point.”

Cocktail Connection

Gin, of course, was the original mixable white spirit. A real Martini, many younger drinkers might be surprised to know, is made with gin, not vodka – as were numerous other classic cocktails. Which explains why mixologists today are much enamored of gin. Savvy bartenders know the spirit’s history and the nuanced differences between types and brands and how best to mix them.

“I think the opportunities are coming out of the pre-Prohibition cocktail trend,” said Auwerda at Philadelphia Distilling.

“There’s been a slow building in the mixology community behind classic cocktails of which gin was the original base,” noted Topf, “and we’re seeing continued momentum around drinks using gin as a base and using a range of types of gin.”

It’s a trend that seems to be migrating from on-premise to off. “Consumers see Plymouth Gin in a bar, try it in a cocktail and that translates into them going into the off-trade and making a purchase,” said Puente at Pernod Ricard.

On the flip side, many gin drinks are easy for consumers to mix up at home.

“The Collins, Negroni, Martini – gin is found in many of those classic two- or three-ingredient drinks,” said Topf. “Drinks that people can easily make for themselves.”

“That’s what we’re promoting in the off-trade – how mixable gin is,” said Woodyer. Bombay, like most of the players, offers a full suite of off-trade tools, including POS materials and recipe books, showing off that mixability.                                                                    

High Tide Floats All Boats

Over the last few years, the usually staid category has seen a lot of churn with new products. Junipero from Anchor Distilling, Aviation from House Spirits, DH Krahn from American Gin, G’Vine from EWG Spirits & Wine, Martin Miller’s from Reformed Spirits, Citadelle from Cognac Ferrand, Pinnacle imported by White Rock Distilleries, and the recently released superpremium Oxley Gin from Oxley Spirits Co., to name just a few. Although this influx might dilute a finite market, observers say the debuts have created plenty of ink and talk about gin, which is good for the category as a whole.

“The new entrants have made gin more top-of-mind as a category,” confirmed Topf. “As with any brand, you have to work to bring in new consumers. It’s a combination of marketing tried-and-true brands and new ones coming into the market.”

“Without new brands entering the market, like Bluecoat and Hendrick’s, the category would be down,” said Auwerda. “They create excitement and get consumers to take another look at gin.” Labeled “American Dry Gin,” Bluecoat is softer on the juniper notes than traditional styles, not so pungent and Christmas tree-like, with forward citrus notes, according to the producer. “It’s easy to drink, easy to mix.”

Wooing New Consumers

Many of these entrants feature a softer flavor profile aimed at appealing to new, especially younger, consumers. Noting this strategy, more than a few established brands have introduced more approachable versions themselves over the past few years.

Diageo may have led the charge in this respect, with the introduction of Tanqueray Ten in 2000. This second label has more of a citrus profile than Tanqueray London Dry. A few years ago, the company introduced Tanqueray Rangpur with a much heavier lime profile and lower ABV than the London dry style. Those two products are in line with the so-called New Western Gins, said Topf, with similar appeal. “A lot of the new styles have pulled new consumers in – vodka consumers,” Topf added. “And that’s fine if that’s an entry point to introduce people to gin.”

Pernod Ricard developed Beefeater 24 as a more accessible superpremium companion to Beefeater Dry. “It’s got a lighter flavor profile than Beefeater Dry,” noted Puente. Master distiller Desmond Payne added Japanese sencha tea and Chinese green tea (Beefeater’s founder was a prominent tea merchant) to the botanical mix.

Similarly, the House of Bombay developed Bombay Sapphire as a smoother companion to Bombay Dry, with more floral and citrus accents. “We’ve had tremendous success recruiting new drinkers into the gin category with Bombay Sapphire,” said Woodyer. “It appeals to both gin drinkers and non-gin drinkers.”

 “Palates are changing, there’s a demand for more flavor,” noted Tal Nadari, managing director U.S.A. for Lucas Bols U.S.A. Inc., whose portfolio includes Bols Genever and Damrak Amsterdam Gin. “Gin is a transparent, easy step up from vodka.”

That graduation may be the key to the category’s ultimate success. “The future holds great things for gin and genever, as consumers get outside their repertoire of vodka-based drinks,” said Puente.

Education For All

One point of differentiation for this spirits category is that most participants recognize the need for general education about gin, not just brand-specific communication. Tell consumers what is unique about the “other white spirit,” goes the reasoning, once they are hooked on gin, they will discover the differences between styles and brands for themselves.

“A unique thing about the category is that all the brands are interested in education,” noted Puente. “There’s a lot of mystique and misconceptions about gin, so as a group we’ve undertaken to educate not only the trade but the consumer about the different styles of gin and how they can be used in different cocktails and for different occasions.” For its part, Pernod Ricard has been conducting six-hour symposiums about gin around the country. “The trade is thirsty for knowledge about gin,” she said.                                              

“Education is empowerment for everybody,” echoed Topf. Among other initiatives, Tanqueray has partnered with New York-based consultant Steve Olsen and his aka Wine Geek team to tour the country conducting full gin education sessions for the trade and accounts. “It’s important to keep reminding people what a great category gin is. We feel that as we get behind gin, Tanqueray will follow.”

Merchandising Efforts

Hand-in-hand with education are merchandising campaigns aimed at off-premise retailers.

Pernod Ricard continues to roll out Beefeater 24. This spring the new expression launched in Las Vegas and Chicago, and it will add five more markets in September. For summer, the company debuted a limited-release Beefeater Summer Edition Gin. This LTO is primarily focused on off-premise markets, said Puente, to generate excitement among retailers and consumers. Beefeater Summer Edition adds hibiscus, elderflower and black currant to Beefeater’s botanicals. “It’s floral and lighter to reflect the relaxed style of summer drinking,” said the brand manager. Beefeater will likely follow up with a Winter Edition Gin in select markets, she added.         

For its part, Diageo launched a summer promotion themed around a Best Tanqueray & Tonic competition for both bartenders and consumers. Running for four months over the summer season, brand ambassadors will visit 24 cities, focusing on how to craft the perfect gin and tonic. POS materials on-premise, in retail and on the Facebook site will promote the contest. The winning consumer with the best twist on a Tanqueray & Tonic will win a VIP trip to New York City for a cocktail culture tour. The packaging graphics for Tanqueray London Dry and Rangpur have also been updated.

A new superpremium gin that debuted last fall, Oxley, touts itself as the “world’s first cold-distilled gin.” With an SRP of $50, Oxley uses a technique involving sub-zero temperatures to extract botanical essences. Currently available in Los Angeles, San Francisco, New York and Las Vegas, the brand is extending distribution to six additional major markets.

Bols is working its sampling program, teaming up with retailers and their staffs. “We tell the Genever story and have them taste the product,” says Nadari. As for Damrak, the theme of the summer promotion that will continue through year’s end is that “Damrak is the gin to try if you’ve never tried gin.” Damrak is a Dutch take on English gin. “Compared to London dry, Damrak is soft with a citrus dominance. It’s easy to drink,” said Nadari.

For off-premise merchandising, Bluecoat developed a new neck-hanger to supplement its shelf-talkers. The POS material is virtually a booklet on the bottle that tells the Bluecoat brand story and talks about the gin’s botanical formula. “It’s a way to get consumers to the next level, the next layer of the onion,” said Auwerda. Sampling programs in states that allow it, have also been very effective, he added. Also new for the summer is a proprietary line of bitters, which will be gift-packed for off-premise sales. “A lot of retailers don’t offer many bitters for sale,” said the president, “so we think they will interest consumers making cocktails at home.”

The newest addition to Bombay’s toolbox of off-premise POS materials is a series of short videos demonstrating how easy it is for consumers to make a Sapphire Gimlet or Negroni at home. Featured on its website, the cocktail videos are also available to retailers who have the facility to show them in-store. Not only that, but POS materials contain high-tech barcodes, which customers can scan and watch the cocktail videos on their smartphones.

With these tools and changing consumer attitudes, most of the major players are upbeat about the future.

“We’re passionate about our brands and we think it’s the right time for the category,” said Diageo’s Topf. “We are ready for the gin revolution to take hold.” 

Dutch Treat

Americans are discovering genever, the original gin from Holland.

Although it may be news to many consumers – and even a few gin drinkers – the original white spirit hails from Holland where it originated in the 1600s. Unlike English-style gins, genever is not at all dry but has a sweet malty character from its grain base and a more pronounced juniper accent.

“It’s like nothing you’ve ever tasted before, unless you tasted it before Prohibition,” says Tal Nadari, managing director for Lucas Bols U.S.A. Inc., which in 2008 relaunched Bols Genever, made from an 1820’s recipe in the U.S. Currently available in nine states, the Dutch spirit will be rolled out to another five to 10 states by year-end.

That pre-Prohibition legacy has garnered genever some cache among the mixologist community. A few classic cocktails, such as the John Collins, were originally formulated with genever, not gin.

Nadari and the Lucas Bols crew are working hard to communicate genever’s legacy and uniqueness to consumers via shelf-talkers, stack promos, neck hangers and sampling programs. Bols Genever is now also available in 50 ml mini bottles (SRP $4.99), which are ideal for sampling. “Because it’s a new category here, education is vital,” points out Nadari. One advantage is that the Bols brand name is well-known in the U.S. thanks to its cordial line.

A few other brands of genever are distributed in the U.S. market, notably Zuidam and Boomsma. And, in the imitation is the sincerest form of flattery mode, at least one American distiller has created a genever style: San Francisco’s Anchor Steam Distilling markets Genevieve, with a flavor profile similar to the Dutch spirit. Of course, according to European Union regulations, true genever is only made in Holland, Belgium, France and Germany.

For his part, Nadari welcomes other genever brands whatever their origins. “We’re trying to build a category here,” he says. “I foresee an entire retail shelf just for genever.”


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