Bullish on Irish

Irish whiskey continues its phenomenal streak of double-digit growth. For the most recent full-year statistics (2010), there was a whopping 20.9% increase in Irish whiskey sales volume in the U.S., according to the Beverage Information Group. In addition, there was a 29.8% jump in revenues for Irish whiskey during that same period of time, according to the Distilled Spirits Council of the United States. And according to all indicators, Irish has been chugging along a similar strong growth track throughout 2011. [In the control states, Irish whiskey sales volume grew overall by 19.4%, based on 12-month rolling data through September 2011.] Several years ago, when the Irish phenomenon first appeared on the radar, those prodigious increases were usually qualified with the phrase “albeit from a small base.” But after five years of year over year development, that base is a lot bigger. In fact, some industry authorities say the fastest-growing spirit has a role in driving overall industry growth. Certainly, Irish whiskey has stimulated the thirst of consumers and increasing investments by the major players. New products, ownership changes and seductive marketing have made the emergent category as exciting as an Irish reel.

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There were a number of significant developments in the category this year. Perhaps the biggest news is the recent debut of Jameson Black Barrel Select Reserve. This new expression is a blend of pot still and small-batch grain whiskeys, which gets its moniker from maturation in flame-charred bourbon barrels and toasted sherry casks. “Black Barrel is meant to be a trade up from Jameson Original, a way for Jameson drinkers to treat themselves and their friends on special occasions,” pointed out Wayne Hartunian, vice president of whiskies and Cognac at Pernod Ricard USA.

Additionally, in February Pernod Ricard USA will debut a new expression of Redbreast, a 12-year-old cask strength whiskey. “With relatively minimal support over the years, Redbreast has been growing organically,” noted Hartunian. “There is definitely a base of fans out there and that’s expanding.” For Tullamore Dew, 2011 marked the first year under new owner William Grant & Sons, Ltd. “As a broad-based spirit company, we desired to have an Irish whiskey in the portfolio because it’s a very fast-growing category and complements our overall strategy,” said Shane Hoyne, Tullamore Dew global brand director. “Tullamore Dew provided the perfect mix of a brand that is currently very successful with a strong base that had commercial market opportunities for William Grant. It is also a brand that we believed would have significant upside in the future,” added Hoyne. To support its acquisition, William Grant rolled out a multi-million dollar global communications investment in the brand late last fall. Among the plans that William Grant has for its acquisition are the introduction of some premium expressions of Tullamore Dew over the next few years and the development of the 1800s distillery and barrel warehouse in Tullamore town into a visitors center. New, more modern and contemporary packaging has also been designed, slated to appear on shelves in July.

Appearing on the market this past year from Sidney Frank Importing Co. was a new expression of Michael Collins, a 10-year-old Single Malt, which is double-distilled in copper pot stills, from both malted barley and peated malted barley and matured in bourbon casks for a minimum of 10 years. Michael Collins Blended Irish Whiskey also boasts a new packaging design. Named for the legendary Irish independence hero, the new label features an iconic image of Collins on a bicycle, the Gaelic saying, “Is maith an scealaí an aimsir,” meaning “time is a great story teller,” and a note that the spirit is double distilled.

The ever-innovating Cooley Distillery has released a number of new expressions of its four core brands, including the The Tryconnell in Sherry, Port and Madeira finishes as well as Kilbeggan 18-Year-Old and Greenore 18-Year-Old, imported by Sazerac. Cooley is also experimenting with batches of poteen (Irish moonshine) and a Connemara whiskey, matured in a cask with the barrel ends made from bog oak, wood that’s been petrified for thousands of years.

Growing Up Strong

All this innovation wouldn’t be possible without strong category growth. Certainly the category’s major players are bullish on Irish and are betting on continuing expansion.

“For the past few years, Irish whiskey has been the fastest-growing spirits category, and that growth rate is accelerating,” declared Hartunian at Pernod Ricard USA. The company’s contender, Jameson is the category leader, at about 1.2 million cases. Hartunian cites Nielson research, noting that according to the latest 52-week data, Irish whiskey growth is up 21%. “That’s a huge increase,” he continued. “It is a small category compared to vodka or rum but because it has been growing so fast for such a long time, it has about doubled in size over the past four years. So the category is getting to critical mass, and it is one of the key drivers of growth for the industry, driving overall growth. The scale is starting to make an impact.”

Two other Pernod Ricard Irish brands are also faring well. Redbreast, a pure pot still Irish whiskey has been winning a number of accolades and fans. Hartunian cites Nielsen data for the past 12 months indicating the Redbreast brand’s volume has increased 47% over the previous period. “The growth has been organic, with minimal marketing support.” The company’s Powers Irish Whiskey is also growing decently without much support; it’s up 11%.  “For any brand to be growing with such minimal support, especially in this market, is pretty impressive,” declared Hartunian, who believes there is a lot of potential for additional growth for both brands.

“In general we are really optimistic about the category and the brand,” affirmed Yvonne Briese marketing director for Diageo North American Whisky and Irish. The company’s entrant is Bushmills, which grew 3% over the fiscal year ending June 30. “The brand’s been growing, and we see lots of opportunities in the market.”

“All indicators point to a good year for the category, that double-digit growth will continue,” concurred Hoyne, Tullamore Dew global brand director. “We are happy with the performance of Tullamore Dew; it has exceeded our expectations in the first year fully owning the brand.”  

Driving Growth

There are many theories as to what is driving the growth of the Irish whiskey segment, including inherent category momentum, increased investment, marketing campaigns and the innate quality and drinkability of the liquid.

“Jameson is driving a lot of the growth in the category,” opined John Cashman, global brand ambassador for Cooley Distillery. But that is good for the category as a whole, he believes. “They are able to open up new doors that we never could, and people are peeping in to see what else is behind Jameson.” Consumers who are lured by the brand’s advertising to drink Jameson will go on to try other Irish whiskeys, believes Cashman.

“Jameson’s ad campaign, the ‘Hawk of Achill,’ has added fuel to the fire,” noted Broc Smith. Owner of Sarasota Liquor Locker in Sarasota, FL. Smith stocks quite a few Irish whiskeys beyond the Jameson line, including Bushmills and Black Bush, Redbreast, Tullamore Dew, Powers and Michael Collins, among others. “Younger customers are buying Irish whiskey, because they are smooth and approachable,” reports the retailer.

“Currently, we are seeing a lift from the males 25-plus demographic who have the disposable income and want to try something new or unique,” according to Kate Laufer, director of public relations for Sidney Frank Importing. The Michael Collins brand has seen a tremendous increase in sales over 2011, and is up over 50% year-to-date, said Laufer. She also points to the cocktail trend as contributing to Irish whiskeys’ popularity.

There’s consumer cross-over, declared Briese at Diageo. “We’re seeing occasions that were oriented around beer are now including whiskey, groups of guys going out for an evening. There’s more of an openness to spirits in general among millennials.” A lot of that change, she attributes to the persuasive power of marketing and advertising, the increased spending across the category. But Briese also believes retailers and bartenders need to educate customers more about the category. Some consumers are ready be ready to be steered to Black Bush or single malts like Bushmills 10-, 16-, and 21-year old.

“There is a generational switch,” posited Cashman, “where the present generation doesn’t want to drink what their parents drank.” Ireland’s mild climate produces a soft mild whiskey, that appeals to younger drinkers as well, says the brand ambassador.

Cooley’s core business is represented by four distinct styles. “All of our brands experienced significant growth this year,” noted Cashman. The biggest seller is Kilbeggan, a blended double-distilled whiskey, which is sold in over 50 countries. Connemara is a peated single malt, unusual in Irish whiskey nowadays, but peat was traditional 100 years ago. The Tryconnell is a heritage brand from the 18th century, which gets its name from a long-odds winning racehorse; it’s an unpeated single malt. The unusual single-grain Greenore is made from corn, matured in first-fill Bourbon barrels. “With those four styles, we can appeal to just about every palate,” assured Cashman. “No matter what style or what country you like whiskey from, there’s something from the Cooley portfolio to suit you.”

At Yankee Spirits’ three stores in Massachusetts, the Irish shelves carry 17 different brands and a total of 28 expressions. Most popular is Jameson. “It’s off the charts,” said partner Tom Tesauro. The brand was up 56% through

 the first 10 months of 2011, he reported, adding that Bushmills is showing good growth as well. Part of the popularity the retailer ascribes to the revival of brown goods. That Irish whiskey is very mixable is also a plus in Tesauro’s book. Marketing has made the spirit appealing to younger consumers, he said: “It’s hip to drink Irish.”

Marketing Magic

Irish whiskey’s hip image is the result of successful advertising and marketing campaigns waged by the major players in the category. There have been a number of new developments on that front.

Launched two years ago, the “Legendary Tales of John Jameson” campaign continues to perform very well for the brand, according to Hartunian, which will continue to leverage that. The most recent spot was the “Hawk of Achill,” in which the legendary founder fights a mythic bird over his whiskey. “We significantly increase our marketing investment each year behind the brand,” noted Hartunian.

Tied into the Legendary Tales ad campaign is a newly debuted digital initiative, called Jameson1780.com, which invites users to participate in their own legendary tale and solve the mystery of the missing barrel of Jameson Irish Whiskey. “This digital extension is a truly unique and innovative program within the distilled spirits industry. It offers our passionate Jameson consumers a fun new way to engage and interact with the brand” said Hartunian.

Bushmills has been busy activating a program called Since Way Back, which tested well in New York City last year. Tying into Bushmills’ 400-year-old heritage, the program is about longtime friendships and camaraderie, according to Briese. The brand has partnered with a number of influencers, including musicians like Chromeo and Bon Iver and actor Elijah Wood. Another partner is the ultra-hip fashion store Bodega in Boston, which developed wooden-framed sunglasses made from Bushmills barrels. “Many of these are individual collaborations developed by the influencers themselves,” said Briese.

Bushmills is also planning extensive St. Patrick’s Day programs for off- and on-premise during February and March. “That’s a big time of the year for us,” says the marketing director. 

For its part, Sidney Frank Importing intends to strengthen consumer awareness of Michael Collins Irish Whiskey through significant increases in our consumer advertising in 2012, according to Laufer.

As part of its multi-million dollar investment in Tullamore Dew, William Grant is launching a global integrated communications campaign, supporting the “Irish True” advertising creative. “It’s about passion, poetry and pugilism,” quipped John Quinn, global brand ambassador at a preview of the campaign in New York last fall. TV and print ads will feature striking images and charismatic characters, evoking the true spirit of the Irish, both poetic and rebellious. Additionally, the campaign features posters, wall art and digital roll-out in New York, Chicago, San Francisco and Philadelphia, supported by under-the-radar events. “There’s more to Ireland than images of green hills and pure water,” asserted Hoyne, who collaborated in the creative. “Irish has a vibrancy and dynamism, and we want to communicate that in our messaging. We’ve moved from the geography of Ireland to the character of the Irish. Also in this package is a smart-phone app that allows consumers to create own lyrical Irish toasts to share with friends.

Irish Creams and Others

“We are pleased with way things are going both with regards to the Baileys brand and to the Irish cream category as a whole,” said Anna MacDonald, Diageo’s director of marketing for Liqueurs North America. For the last fiscal year, ending June 30, 2011, Baileys grew by 1% in North America. Given the scale of the Baileys brand and the difficult economy, the company is pleased with those results. “This year the cream category is in growth too,” noted MacDonald. And though the increasing consumer interest in Irish whiskies seems to grab a lot of the press, the fact is that Irish creams produce significantly more sales volume in the U.S. Indeed, at national sales of more than 1.35 million cases, Baileys, by itself, is just under the 1.42 million case total for the entire Irish whiskey category. Other leading creams include Carolans (342,000 cases nationally), Saint Brendan’s (170,000 cases nationally) and Emmet’s (125,000 cases nationally).

“Baileys is the big driver in the Irish cream segment,” reported retailer Smith, of Sarasota Liquor Locker. Smith stocks a range of Irish creams, including Original and flavored Baileys, Saint Brendan’s, Carolans and Emmet’s as well as Irish Mist liqueur.

The Baileys brand has just emerged from a flurry of marketing activity over the just completed holiday selling season, including TV and print ads. “Off-premise is the biggest focus for Baileys because so many people entertain at home over the holiday season,” stated marketing director MacDonald. Various gift packages are offered, including Baileys Original in combination with the four flavored expressions and Baileys with logoed glassware. “Advertising remains an important part of our merchandising mix but social media has become increasingly important,” said MacDonald. Sites like Facebook are a good way for the brand to communicate with customers—and for customers to communicate with the company. “It’s a two-way conversation. We learn a lot from our consumers.”

“For O’Mara’s Irish Cream, we’ve seen some really great growth,” commented Josh Hafer, corporate communications manager at Heaven Hill Distilleries. The O’Mara’s brand is the fifth largest seller in the Irish cream category, says Hafer, at a bit below 125,000 cases.

“Over the last five years or so, O’Mara’s has seen exceptional growth, we’ve grown high single digits to almost double digits and this year we grew at a 20% clip.” Hafer attributes much of that growth to customers trading down during this difficult economy. “The brand is at a good price point,” he said. O’Mara’s has also found great success with the chain store market, especially during the holiday season.

Hafer also thinks the Irish cream category is getting a little lift from the meteoric success of Irish whiskey. “I think there is a synergy there; the Irish-ness of both categories.” O’Mara’s touts its Emerald Isle heritage on the bottle. The company is changing some of its POS materials to stress the cream’s quality and true dairy character.

“The growth in Irish whiskey is pointing up the quality of Irish brands to the forefront,” agreed MacDonald. “And that popularity will undoubtedly help Irish brands across the board.”

Of course, another well-known Irish liqueur is Irish Mist, the classic cordial steeped in tradition, which can be consumed as an after-dinner drink or as an ingredient in a cocktail. Made with aged Irish whiskey and hints of honey, as well as a variety of other ingredients, the venerable liqueur is hoping to move beyond its core constituency of older consumers to a new generation of drinkers.

The Future

Virtually everyone is bullish on the potential of Irish spirits.

“Both the category and Jameson are in their infancy with much potential upside,” posits Hartunian.  He notes that Irish whiskey seems to be resilient to economic swings, performing well even during tough recession years. “From a category standpoint, I am extremely optimistic; for Jameson specifically, it is the fastest-growing premium spirit brand for the past few years and I expect it to continue.”

At Cooley, Cashman believes that premiumization is going to come back, especially for Irish whiskey, where there is a lot of room for consumers to trade up. The company is prepared with whiskeys ranging in price from an affordable $20 all the way up to a superpremium $180. “People have a little more money now and they are willing to spend it on brands that they can stand over,” asserted Cashman.

The category has a good reputation and lots of potential to grow, affirmed Hoyne at Tullamore Dew. “In a spirits industry which hasn’t been defined by its dynamism over the past few years, I think people are genuinely looking to see what Irish does over the next decade.”


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