Irish Spirits Express

All aboard. The Irish spirits segment is following many different tracks. For years, the big story out of Ireland has been the double-digit increases in the whiskey category. That phenomenal growth shows no signs of slowing down, agree all the major players. That momentum has spurred many new developments, including a new major player, distillery expansions, tourism, additional expressions, packaging changes, re-launches, and even a new category of liquid.

“Whiskey has a lot of cache right now, whether it’s American, Scotch or Irish,” says Yvonne Briese, marketing director for Diageo North American Whisky and Irish. Diageo’s internal projections show Bushmills and the Irish whiskey category continuing to grow at the same high rate over the next few years. “We aren’t seeing signs that growth is slowing down; there is still a lot of upside in this category,” notes Briese.

Indeed, Irish whiskey remains the fastest-growing category, according to the Distilled Spirits Council of the United States (DISCUS). Volume was up 24% to 1.7 million cases in 2011 (the last full year for which statistics are available), according to DISCUS. “2011 was a solid year for Irish whiskey and 2012 looks to be the same,” said DISCUS President Peter Cressy at the industry’s annual briefing.

Driving much of that growth, as it has for the past several years, is Jameson. The category leader was up 28.7% in 2011, according to Beverage Information Group’s Liquor Handbook 2012.

“Jameson has been driving a lot of the growth; in fact, in 2011, we drove about 86% of the category growth,” explains Wayne Hartunian, vice president of Whiskies and Cognac for Pernod Ricard USA. “The pace of growth is accelerating, and I feel there is a huge amount of additional upside still for Irish whiskey and Jameson in particular.”

New Kid on the Block

Joining the Irish market is Beam Inc., with its purchase last January of the Cooley Distillery, the last independent Irish producer. That acquisition included the Kilbeggan, Connemara, Tyrconnell and Greenore brands, as well as aging inventory and Cooley’s malt and grain distilleries in Dundalk and Kilbeggan, Ireland. Still to be seen is what this new major player’s impact will be upon the market.

“[Beam’s entry into the category] is an encouraging development for Irish whiskey overall, and we are looking forward to the challenge,” says Ken Reilly, Category Marketing Director who oversees Tullamore Dew for William Grant & Sons. “I believe Beam will bring its A-game to Irish whiskey, which will force us as competitors to think about every dollar we spend and how we differentiate ourselves.” “Yes [Beam] is competition for us but it’s also more energy for the category, and we believe there is enough to go around,” echoes Briese.  “Competition isn’t a bad thing.” “Beam’s has a very strong whiskey portfolio, but the one area missing was Irish. As one of the fastest-growing spirits, Irish was a category that we wanted to play in,” explains Bob Gorman, Director of Marketing World Whiskies, about the acquisition strategy. There are only four distilleries in Ireland, he adds, and with the Cooley purchase, Beam acquired two of them. “It gives us access to really desirable liquid.”   

Right now, Kilbeggan is Beam’s number-one focus. “But Connemara is great for us because it is the only peated Irish single malt. Scottish Islay peated malts are growing faster than other single malts and we think there is a great place for Connemara to play,” says Gorman.  Beam sees Connemara as a complement to its Islay Scotch Laphroaig. Another label in the acquisition is Tyrconnell, a single malt. “We see that single malt business continuing to grow,” believes Gorman. Rounding out the Cooley brands is Greenore, unique as the only Irish single-grain whiskey. “We think we have the most diverse portfolio of any one playing in Irish,” concludes Gorman.

Indeed, Beam has already made a move to add another brand to its Irish Whiskey portfolio. The company just announced it has acquired 2 Gingers, an Irish whisky produced at the Kilbeggan distillery, which had been launched in limited markets in the U.S. in January 2012 by Kieran Folliard. Simultaneously, Folliard, the brand’s founder, has been named Beam’s Chief Irish Whiskey Ambassador in the U.S. The name 2 Gingers is apparently based on Folliard’s red-haired mother and aunt, the company said.

Construction Boo 

Increasing sales have led to demand for more whiskey than the four distilleries can supply. Plans are set for a major facility expansion and a new distillery.

Midleton Distillery is at full capacity supplying liquid for Jameson. Irish Distillers Pernod Ricard is reportedly investing 100 million euros to expand the County Cork facility. Ground was broken on the project in 2012.

William Grant & Sons has also announced plans to build a new distillery in the town of Tullamore, which will bring the brand full circle back to its original home, says Reilly. Due to consolidation, the original source of Tullamore Dew was closed down in the 1950s, production moved to the Powers’ distillery, which was also closed, and then shifted to Midleton, where it is distilled today. With an investment of 35 million euros, the Tullamore facility will be up and running by early 2014, according to Reilly, who adds, “It will be the first significant distillery opened in Ireland since the 1970s.”

A Wee Dram of Tourism

Aficionados will go far to seek out the source of their passions, and whiskey is attracting a fair number of tourists to Ireland, visiting shrines like the Old Jameson Distillery in Dublin. In tandem with the new distillery in Tullamore, the company overhauled the existing visitors center on the site of the original distillery. “We created a more engaging consumer experience, bringing out the heritage of the Tullamore Dew brand,” explains Reilly. “Irish whiskey helps the balance of trade in Ireland, provides a lot of jobs, and brings in tourists. It’s nice to be a part of a bigger story about the Irish economy coming back.” “We see the Kilbeggan distillery as being one of Ireland’s top tourist destinations,” says Gorman. Significant investment is being made in marketing support and site infrastructure at the Westmeath distillery, including a 70,000 euro investment to restore the distillery’s ancient waterwheel. Visitor attendance is up 40% over the previous year. “And when Americans return from their vacations, they’re looking for Kilbeggan on the shelves,” points out Gorman.

Uncorking Another Bottle

A number of new expressions were unveiled in 2012, and this year should see some new liquid debuts as well.

Pernod Ricard is expanding distribution of its newest expression, Jameson Select Reserve Black Barrel, a small-batch grain whiskey with a high proportion of single Irish pot still whiskey matured in flame-charred bourbon barrels and toasted sherry casks. “Black Barrel is doing very well,” says Hartunian. “With its full-bodied, complex taste, it’s meant to be a trade up from Jameson Original, which appeals to our advocates of the brand.” To help drive awareness in retail venues, the company is supporting Black Barrel with advertising, point-of-sale support and samplings.

Early last year, a new expression of Redbreast was launched, 12-Year-Old Cask Strength Pot Still.  “Redbreast is one of those brands that whiskey aficionados really love,” notes Hartunian. “It’s getting an organic buzz; enthusiasts are excited that we’ve launched something new.”

“Redbreast has certainly caught a lot of people’s attention, but Jameson is the big boy in the house,” comments David Phillips, a sales manager at Astor Wines & Spirits in New York City. “The best-sellers in my store, Irish-wise, are Jameson first, followed by Kilbeggan, Bushmills and Baileys. After that, it’s Jameson Black Barrel and Emmets Irish Cream. The Irish creams are right up there with the whiskeys.”

Another Irish brand in the Pernod Ricard Irish portfolio is Paddy, a 10-year-old pot still whiskey, which had been in limited distribution for several years. “We are starting to roll that brand out to more markets during this fiscal year,” says Hartunian. “It fills that gap below Jameson, priced about $3 less a bottle. “It’s a great-tasting product and we are excited about expanding distribution.” “Paddys has re-emerged back in our market, where it has a strong following,” notes Rick Ostrand, spirits buyer for Stateline Liquors in Elkton, MD. Stateline carries about 40 Irish whiskeys, all of the Jameson and Bushmills offerings, as well as many smaller labels. “We’ve had to increase shelf space, because there have been so many new ones coming on board,” comments Ostrand. Also in the Pernod Ricard portfolio is Powers Irish Whiskey. “We are going to do a lot more with the Powers brand, too,” adds Hartunian. “It also is developing an organic following among bartenders in some markets. When you have that dynamic with a brand it’s really magic. We are looking to develop it further.” The company is just starting to put support behind the Powers brand, and will leverage that more going forward, according to the VP.

“We have a lot of innovation in liquid coming in 2013,” says Tullamore Dew’s Reilly. Although he could not reveal details at press-time, the company will add an expression in the second half of the year. New packaging was developed in mid-2012 for Tullamore Dew Original, which accounts for 95% of the brand’s overall volume in the U.S. market. The new pack emphasizes the heritage of the brand throughout the design by giving founder, Daniel E. Williams’ initials “D.E.W.” more prominence within the product name. Additionally, “1829,” the year the original Tullamore distillery was founded is embossed on the bottle along with a number of past gold medals the brand has won since its inception. “This year, we will revamp the packaging of our entire line to reflect the changes made to Original, to help consumers navigate our range in an easy and compelling way,” reveals Reilly.

For its, Michael Collins brand, Sidney Frank Importing Company continued to focus on the packaging and 10-Year-Old Single Malt that debuted in 2011. “Both the trade and consumers have responded very well to the new look of Michael Collins Irish Whiskey,” says Kate Laufer, director of public selations. “And our 10-Year-Old has given us great traction and more access to the Scotch consumers based on its unique taste profile and lightly peated product.”

Cream of the Crop

There have been some significant developments in the Irish cream and liqueur category, as well.

“We’ve been busy bees at Baileys,” quips Anna MacDonald, Diageo’s Director of Marketing for Liqueurs North America. The category leader in Irish creams just launched Baileys with a Hint of Hazelnut in the U.S. market. “In the U.S. people enjoy Baileys with coffee, and the most successful flavors are those that marry best with coffee consumption behavior. Plus hazelnut is one of the top coffee flavors as well as a top coffee creamer flavor,” explains MacDonald about the genesis of the new expression. Reception so far among consumers has been “amazing,” she adds. Currently Baileys offers five flavors in the U.S. market: Caramel, Mint Chocolate, Coffee, Original, and now Hazelnut.

MacDonald believes that Baileys is finding synergy with the drinkable desserts trend, and is working with some on-premise partners to take advantage of that trend. “It for those times when you are quite full after a meal but you still fancy a little something sweet,” she explains. There is an opportunity for drinkable desserts to round off that meal experience. “Irish creams seem to be holding their own on the shelf,” says retailer Ostrand at Stateline Liquors. Baileys’ performance is quite strong at the moment, according to MacDonald, although, the creams category is flat right now. “At the end of our first fiscal quarter, we were up on the core brand and also buoyed by the introduction of Hazelnut,” she says.

A new pack design for Baileys should also have a positive impact. The repack will include a new bottle and graphics. Details were being finalized at press-time, but Baileys’ new look should hit retail shelves in the U.S. by early spring.

A Taste of Honey

American and Canadian whiskey producers have recently found great success with flavored products; that subcategory continues to grow, especially among younger drinking-age consumers.

Now Bushmills has debuted the first flavored Irish whiskey, Bushmills Irish Honey. “Flavored whiskey was something we had looked at for a while, trying to decide if Bushmills Irish Honey was the right thing for us, but when we did go after it, we went strong,” explains Briese. The new product was launched over St. Patrick’s Day, with full-barrel support at retail as well as incorporating it into Bushmills Since Way Back campaign. “We had a big outreach with the off- and on-trade, as well as a number of tasting events.” The launch exceeded expectations, she says.

“Flavored whiskey is a hot trend,” adds Briese, “and Bushmills is already approachable and easy to drink, so it’s the perfect fit.” In keeping with Bushmills’ authenticity, the honey is sourced from Ireland. “We think there is tremendous upside potential for the product. Bushmills Irish Honey appeals to a different consumer and broadens the Irish whiskey repertoire.”

A different take on the flavor topic comes from Peter Gyimesi, Group Brand Director of Cordials and Rums at Campari America. “As we saw with the explosion of flavored vodkas over the past 10 years, we are now seeing a big spike in the popularity and demand for flavored American whiskeys in the US. Irish whiskeys are also poised to capitalize on this trend, explains Gyimesi. 

“Irish Mist is the original flavored Irish whiskey liqueur and we intend to really take advantage of that first-mover status through expanded promotion of this iconic brand,” announces Gyimesi. Additionally, the brand director believes that flavored variations open the door to a younger legal drinking age consumer, which potentially serves as the first rung on the ladder as they enter the Irish whiskey segment.

Campari America plans to re-launch Irish Mist in 2013 with a comprehensive marketing campaign highlighting the brand’s authenticity as the original Irish honey-flavored whiskey liqueur. “We have a real gem in Irish Mist and are focusing our efforts on reintroducing the brand to a whole new league of consumers,” posits Gyimesi. 

And Now, a Word from our Sponsor

Fueling category growth are advertising and marketing campaigns as well as merchandising support from all the major players. Baileys has launched a new campaign, called “Baileys Cream with Spirit.” A 60-second version of the new commercial premiered on Saturday Night Live in November. Inspired by Hollywood movie director and musical choreographer Busby Berkeley, the commercial depicts women in Baileys-colored gowns flowing like poured Irish cream. “With this campaign, we are going back to our roots: Baileys was created in 1974 with the female consumer in mind,” explains MacDonald. “The Cream with Spirit campaign celebrates the spirit of modern womanhood.” Ad materials feature slogans such as: “Be a girl with a mind, a woman with attitude, and a lady with class.”  

“The Cream with Spirit campaign is a bit of new direction for us,” says MacDonald. “A lot of our marketing in the past has focused on driving specific occasions or serves. This allows us to bring more relevance to the consumer, as opposed to just talking about our product.” Previous advertising was holiday-focused, but the new Cream with Spirit campaign can extend beyond the holidays into the second half of the fiscal year.

Kicking off support for Kilbeggan was Halfway Day Celebration, September 17, a reminder that it’s just six months to St. Patrick’s Day. It was the first major event for Beam’s new brand, focused in five markets: New York, Chicago, San Francisco, Boston, and Philadelphia, with incremental merchandising for both on- and off-premise. “Halfway Day was a great opportunity for us,” relates Gorman. “We will continue to hold the event every year.”

Another marketing program for Kilbeggan is called Irish Hour. “The idea is that when it’s happy hour in Ireland, it’s time in the U.S. to watch your team play football,” explains the marketing director.  Recently, Kilbeggan made a big splash in Hollywood at “Variety’s” Power of Comedy event held at the Avalon Theater in Los Angeles, hosting a tasting station for VIPs, serving comedy-inspired cocktails, and operating a whiskey bar on-stage for celeb presenters.

Leveraging an Irish government program, the company has imported five Irish brand ambassadors for the five markets. The ambassadors are helping to drive distribution, education, and staff training for on- and off-premise, as well as road shows and market blitzes. “You’ll be seeing more marketing on Kilbeggan over the next 12 months than you have in the last 10 years,” promises Gorman.

For its part, Jameson is extending its highly successful “Legendary Tales of John Jameson” campaign with a new commercial spot to air in early 2013.

Bushmills will focus on Since Way Back, which it activated last year, and has expanded from an initial three to six markets. The brand has collaborated with a number of “influencers,” including musicians and actors. A recent manifestation of that is musician Justin Vernon’s “1608 Guitar” made from Bushmills barrels.

Tullamore Dew’s Irish True campaign, which debuted in late 2011, carried over into 2012 and the company will continue that theme this year, with select sponsorships, media placement and advocacy programs. An example is Tullamore’s sponsorship of the Battle of the Badges event in New York, an annual boxing tournament pitting stalwarts of the NYPD against the FDNY.

Looking into the Crystal Ball

All of the major players see a bright future for the Irish category.

“It’s an exciting time to work in the whiskey industry, because the category is doing so well,” enthuses Hartunian at Jameson. “I am positive about the future of Irish whiskey,” concludes Reilly at Tullamore Dew. “Formerly, the growth of the category was a proxy for how Jameson was doing. Now, brands like Tullamore Dew and Bushmills are growing at a strong rate as well. It’s not just one brand anymore. The rising tide is raising all ships.”            


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