A Great Time For Bourbon
Consumption increases for the first time in decades as ad spending jumps almost 50% and ultra premiums create new interest and entry points.
In one of the most remarkable turnabouts in the beverage alcohol business, apparent consumption of straight whiskey actually increased last year for the first time in more than at least two decades. Whether that turns out to be an aberration in the category’s long slide, or truly signals the start of a new upward trend is unclear. But initial projections from Adams Business Media, based on industry data as well as anecdotal evidence, indicate that the straight whiskey category will continue to show modest growth this year and next.
But the rising tide of whiskey is not lifting all the boats in bourbon’s fleet. The strong performance of several leading brands accounts for the real growth, offsetting the long-term decline of most of the brands in the category. In other words, while a handful of brands are rising, the majority are sinking.
Nonetheless, whiskey marketers as well as on-premise operators are justifiably encouraged by the uptick in consumption and cite a variety of reasons to be optimistic about the category’s future prospects.
Among the most significant factors driving growth in the category are increasingly favorable consumer demographics, a plethora of boutique-style bourbons boasting higher proofs and higher margins, a strong economy, the popularity of “authentic classics,” and, perhaps most important, a dramatic increase in advertising.
According to the authoritative Adams Liquor Handbook, total spending in measured media for the straight whiskey category jumped 49% to almost $38 million in 1998, an increase of $12.5 million over the previous year. Among the category’s leading advertisers, Jack Daniel’s increased its spending to $18.7 million or 40% more than it spent during the prior 12 months while spending for Gentleman Jack grew 20% to $1.1 million. Ad spending for Jim Beam increased by 18% to $8.1 million while expenditures for the company’s Knob Creek were up fourfold to $2.6 million. Advertising for Maker’s Mark was up 158% to $3.2 million and spending for Evan Williams increased 76% to $914,000. All of these brands also registered volume gains last year. Among the leading brands, Maker’s Mark posted the greatest percentage increase with growth of almost 19%.
While this ad spending is aimed primarily at boosting the fortunes of the respective brands, it also increases the level of overall awareness for the category. And the increase in spending, as well as public relations and educational initiatives, helps generate a discussion on product attributes, claims and characteristics that are essential to whet the appetite of upscale consumers and build a buzz for bourbons priced at $25 and up.
Demographics are also kicking in to benefit bourbon. As a starting point, the big name, truly national and international brands are benefiting from an increase in the population of 21 to 24 year olds — the so-called “echo” baby boom; the children of the boomers who are coming of legal drinking age — in the geographic and psychographic heart of their biggest state and metro markets.
These brands also benefit from the “drinking better” dynamic at work in all spirits categories among the many are consumers who want the best of whatever it is they buy. Like other distillers, Brown-Forman is finding growing consumer interest for its ultrapremium offerings including Jack Daniel’s Single Barrel, Gentleman Jack and Woodford Reserve. At the same time, its core brand, Jack Daniel’s, continues to prosper.
The Tennessee straight whiskey was up 4.6% last year to more than 3.3 million cases. The ongoing popularity of retro drinks is also contributing to the growth of ultrapremiums. While sales of Jim Beam bourbon grew 1% last year to more than 3.3 million cases, the company has been in the vanguard of the ultra premium bourbon movement with its Small Batch Bourbon Collection (Knob Creek, Booker’s, Baker’s and Basil Hayden).
In addition to advertising, Beam has been a leader in implementing successful informational and educational initiatives for consumers as well as the trade. One of these is a Knob Creek program titled, ‘Return to the Cocktail Hour’ which is intended to reintroduce, or for younger adult consumers to introduce, classic cocktails. And while Knob Creek continues to grow at double-digit rates, Beam is currently introducing an 18-year-old “luxury bourbon finished in French cognac casks” called Distillers’ Masterpiece with a suggested retail price of $250 (see sidebar).
A few short years ago all of this would have seemed highly unlikely. The straight whiskey category seemed on an inexorable and inevitable downward slide; a trend bucked only by brands like Jim Beam and Jack Daniel’s, which are really more nationally-marketed premium spirits than mere straight whiskies, and brands such as Maker’s Mark which had developed a devoted following of bourbon connoisseurs. Today, the category has a new dynamism, a new vigor and a bright outlook — not to mention $250 offerings, and vintage-dated, extra-aged, single barrel and higher proof bourbons. Who would have thought?
Debut Of Distillers’ Masterpiece
Jim Beam Brands is leveraging the success of its Small Batch Bourbon Collection with the introduction of Distillers’ Masterpiece, an 18-year-old luxury bourbon finished in French cognac casks that carries a suggested retail price of $250.
“We were fortunate that we were able to combine the talents and knowledge of Booker Noe and Alain Royer, two of the world’s most respected distillers,” says Nancy Lintner, vice president of marketing, Jim Beam Brands Co. “The result is a spirits that raises the bar not only for bourbon, but all luxury spirits.”
The packaging features fine French glass highlighted by an intricate oak leaf design that underscores the role the oak barrel plays in the aging process. Each wood-trimmed cork is hand-numbered to mark the bottle’s limited edition status, and the bottle carries a simple, elegant black name label that is framed by the signatures of its creators.
Countdown To Jack Daniel’s 150th
Jack Daniel’s celebrates its 150th birthday in September of 2000, but the
celebration gets underway a year earlier. Now, that’s the way to party.
A special, limited edition bottle — same signature square shape but with colorful applied ceramic graphics instead of a paper label, and containing 90 proof whiskey instead of normal 86 proof — will be available beginning this month.
“We’re gearing up for the 150th party next September,” says Brown Forman’s Mike Keyes, “we’re planning lots of fun promotions and activities to honor this event.” And why not? As Keyes says, “Jack Daniel’s is an American icon. It’s more than a whiskey. It’s one of the truly national premium brands.”
Seagram’s Magic Bulleit
Seagram Americas, the longtime leader in blended whiskey with its best-selling Seagram’s 7 Crown, is rolling out a premium Kentucky straight bourbon.
Bulleit, a 90 proof bourbon, is distilled from soft Kentucky-limestone filtered water and the highest quality corn, barley, malt, rye and a proprietary yeast strain. Seagram generates a minimum of 10 bourbons at its Lawrenceburg, KY distillery and after distillation the bourbons are aged in new white oak barrels for six to eight years. After aging, the bourbons are blended for optimum flavor and consistency. Bulleit, originally afamily-owned distillery that traces its roots to the mid 1800’s, was purchased by Seagram in 1997.
The brand’s launch is being supported by on-premise and off-premise promotions and an ad campaign titled, “When Men Were Men and Whiskey Was Bourbon.”
“It’s a wonderful time to be in the bourbon business,” says Larry Kass, group product manager for bourbon at Heaven Hill Distilleries.
“We are reaching unprecedented levels of new consumers, and getting the kind of critical and historical appreciation that the category deserves,” says Larry Kass. “We are starting to get the write-ups in the local papers,” he adds, and the superpremium bourbons, including brands such as Heaven Hill’s Fighting Cock, are breaking into “non-traditional markets” such as the northeast and upper midwest. In addition, Kass notes that while the super and ultra premium bourbons represent a relatively small proportion of total volume (estimates range from 3% to 8% of the category), “they’re very marketable and merchandisable and hugely profitable. The number of cases, while admittedly small, is somewhat deceiving because the profitability is so high.”