WHISKEY: Follow the leaders

While Scotch struggles in the UK, imported whiskey is enjoying good times. Two brands – Jack Daniels and Jamesons – dominate their respective categories but will these heavyweights pave the path for other contenders, asks Ben Grant

Brown spirits have faced some pretty testing times in the UK in recent years, but amidst the relatively gloomy sales charts, imported whiskey stands out as one of the brightest performers. It is, however, a category that is more than a little reliant upon its two top dogs and they aren’t exactly the most predictable of forces. On the one hand, the US whiskey segment is dominated by Jack Daniel’s, a brand that is riddled by contradiction. From the Irish camp, meanwhile, it’s scarcely surprising that Jameson rules the roost given that, until just three years ago, it was essentially the only serious priority for monopoly producer Irish Distillers. Both are marketed with aplomb and have established themselves as an essential feature in the drinks repertoire of the target 18-24 year-old male consumer. But do these two compelling and well-managed brands have a knock-on beneficial effect for the wider category?
First things first, while there are clearly some similarities between the spirits, the catch-all term “imported whiskey” is a gross over-simplification and it’s clear that the various sub-categories are experiencing very divergent patterns driven by very different forces. Irish and American whiskies dominate the sector in the UK but the two could scarcely be more different, and it is the latter that has been the engine driving the total category. As the Euromonitor stats opposite and overleaf indicate, spirit from across the Atlantic has enjoyed enormous growth in the last five years and the research specialist is predicting a continued positive performance for the next five, albeit at a slightly slower pace. The Irish evolution has ridden a rather more gentle upward curve and looks set to continue at a similar rate. Importantly, however, even this sluggish performance drastically outperforms the total whiskey sector, which is struggling – and failing – to arrest its seemingly terminal, slow decline.

Any look at the US whiskey category must, almost by definition, begin in Tennessee, home of the ubiquitous Jack Daniel’s. The performance of this peerless spirit over the past decade has been a masterclass in effective brand building, establishing itself as a truly iconic contemporary classic, the drink of choice for hip young things and one of only two spirits (alongside Bacardi) that has convinced reluctant UK consumers to brand call at the bar.
There can be no doubt that the emergence of the wider US category owes a great deal to the sterling work put in by Brown Forman. As Maker’s Mark brand manager Lee Willets readily admits, a lot of his brand’s consumers “got into the category through JD” and then graduated to other variants from the wide portfolio of US whiskies. The other brands have enjoyed terrific success from Jack drinkers seeking alternatives that are similar but different – but they will be more than a little concerned to hear Jack Daniel’s UK brand manager Philip Epps say that retention is now on the agenda at JD HQ. While he stresses that this is certainly not the top priority, Epps confirms that the company is beginning to look seriously at how to convince consumers to stick with the brand after they grow out of the LDA-24 demographic that constitutes the brand’s heartland.
While Jack is the undisputed heavyweight champion of the category, from a global perspective Jim Beam at least represents a worthy adversary. In the UK, however, Jim is frankly puny by comparison. Impressive positioning in Australia and Germany (not to mention a sterling domestic reputation) enabled the brand to climb above the six million case mark earlier this year. The UK, by comparison, notched up just 60,000 cases last year, a measly 1% of the global total. It’s a poor performance that has been duly noted by the upwardly mobile Beam Global UK team and the company is committed to a dramatic expansion in the coming years.

Beam commercial manager Gareth Brown points out that while the brand is nowhere near the levels it should be in the UK, it has still been in sharp growth since the company began working with Maxxium, four years ago sales stood at a paltry 25,000 cases. During the last year, he says, “we have taken a step back and conducted a strategic review,” and this analysis is the basis for “a new approach” in the coming year. As db went to press Brown was unable to reveal details of a strategy that is, apparently, “still on the drawing board”, but he hinted at the fact that it will “go back to the roots of the brand” and expects the new direction to launch with a fanfare in May.

A question of investment
Interestingly, this approach is in stark contrast to Wild Turkey, another brand that has significant status on the global stage but has failed to make an impact on these shores. Patrick Venning, Pernod Ricard UK marketing manager, explains that the brand is not going to receive any significant focus in this market, stating that “it’s simply a question of priorities”. Nobody could reasonable argue that Pernod lacks ambition in the UK, but with so many up and coming brands in its weighty portfolio, Venning explains that the company has decided that “for a brand of this size to take share will require a significant amount of over-investment”. While this conclusion does not preclude Jim Beam from future success, it suggests that to make a significant impact a weighty investment will be required.

Reasons for growth
The JD factor has clearly played a significant role in encouraging drinkers into the imported whiskey category – but this is, of course, not the sole factor that has contributed towards the impressive recent performance. The category is aimed squarely at a young male audience, predominantly those from LDA-24. It’s a significant demographic in terms of both numbers of consumers and the volume of per capita consumption, but it is also an incredibly difficult group to tie down to a category, let alone a specific brand. As Beam’s Brown explains, “we are competing not just with other bourbon brands, but with vodka, rum, Tequila, beer and even wine. We can recruit consumers from a variety of different sources … [these consumers] have a broad repertoire of drinks.” All of which makes it incredibly challenging for brands to gain any semblance of loyalty.
The taste is clearly a significant factor, providing an entry point for consumers who are put off by the more challenging flavour profiles of other dark spirits. “Our consumers are seeking a flavour that is easier to drink than Scotch,” says Willets – though this ease on the palate does not come at the cost of complexity, for the category clearly has an extensive ladder of flavour, allowing drinkers to explore and enjoy a wide range of different options. Where US whiskey has been particularly canny, however, is the way that the category has not been at all prescriptive in terms of advocating a particular manner of drinking. Speaking on behalf of the brand that has driven the entire trend, Epps points out that “we never told people how to drink it”. The vast majority of the spirit is drunk neat, on the rocks or mixed with cola, so drinkers aren’t exactly being groundbreaking in terms of their behaviour, but crucially they don’t believe that they’ve been told what to do, which engenders a feeling of discovery. And if  you can remember back to those halcyon days, you’ll recall how liberating and important that sense of discovery is to the target audience.

Also acting in the category’s favour is the high level of heritage, history and authenticity that its brands can lay claim to. “It’s not just a case of projecting an image,” says Roy Evans, brand manager at Buffalo Trace, “that’s the reality for American whiskey – it’s a very authentic product.” Across the board, spirits brands are desperate to lay claim to such credentials, but frequently it’s a case of constructing a conceited story. Not so for most American whiskies, and this is a value that the marketers have clearly identified as key: just look at the long-running ad strategy that has worked so well for Jack and consider the way that Stella Artois (that other staple of the LDA-24 year-old male) has positioned its brand. Surely we can expect Jim Beam to move in a similar direction when the new campaign rolls out shortly.
Much to the delight of the brand owners, it’s not just consumers who have a strong propensity towards US whiskey. Bartenders seem to be similarly enamoured of the category. Trey Zoeller is vice president of bourbon operations for Jefferson, the latest brand to target the UK having signed a distribution deal with Castle Brands. “There’s real excitement among bartenders about the category,” he explains. Perhaps it’s a yearning for something that’s not “just another vodka”, but whatever the impetus that is turning the bartenders towards the category, Evans is undoubtedly correct when he points out that “there’s an ever-increasing number of bourbon-based cocktails on good quality bar lists”. Neil Skinner, innovation marketing manager, dark spirits, Europe, Diageo – which produces Bulleit – comments: “The higher end bars are using bourbon as a cocktail ingredient as it gives them interesting new flavours to experiment with. [So] classics like the Mint Julep or Old Fashioned are beginning to be discovered again by UK consumers.”

Willets agrees, stating that UK bartenders are “nutcases for bourbon, I’ve seen a bar in Leeds with a range of bourbons that you won’t see outside of Kentucky”. And it’s perhaps here that he touches upon the factor that has been most pivotal in ensuring that the wider category has moved onto wider success beyond armies of young drinkers following the hordes into JD territory. Jack represents the ideal entry point, but for those looking to explore, US whiskey offers a vast number of options to investigate. The extensive plethora of brands populating this wide category is perhaps its greatest asset: they engender a healthy level of competition and occupy a significant portion of the back bar – as Evans puts it, the emergence of so many complementary brands “has given real weight to the category”.

One-horse race
It’s the area where the distinction between the US and Irish categories is at its most pronounced. For while the US boasts a seemingly endless rostrum of brands, its Irish counterpart could all too easily be misjudged to be a one-horse race. The epic disintegration of the category’s once proud position on the global stage has been well recorded, but there’s a compelling reason to believe that we could be on the cusp of a renaissance for the sector. Thirty months after acquiring the Bushmills brand from Irish Distillers, Diageo has recently begun to flex its marketing muscles with its new asset. There’s nothing quite like a battle between two heavyweights to get the entire category moving, so perhaps this will be just the impetus that the category needs to become more than just “Jameson (and the rest)“.

As Bushmills’ global brand manager Yves Cosetino explains, “the ‘category’ was not really a category until recently”. The arrival of Diageo on the scene, however, will certainly shake things up, with Cosetino describing the resultant competition as a “virtuous circle” that will spur on both parties to up their game. Diageo has spent the last two years “getting the basics right”, in terms of establishing a coherent and consistent brand identity, and recently begun to drive the brand in the UK (and a host of other international markets, for the first time) with a major marketing push, based on the strapline “Irish at its best”. While he refuses to provide specific details of sales aspirations, with typical Diageo bullishness he says that the category as a whole “could certainly double”.
Jameson, meanwhile, certainly won’t be sitting still as its arch rival takes tentative steps into this once uncontested category. Pernod’s Venning points out that the brand has just enjoyed its sixth consecutive annual rise in the notably sluggish on-trade, and the brand has expertly managed to recruit vast swathes of Generation Jack without alienating its core demographic. Aside from an intriguing new marketing direction (see box overleaf) the buzzword for Jameson at the moment is premiumisation, as the brand places increasing emphasis on its aged whiskies.
The brand may not be placing much emphasis on the UK market, but Tullamore Dew marketing manager Ann O’Leary sums up the potential of the category when she says “Irish whiskey was once a significant force in the global whiskey market and it certainly has the potential to rise again.” It’ll be interesting to see if the significant marketing spend of the two big guns will have a knock-on effect for the category’s other contenders – the likes of Tullamore Dew and Cooley’s – or whether Diageo and Pernod Ricard will build brands in their own right that don’t lead consumers into the wider category.

©  db March 2008