Northern Appeal

Canadian whisky continued its comeback from a slump that ended in 2002, with sales gains of 0.4% in 2003 to 15.4 million 9-liter cases, on top of 0.5% the previous year. The category also seems to have maintained the upward trend in 2004, according to several executives from Canadian whisky suppliers.

0502cnw1The Royal Gingersnap Canadian whiskies are smooth spirits that can be readily blended with a number of mixers, flavors and cordials. This cocktail was created by master mixologist Dale DeGroff for Crown Royal. To prepare it, start by frosting the rim of a rocks glass with powdered cinnamon and sugar. Muddle 1 slice orange and 1 maraschino cherry together with 1 bar spoon orange marmalade and 2 dashes ginger syrup in a mixing glass. Add 1 1/2 oz. Crown Royal and ice. Shake well and strain into the rocks glass over ice. Garnish with flamed orange zest.

The growth has come from Canadian whiskies bottled in Canada, which climbed 3.3% in 2003, following a 2.9% gain the prior year. For their part, U.S.-bottled Canadians declined by 1.6% in 2003. Industry experts attributed a good part of the growth to superpremium line extensions, such as Crown Royal Special Reserve (up a whopping 18.2% to 78,000 9-liter cases) and Black Velvet Reserve.

Advertising expenditures for the category, after surging by 28% in 2002, fell by 9.6% in 2003 to $29.7 million. But even so, in 2003 the category made gains in spending in the increasingly popular broadcast arena. Four Canadian whiskies advertised in broadcast, and two, Crown Royal and Canadian Club, spent more there than the year before. Suppliers are keeping up the momentum they’ve gained with increased consumer visibility, sponsorships and a spate of innovative off-premise promotions for the first quarter of 2005.

Canadian Club giftboxAllied Domecq’s Canadian Club family saw sales rise in 2004. The brand recently completed a “Find the Case” promotion in 22 markets.

Although brand results varied for 2003, Crown Royal, the market leader, continued to outperform. The brand in the purple pouch realized gains of 4.8% to 3.1 million 9-liter cases. It also moved ahead on the list of top-selling spirits in the U.S., progressing from eighth to seventh place in the rankings. Among other major Canadian whiskies that gained were Black Velvet, which increased sales by 3.5%, and Canadian Club, which added to sales by 1.9%.

Progress Made in 2004

Category brand managers said progress was made in their sales goals last year. Jim Lorenz, U.S. brand manager for Crown Royal and Crown Royal Special Reserve, Diageo, said the “total category has shown growth” in 2004.

CR Super Bowl Case BinCrown Royal, from Diageo, is featuring this Super Bowl-themed promotion, among other merchandising materials.

Lorenz also said that while he is “encouraged” by this growth trend for Crown Royal and “expects it to continue,” the brand is challenged by competition from outside the category. The brand “competes with all premium spirits and that is where we focus our attention. We know the discerning consumer will appreciate our fine product and we want them,” he stressed.

At Canadian Club, “sales grew in our fiscal year 2004 for the first time in many years,” said Suzy Kilgore, brand manager for Canadian Club, Allied Domecq Spirits North America.

Kilgore agreed that overall category growth is coming from the premium, rather than value brands. “This has been evidenced by the growth in some of Canadian Club’s higher marques, such as Reserve and Classic 12,” she noted.

Black Velvet also increased sales in 2004, said Jack Kavanagh, vice president, marketing services at Barton Inc., which markets Black Velvet, Black Velvet Reserve and Canadian LTD. Black Velvet Reserve “grew exceptionally” in 2004, by roughly 40%, he said. “The distribution of our Reserve has become a focal point for us. And of course we re-packaged it a year ago.”

And Introducing…

Black Velvet has some exciting new promotional plans of its own. The brand is introducing a new face to represent it, fitness model Rachel Moore, who will appear in all of its advertising and marketing materials in 2005. Rachel, also a blonde, takes over from Carol, who appeared in Black Velvet ads for three years. “Carol was great for us. But we needed to do something different to take advantage of the fact that we’re putting the brand out there.”

The golf program, which Black Velvet started last spring, will also continue in this year’s first quarter. “We’re giving this program added emphasis, with more sweepstakes and tournaments in 2005. And we’ll also have significant displays in stores,” said Kavanagh. The program features golf pro and teacher Butch Harmon.

Canadian Club bottle shotMike Haering, national brand director — Heritage Brands, Brown-Forman Beverages Worldwide, which markets Canadian Mist, said the Canadian category “is similar to other categories, whereby the declines within it are more in the value and discount areas, rather than at the upper end.” However, he stressed that the category “remains the second largest in the U.S. spirits industry, representing around 13% of total distilled spirits.”

Indeed, Haering pointed out that “the trend for Canadian Mist has shown improvement over the prior year, yet we don’t disclose specific numbers.”

But while there have been some gains, Canadian’s growth is hovering around being flat, in part due to competition from other spirits, noted Sam Seiller, senior brand manager, Windsor Canadian. “According to NABCA/DISCUS, the Canadian whisky category is up 0.2% on a rolling 12-month period (from Oct. 2003 to November 2004),” she said.

“The category appears to be flat likely because of the continuing popularity of white spirits and the trend toward the cocktail culture,” Seiller said.

Nevertheless, Seiller said that forward movement is being made at Jim Beam Brands’ Windsor Canadian. “The brand is slowing overall declines by almost 50% and this can be attributed to a reallocation of marketing efforts to our core markets. The brand is performing better because of the focus on its core markets of MN, PA, NE, ND, and WI,” she said.

Windsor Canadian's of#63D13Windsor Canadian, from Jim Beam Brands, highlights its outdoor-themed promos via this spectacular display.

The high-end niche of Canadian whisky has performed well. Established brands have generally done well with their superpremium line extensions, which include Black Velvet Reserve, Canadian Club’s Reserve and Classic 12-Year Old, and Crown Royal Special Reserve. Two relatively new additions to this segment ­ Forty Creek and Pendleton — have also capitalized on this market. Forty Creek, from Shaw-Ross International Importers, clocked 40,000 cases in its first year in the market. Pendleton, bottled and distributed by Hood River Distillers, aims to appeal to “rugged, spirited individuals” and is named after the 92-year old Pendleton Round-up rodeo.

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