The pre-mixed cocktail segment is growing into one of the top performers in the beverage alcohol industry.
Chalk it up to the resurgence of cocktail culture in recent years, but the spirits-based, prepared cocktails segment is one of the bright spots in the distilled spirits industry.
With dominant brands stepping up their promotion and advertising, including a few careful forays into broadcast advertising, industry executives hold qualified optimism that the segment could be in for a sustained period of growth. That would be good news not only because the segment offers healthy profit margins, but because it helps to bring new consumers into the spirits category in general.
The prepared cocktails segment rose 7.9% to more than 6.2 million 9-liter cases in 1997, according to 1998 Adams Handbook Advance, and such brands as T.G.I. Friday’s, Jack Daniel’s Country Cocktails, Alizé and Chi-Chi’s all appear to have maintained strong sales gains in 1997.
Brands like Jack Daniel’s Country Cocktails “help get younger consumers into cocktails,” said Donny Sanders, owner of Monaghan’s Liquors of Toms River, NJ. “It takes them to the fence; then they start mixing them on their own, and next thing they’re buying spirits.” Nor does Sanders object to the prospect of trading customers up from $3.99 four-packs of wine coolers to pre-mixed cocktails, which generally sell for more.
Other issues that could help determine the growth pattern in coming years are whether manufacturers can bring more males into the pre-mixed cocktail franchise, and whether they can overcome a sharp seasonal skew that sees the bulk of sales occurring in the three months between Memorial Day and Labor Day. Through new packaging, seasonal SKUs and promotions, and other means, some players are claiming to progress on both those fronts.
“The category had been declining at the cost of specialty beers and wines at the retail chains, but now it’s turned around, and [retailers] are supporting pre-mixed cocktails more than they have in the past several years,” both on-shelf and in the cold box, said Stuart Brown, brand manager for the Jack Daniel’s Country Cocktails line marke-
ted by Brown-Forman Beverages Worldwide.
Several major prepared cocktail lines have, like Chi-Chi’s, introduced new flavors recently.
Prominent players in the segment have adopted strikingly different strategies. Some, in response to the faddish cycles, on-premise and off-premise, are willing to play the “Snapplization” game, quickly spinning off new flavors while retiring exhausted ones to keep total SKU counts manageable. Hot flavors from one brand are likely to be quickly aped by competitors. “There are a lot of line extensions of Mudslide out there,” said Deborah Candeub, strategic marketing manager at Diageo’s United Distillers & Vintners, whose fast-growing T.G.I. Friday’s line was one of the first with a pre-mixed Mudslide.
Other players have been very sparing in their launch of new flavors, hewing rigorously to a core brand strategy so long as that core brand shows continued prospects of growth. In one extreme case, Kobrand took a dozen years before launching the first line extension to its successful Alizé cognac and passion fruit blend a few months ago.
Among brands that do experiment frequently with new flavors, some are quick to mimic concoctions that have demonstrated interest on-premise, while others strive to go counter to such trends with blends that consumers can’t easily find in alternative venues.
A Recent Standout
In recent years, one of the standout brands has been T.G.I. Friday’s frozen cocktails, marketed by UDV along with a separate line of pre-mixed cocktails. The brand rose 14% to more than 1.26 million 9-liter cases in 1997. According to Deborah Candeub, strategic marketing manager at UDV, “Our focus is on the frozen because that’s our unique proposition. We’ve experienced outstanding growth of 20% nationally on the [300,000 case] ready-to-drink line, but the core of our focus is on the frozen line.”
At the time the brand was relaunched four or five years ago, not much was happening in the category, Candeub said. “It was pretty stagnant; a lot of brands had been around for a long time, but T.G.I. Friday’s was revolutionary: in a bottle, but for a blender, and pretty self-contained. It offered ease of use and was a new kind of drink.” As a result, she recalled, it drew healthy support from the trade, including independent retailers, and brought renewed attention to the category.
For T.G.I. Friday’s, given its marketer’s conviction that its striking taste alone is enough to win over consumers, the crucial marketing element has been sampling. Distributors and retailers in many markets have embraced non-alcohol versions of T.G.I. Friday’s drinks that are available for in-store and other sampling efforts. Also important are paid samplings of the alcohol versions, at venues such as the Pine Knob Arena in Michigan. And just last fall, UDV tested a logoed sampling van that paid retailer calls and visited special events in two markets. The effort was successful enough, Candeub said, that UDV now is setting a schedule for two vans to tour the nation, targeting high-traffic venues where awareness might be built among consumers who haven’t previously seen the brand.
Also increasing has been T.G.I. Friday’s use of promotion. A giveaway of various party accouterments during the 1997 Super Bowl had a solid effect on national accounts, and UDV in general has promoted the brand around sports occasions. For early 1998, the brand is relying on local tie-ins with food, ice and other items, along with a party-goods offer through March.
“Friday’s is a very confusing consumer proposition,” Candeub said. “Consumers will ask, is everything I need in here? We try to let people know that putting it in a blender with ice is all you need to do, but there’s still room to grow.”
In UDV’s separate line of ready-to-drink prepared cocktails, flavor experimentation also is key, with the line’s approximately 15 SKUs balancing an ever-changing array of flavors in five different packages (although some winnowing of package variants is due soon). “We gradually built the line, and there’s a somewhat regional skew to the flavor mix available,” Candeub said.
Still, Candeub said that strategy is different from competitors who, figuring on short product life cycles, constantly generate new flavors to maintain interest. “We do flavors that we hope will have legs,”she said, although UDV is in the early stages of re-evaluating what she acknowledged to be an “SKU-rich line.”
The four-year-old line of pre-mixed Cuervo Authentic Margaritas is also generating an impact on the UDV lineup, now in a new package and receiving increased trade support, particularly in the warehouse club channel. It’s a brand that brand manager Rand Eyberg feels is benefiting from tequila’s surging popularity, the leadership of the Cuervo name within that category and consumers’ yen for increased convenience. The 19.9 proof Authentics line enjoyed a 31.6% surge in depletions in 1996, and posted another 25% increase in 1997 to 383,000 9-liter cases, offsetting the almost 24% decline in Jose Cuervo ‘Ritas last year.
LEADING BRANDS OF PREPARED COCKTAILS
(Thousands of 9-Liter Cases)
|T.G.I. Friday’s||IDV North America||1,107||1,262||14.0%|
|Jack Daniel’s Country Cocktails||Brown-Forman Beverages||830||915||10.2%|
|Club Cocktails||IDV North America||503||493||-2.0%|
|Jose Cuervo Authentic Margaritas||IDV North America||307||383||24.8%|
|Kahlúa Drinks To Go||Hiram Walker & Sons||195||274||40.5%|
|Jose Cuervo Margaritas||IDV North America||330||251||-23.9%|
|Bacardi Breezer||Bacardi-Martini USA||325||270||-16.9%|
|Heublein Cocktails||IDV North America||245||204||-16.7%|
|Total Top Ten||4,457||4,852||8.9%|
|Total Prepared Cocktails||5,782||6,236||7.9%|
|(p) 1997 brand numbers are preliminary. Source: Adams Handbook Advance 1998|
“We’ve had a very strong message that Margaritas can be paired with food, and not just Mexican food,” Eyberg said. “It can be paired with pizza, barbecue, or most recently, for this year’s Super Bowl, with sub sandwiches.” In groceries, then, the strategy is “anything we can do to pair up with another convenience food item to support social gatherings.” To the extent that gets the brand out of the spirits department, it can help grow awareness.
Although the high visibility of the core Jose Cuervo brand has a huge impact, UDV has engaged in other promotional and sampling efforts to get the word out. As a sponsor of the Fiesta Bowl in Tempe, AZ, Cuervo hosted a block party that drew 150,000 visitors and a tailgate party that drew 20,000. The effect of that and a retail promotion with Tostitos stimulated a 300% jump in sales in Arizona, proving the effectiveness of such efforts, Eyberg said.
Also important is a packaging change just taking place that will imbue what UDV execs hope is a more masculine feel to the brand, which like many pre-mixed cocktail brands skew about 55% to 60% to women. “We want to bring more men into the category, so imagery cues will bring [the cocktails] closer to the base brands,” Eyberg said. The label will pick up more masculine cues, and white borders will be replaced by gold-foil ones, along with a gold cap, that should bring the brand more in line with Cuervo Gold.
Positioning the brand so that it doesn’t encourage trading down by consumers of the tequila brand is another challenge. In other words, it must play off the Cuervo image, as it does even more with the new package, without undercutting the core brand. “We get as close as we can to the base brand, while carrying the message that Authentics are for convenience,” Eyberg said.
TV Ads Working
At Hiram Walker, after a flat year in 1996, Kahlúa’s Drinks To Go saw a 40% increase in 1997, boosted in part by the aggressive use of TV ads as well as consumers’ interest in flavored coffees. In contrast to the core brand, which skews 65% female and reaches an age bracket of 25-49, Drinks To Go have the advantage of skewing younger and more evenly among the genders. Thus, “we believe we’re sourcing volume from outside the traditional cocktail category,” said vice president and group marketing director Charles Metzger. “We’re doing research now to learn more.”
The brand, entering its third year [it was first introduced as Kahlúa Combos], currently has five flavors but is planning additions. Probably the biggest news has been the brand’s aggressive use of TV via two buys on national cable so far: one for the Mudslide and the other for the White Russian. (Also getting TV support was the non-alcohol Kahlúaccino mix.) “There’s no question the TV ads have helped drive awareness for that product,” Metzger said. And this year, “we’ll continue to use TV and introduce new flavors.”
New Flavors Game
Very active in playing the new flavors game has been Barton’s Chi-Chi’s brand, which boasted a volume increase of 51.3% in 1997. The company unveiled several news products last year, including Mudslide variants called Arctic Snowslide (a vanilla and rum version of a Brandy Alexander) and Caribbean Mudslide (coconut, tropical fruit and rum), as well as its first seasonal product, a Pumpkin Pie drink introduced for the Halloween period. The latter, as a new drink, also is seen as having potential as an on-premise product.
Darcy Green, product manager, said the company is doing what it can to capitalize on consumers’ cur rent interest in cream-based products, a thrust that has the added advantage of slowing copycat brands because of the longer development time required for such products. Retail promotions for Chi-Chi’s include case cards and a “cantina” construction that can contains as many as 12 cases under its roof. Products such as Pumpkin Pie are helping to spread out demand beyond the core summer consumption period.
Brown-Forman’s line of Jack Daniel’s Country Cocktails just added its latest flavor–Red-Eyed Jack.
Jack Daniel’s Country Cocktails, from Brown-Forman Beverages Worldwide, has been on a comeback trail. Upon its introduction in 1992, it exploded to 1.875 million cases before plunging to half that level by 1994 as Seagram and Bartles & Jaymes came in with heavy advertising behind their less-expensive malt-based products. But it’s been climbing back since then, scoring a 10.7% gain in 1996, followed by a 10.2% increase in ’97.
The brand’s growth has been spurred by restructuring the pricing (down to about $5 per four-pack), along with a heavy dose of event marketing and, more recently, radio advertising.
According to brand manager Stuart Brown, Country Cocktails has benefited from its presence at small grass-roots weekend arts and music festivals, particular sponsorship of amphitheater-style music events. Also successful in building awareness has been its presence in such public venues as the Los Angeles Forum, where beverage carts stationed near concessions have sometimes won new converts from the ranks of beer drinkers who were tired of waiting on the long lines at the concessions. For off-premise accounts, the brand has had some success with its participation in the “Jack Daniel’s Grillout ” program with Jack Daniel’s Tennessee Whiskey, which will get heavier promotional support this year.
T.G.I. Friday’s sampling vans are scheduled to tour the country, building awareness in targeted venues.
The brand also aired a radio campaign in six cities in Florida, Ohio, Louisiana and Missouri last year. This year, the campaign will be expanded to eight to 10 markets likely including the West Coast and Virginia. Last year’s ads adopted an alternative-country music theme, but new creative is in development for this year. If the results are favorable, the company is considering rolling them out nationally.
Brown said his flavor strategy contrasts with that of most competitors. All new flavors are proprietary bar recipes made with Jack Daniel’s that can actually be ordered in a bar. Generally, one or two flavors are added each year, and a comparable number retired, to keep the line at about eight or nine SKUs from year to year. Currently, there are nine flavors of Country Cocktails, with the latest being the just-introduced Red-Eyed Jack that combines Jack Daniel’s Whiskey with cranberry.
Kahlúa’s Drinks To Go is promoting its White Russian with a campaign running on national cable TV.
Brown said there also has been progress lessening the heavy reliance on the summer period, which typically has accounted for 60% or more of volume. With record sales scored during December and January, the latest fiscal year has reduced that to only 45%. “That tells me we’re broadening this particular brand. Consumers are seeing it as a pre-mixed cocktail, and not just a cooler,” even though the brand typically is shelved with those products, Brown said.
A Grand Passion
Another standout brand has been Kobrand’s Alizé passion fruit and cognac cocktail, which has grown since its 1986 launch to 475,000 cases on the strength of a single flavor. The product, which initially created a conundrum for many consumers who’d never heard of passion fruit, let alone considered mixing it with cognac, has benefited from the attention to tropical fruits that has been developed by non-alcohol, “new age” beverages. With its distinctive frosted-glass bottle, Alizé has developed a big following among women in general, as well as with African-American males.
To broaden its reach, Kobrand just launched the first line extension: Alizé Red Passion, which adds cranberry and a hint of peach to the basic formula. Cathleen Burke, vice president and director of marketing, said that qualitative consumer research and some quiet in-store tests in New York, Atlanta and Chicago indicated that the extension brings more white and Hispanic males into the franchise, without much cannibalization of the core brand. “It’s got a little less viscosity, and the bitterness from the cranberry and the red color seem less feminine,” Burke said. Red Passion is being flagged with point-of-purchase materials that show the brilliant red imprint of a pair of sensuous female lips while inviting consumers to “Seduce your lips,” and likely will be featured with its older sibling in an expanded advertising push later this year.
Both flavors also will hitch to party nights tied to the passion of tango dancing by sending teams into bars to perform the fiery dance, hand out silk roses and push Alizé Martinis. The marketing mix has been suitably complex to reach Alizé’s diverse demographic target, ranging from urban music talent searches in conjunction with Vibe magazine to a New York rollerblading event for restaurant chefs, “Restauroll.” Ads, currently in magazines such as Self and Ebony, as well as 18 outdoor markets, are likely to expand significantly this year.
So, with new products and flavors, expanded distribution and more marketing emphasis for several major lines, it appears that the outlook for sales of spirits-based prepared cocktails remains positive.
Gerry Khermouch is executive editor of BrandWeek.
Mixing It UP
For a supposedly played-out arena, the $220 million cocktail mixes category last year showed surprising signs of life. Venerable Clamato restaged, and two retired Hiram Walker executives saw an opportunity at the high end of the business that prompted a new product, Jack & Bernie’s Bloody Mary Mix, and a partnership with their former employer. Other vendors also thought they spotted opportunity in consumers’ move upscale in their tastes. “Now, people are drinking a lot less but better quality, so they want a good-tasting drink, whether it’s a Martini, Bloody Mary or Manhattan,” observed Troy Woodrow, director of sales and marketing for the Fredonia, NY-based Beverage Specialties division of Redwing Co. Inc., which markets the line of Major Peters Bloody Mary mixes nationally and the regional Jero brand in the Midwest.
Woodrow added that the category seems to be appearing on retailers’ radar screen as well, which should make the job of growing the category easier. “Retailers have neglected the category, not done a lot of good merchandising, but that’s starting to turn,” Woodrow said. “If [as a retailer] I want to sell top-quality vodka, then the mixers are a big part of it.”
For Hiram Walker, Jack & Bernie’s represents the first non-alcohol product that is not, as with Kahlúaccino, simply a line extension of an existing spirits brand.
Two former Hiram Walker executives, Jack Buckley and Bernie Taracevicz, “developed a formula for the perfect Bloody Mary mix and approached Hiram Walker to help them market it,” said Paul Francis, brand manager of Allied Domecq Spirits & Wines’ Hiram Walker unit.
The tomato-based mix is much thicker than established water-based products and, as such, able to command a premium, the company says. The product, which is 97% tomato juice, was tested last October in Chicago and parts of Florida and New Jersey and is currently well along on a national rollout. Currently, it’s available in one-liter glass bottles and 64-ounce plastic bottles, with a sample size in the works.
To bring their products greater consumer awareness, marketers and their retail partners have begun to experiment with ways to merchandise the product. One obvious ploy is to find ways to get mixers out of the mixer section and next to the spirit brands consumers are out to purchase. For Red Wing, a breakthrough came during last year’s Super Bowl, when it tested (in the California market) a special boxed set containing a one-liter bottle of Major Peters’ and a 750 ml bottle of Smirnoff vodka, priced the same as a single bottle of Smirnoff.
Line extensions are key. For Major Peters’, the regular Bloody Mary mix has been buttressed with a Hot & Spicy version with fresh horseradish and a Salsa version with jalapeño peppers. Cannibalization, Woodrow asserted, appears to have been minimal.
The category leader in shelf-stable Bloody Mary mixes is Mr. & Mrs. T, from Mott’s USA. According to Information Resources Inc. scanner data, the brand has about a 64% share of the category, said Jim Harris, vice president of specialty brands for Mott’s USA. Harris added that the brand had “double-digit” sales increases in 1997, and what was shaping up to be a healthy first quarter this year. Strong early promotional support, Harris said, included an NFL sponsorship that featured a tailgating sweepstakes, which offered the winner “the ultimate football experience” for 1998 — four season tickets to the team of the winner’s choice, a pre-game party, a tailgating “survival kit” and limousine transportation to the games.
Not all brands are faring well, however. Although doing well with its Kahlúa Drinks To Go prepared cocktail, Hiram Walker has been disappointed with the performance of its Kahlúaccino non-alcoholic product, despite aggressive TV, radio and outdoor advertising of its “How come you taste so good?” campaign. The brand’s performance “has been mixed,” said Charles Metzger, vice president and group marketing director. “The concept and product have been very well received, but we’ll take a look at how convenient it is for the consumer to use our current package. There’s been less-than-expected consumer takeaway at the off-premise level.”
Mott’s Clamato line, marketed more as a general-consumption product, has recently undertaken an ambitious restaging, enlisting 3rd Rock From The Sun star French Smith in a quirky campaign that assured consumers the product is “99.9% clam-free.” The $14 million campaign and other efforts — such as a “Just For Laughs” joke search — has helped generate trial among new consumers while building general awareness, including among those interested in using Clamato as a mixer.