Irish Spirits Rising

Just as the Irish have slowly and quietly emigrated to the far corners of the world, taking their culture and indomitable spirit with them, so, too, have Irish spirits found their way around the globe. Now they’€™re starting to get the attention and respect they deserve.

Irish whiskey, in particular, is experiencing tremendous growth, outpacing other categories like tequila and vodka by leaps and bounds. While total volume is still small relative to other spirits categories, Irish whiskey has seen year-on-year sales expand in the range of 16% to 19% for several years, surpassing one million cases in 2007. The pace continued unabated last year. That befits products from the country that gave us whiskey in the first place.

Whiskey’€™s roots go back to the fifth century when monks spreading Christianity brought to Ireland the secrets of distillation learned from Arab perfumers in the Middle East. Monks used alembic pot stills to distill fermented grains like barley into aqua vitae, the ‘€œwater of life.’€ So named likely because of its ability to save those who consumed it from indigestion ‘€” or worse, food poisoning ‘€” in an age of no refrigeration. The distilled spirits were called uisce beatha in Celtic, eventually shortened and Anglicized to ‘€œwhiskey.’€

But Irish whiskey’€™s popularity in recent years doesn’€™t just stem from its authenticity and heritage as a descendant of uisce beatha. Consumers are discovering Irish whiskey as a category in its own right, not just as a collection of products somehow related to Scotch or even to upstart American cousins bourbon and straight whisky.

‘€œThere are a lot of factors for its success,’€ according to Wayne Hartunian, brand director for Jameson, the world’€™s largest Irish whiskey brand. ‘€œFrom a pure product standpoint, its taste profile is a really big reason. Most Irish whiskey is triple-distilled, so it’€™s very smooth.’€

That smoothness makes Irish whiskey very drinkable on its own. ‘€œThe category has fantastic flavor profiles to offer,’€ said Bill Topf, vice president Scotch and Irish Whiskey at Diageo. ‘€œIrish whiskies are not as smoky as Scotch, and not as sweet as American or Canadian whiskies.’€

Smooth Moves

Smoothness has put Irish whiskey into the repertoire of both whiskey drinkers looking for new taste experiences and additional flavor profiles as well as consumers new to brown goods.
‘€œIrish whiskies give consumers variety beyond just flavored vodka,’€ Hartunian said. ‘€œThe category is very strong with this type of consumer.’€

Those consumers, particularly males aged 25-34, also aren’€™t impacted by the economic downturn as others might be. They’€™re usually single, with no kids, and still spending money and going out. The financial crisis and recession may not have that dramatic an effect on the spirits industry, as consumers tend to think of spirits as affordable luxuries in downturns, when they can’€™t afford big ticket items like cars and vacations.

And while some consumers may cut back on going out to restaurants and bars, much of the growth in Irish whiskey to-date has been in the on-premise trade. Both bode well for retailers. Young consumers will likely continue to go out. But as other consumers go out less often, they tend to spend more for spirits to consume at home. And often they continue to purchase their favorite brands or even trade up ‘€” the ‘€œless but better’€ syndrome.

‘€œOn-premise sales are a great indicator of strength,’€ Hartunian said. ‘€œAs far as Jameson is concerned, a high percentage of consumption already is in on-premise, which will ultimately translate into more off-premise sales.’€

The smoothness and lighter flavor of Irish whiskey compared to Scotch or American whisky also lends itself to cocktails. That fits in well with consumer trends in the on-premise trade toward new flavor combinations and cocktail experiences.
‘€œBartenders are moving to ‘€˜mixology,’€™’€ said Paul Caffrey, brand manager for Tullamore Dew at Skyy Spirits. ‘€œThey’€™re looking for premium spirits to create cocktails with. Irish whiskey is a small sector of the overall whiskey business, but it has a strong reputation for quality, so bartenders are taking a greater interest in it.’€

Yet another reason for the continued success of Irish spirits, including creams and cordials as well as whiskey, is the heritage and authenticity inherent in the products. They stem not only from distilleries steeped in tradition, but in a culture that is almost universally popular.

‘€œThere are approximately 30 million people in the U.S. who have some connection with Ireland,’€ Caffrey said, ‘€œpeople who really identify with Ireland.’€

And, as they say, we’€™re all Irish on St. Patrick’€™s Day. The fact is that in addition to the millions of people with Irish roots, millions more admire and genuinely like Irish people and culture, creating a natural interest in all things Irish.

Category’€™s ‘€˜Tipping Point’€™

The rapid growth of the category has spurred increasing support from whiskey makers. That, in turn, leads to more awareness and sales with the process feeding on itself. Irish whiskey is now at what Hartunian called a ‘€œtipping point.’€

‘€œWe want to get people to understand [that] the category has much more potential, and there’€™s more we can do to reach consumers,’€ he said.

Jameson, which grew about 23% in 2007 and an estimated 24% last year, according to the brand, is still focusing on fundamentals to help send both the brand and the category over that tipping point. ‘€œWe plan to significantly increase our support for the brand this year,’€ Hartunian said, ‘€œwith more of the same activities across the board.’€

The key is to get people to try it and demonstrate Irish whiskey’€™s ‘€” and Jameson’€™s ‘€” taste and mixability, he said. To do that, Jameson plans to increase the number of bar nights it sponsors, which is expected to translate to off-premise sales.
‘€œWe also now have a category presentation for retailers that shows how the category can continue to be successful with the kinds of activities they’€™re using,’€ Hartunian said.

And the brand has just launched an interactive outdoor ad campaign in select cities (see sidebar).

Number-two brand Bushmills also plans stepped-up support this year. After a slow start in the shift to Diageo a few years ago, Bushmills has been experiencing steady growth again for the past couple of years, up nearly 5% in 2007, and in the range of 4% to 5% again last year. The brand just finished a successful 400th anniversary program in 2008 with a slew of ‘€œbirthday’€ activities and the release of the special limited edition Bushmills 1608.

‘€œWe’€™ll continue to tap into consumer desire for both Irish heritage and sociability with products like 1608, and bring Irish whiskey into the modern age,’€ said Topf.

Cross-Merchandising Opportunites

But there are big plans in the works for a tri-branded promotion for St. Patrick’€™s Day. Bushmills, along with Diageo’€™s other Irish brands, Baileys and Guinness, plan cross-merchandising and other promotional activities for the holiday that will help retailers ramp up sales.

Tullamore Dew, which is the third largest Irish whiskey brand in the U.S., but second globally, saw sales rise about 14% last year, slowing only slightly from its 20% growth in 2007. Like Jameson, the brand is focusing a lot of its efforts on educating bartenders, believing they’€™re key to getting consumers to try products like Tullamore Dew. Once they do, patrons will also buy it to drink at home, according to Caffrey. The brand also offers its ‘€œDew & Brew’€ program, both on- and off-premise, encouraging the Irish style of drinking whiskey with a pint of beer.

For St. Patrick’€™s Day, the brand is hooking up with sister brands Carolans and Irish Mist for a tri-branded promotion both on- and off-premise. Support includes case cards and shelf talkers, and an on-pack offer for an Irish flag in some markets.

The success and growth of large brands like Jameson, Bushmills and Tullamore Dew has been drawing attention to all the smaller brands in the category, too. And as consumers are introduced to the category, they look for new experiences within it.

‘€œWhisky Fest and other similar events are helping to shed light on products like ours,’€ said Fabrice Ramcourt, marketing manager at Gemini Spirits & Wine, part of Sazerac, which imports whiskies from The Cooley Distillery. ‘€œWe’€™re excited to be in the category and associated with a company that demonstrates real craftsmanship and interest in new products.’€

Since its founding in 1987, the independent Cooley has produced Kilbeggan, a blended whiskey, and The Tyrconnell, a single malt. More recently, however, the distillery has brought out new and interesting expressions, including Madeira and port cask-finished and 15 year-old Tyrconnell bottlings. Last January, The Tyrconnell released a sherry cask-finished expression that was voted best Irish whiskey of the year by Malt Maniacs.

Cooley also produces three expressions of Connemara, the only peated Irish whiskey on the market ‘€” Classic, Cask Strength and 12 Year-Old. Geared toward Scotch drinkers, Connemara has picked up several awards over the years.
Last year, Cooley also introduced a 15-year-old limited release of its single-grain Greenore to accompany the already successful 8 year-old.

Clontarf and Knappogue Castle from Castle Brands also are riding the coattails of the category. Clontarf has embarked on a program of on-line photo contests to take advantage of the interest in the brand from younger consumers. Knappogue Castle continues to release vintage single malts, the most recent of which was 1995. Its Roundtable affinity program continues to attract new enthusiasts.

The interest in new expressions once consumers have tasted the essence of Irish whiskey ‘€” the smoothness from traditional triple-distilling and (usually) blending ‘€” has prompted the big producers to bring out new products, too.

Jameson added Gold to its stable not long ago, and this year is considering introducing a new aged product. ‘€œWe want to be sure we have a full range of marques of premium products,’€ Hartunian said.

Over the years, Bushmills has added several new marques to its line, including last year’€™s 1608, although Bushmills doesn’€™t have any plans for new releases this year after 1608 stocks are depleted. ‘€œWe have a nice mix already and plan to continue to delight consumers with the range we have,’€ Topf said.

Tullamore Dew came out with a 10 year-old whiskey in 2008, and plans to release a new expression in the second quarter this year. ‘€œWe believe we have to come out with new expressions to grow the category and help retailers build an Irish whiskey section,’€ said Caffrey. ‘€œNow we have lower-priced, mid-priced and premium-priced marques on the shelf.’€

Top Irish Creams

Whiskies aren’€™t the only Irish spirit on retailer shelves, though. Almost a category in their own right, Irish creams are big business with consumers, and still growing. Though growth is much slower than that of the Irish whiskey category, creams are bigger, with category leader Baileys accounting for sales of close to 1.5 million 9-liter cases on its own.

Baileys is building on its success by developing real continuity to its programs. This year the brand will push hard during holidays where it’€™s already experienced traction, starting with Valentine’€™s Day, moving into its tri-branded promotion with Bushmills and Guinness on St. Patrick’€™s Day, and continuing on into Mother’€™s Day in May.

This summer, Baileys repeats its on-premise ‘€œShiver’€ program for the third year, which features a 70 ml shot of Baileys blended with ice. The program will be bigger and better, promised global brand director Pedro O’€™Connell, with the brand pushing to expand it and working on the logistics of getting blenders into bars that don’€™t have them.
Promoting Baileys as a part of the cocktail culture still going strong across the country, the ‘€œShaken Baileys’€ program has added a special glass that reinforces the brand’€™s premium image.

‘€œIt goes back to the original idea of what a cocktail in a lady’€™s hand should look like,’€ O’€™Connell said. ‘€œI call it the Prada of cocktails.’€

Baileys also expects to capitalize on its full range of flavors after the national launch of Baileys with a Hint of Coffee last October. Flavors now account for 20% of the brand’€™s volume, according to O’€™Connell, without cannibalizing on sales of the original flavor. A packaging change last year to reincorporate the country scene on the label of Baileys original reinforces the core brand image and further distinguishes it from the flavored line extensions.

Number-two Irish cream Carolans has been growing faster than the overall category in the past year, and hopes to keep up that momentum by continuing to offer product sampling with consumers and emphasize its winning taste profile. For St. Patrick’€™s Day, Carolans is cross-promoting with Tullamore Dew, and pushing a special holiday cocktail ‘€” the Midori Shamrock, which contains Midori, Carolans and Tullamore Dew. The brand also held the line price-wise while Baileys took a price increase last year, which could bode well for Carolans in the current economic downturn.

Brands like St. Brendan’€™s from Luxco and Brady’€™s from Castle Brands also are doing well. St. Brendan’€™s hangs its hat on being all-natural and using authentic Irish cream and whisky, not neutral grain spirits. Mail-in rebates throughout the year have helped encourage trial.

For now Carolans and other brands aren’€™t responding to Baileys’€™ push into flavor extensions. ‘€œCreams are a really comforting product, especially in tough economic times like these,’€ said Robin Gonci, brand manager for Carolans. ‘€œWe don’€™t think we need new flavors to keep consumers interested in the category or the brand.’€

O’€™Mara’€™s, however, the category’€™s only wine-based cream, did launch new flavors this month ‘€” caramel and chocolate-mint. The launch is being supported with shelf-talkers and bottle neckers, both of which feature recipes.

‘€œWe’€™re looking to gaining real estate on shelves and get more presence with O’€™Mara’€™s, and we think flavors will help us do that,’€ said Josh Hafer, corporate communications manager for Heaven Hill, which imports O’€™Mara’€™s.

Merchandising Madness

Since it’€™s wine-based, O’€™Mara’€™s also has experienced great success by being merchandised in non-traditional distribution channels and areas of stores. It has excellent distribution in c-stores, for example, and often is merchandised in or near wine sections in grocery stores.

That strategy has captured a lot of female shoppers, drawing the attention of even big players like Baileys.

‘€œThis new shopper ‘€” a female, [aged] 25 to 35 who goes to the wine section for two or three bottles of wine, the deli section and then buys some sweets to top off her trip ‘€” if you put Baileys in the wine section, she has the opportunity to purchase a liquid dessert,’€ O’€™Connell said. ‘€œWhere legal, it’€™s a great way to sell additional amounts of Baileys.’€

Increased focus on merchandising, in fact, is one of the factors in pushing categories like Irish whiskey and brands like Baileys over the ‘€œtipping point’€ Hartunian references.

‘€œAs more retailers transition their shelf sets from just Scotch to a whiskey section including American and Canadian whiskies with an Irish whiskey section, we’€™re getting more play,’€ he said. ‘€œDisplay and feature support also is really helping.’€

‘€œIf retailers create an ‘€˜Irish’€™ category in their stores, not just whiskey, it could drive consumers not just at St. Patrick’€™s Day but all year ‘€™round,’€ said Caffrey. ‘€œTo educate consumers about drinks from Ireland, whiskey alone may not drive more sales, but if creams and cordials are included, it might pay big dividends.’€

With St. Patrick’€™s Day right around the corner, there’€™s no better time to find out. With the increased consumer interest in Irish spirits, sales of Irish whiskies, creams and liqueurs should raise everybody’€™s spirits.

Tricks of The Trade

As retailers take notice of the increasing interest in Irish spirits, they’€™re finding ways to capitalize on this growth. As usual, just a little attention to detail or a small marketing push can make the difference between ho-hum and above-average sales. Here are a few tips retailers can use.

Variety.
‘€œWe try to offer as much variety as we can find, including some really high-end, hard-to-find whiskey, like Jameson Rarest Reserve,’€ said Arnie Lewin, general manager of Hamilton Beverage Fine Wines & Spirits in Indianapolis, IN, ‘€œand we merchandise it all in a separate section. To be a destination store, that’€™s the best thing we can do.’€

Tastings.
‘€œWe did a Saturday whisky tasting recently, and featured Scotch, American and Irish whiskey,’€ said Keith Hanson, liquor buyer at Hi-Time Wine Cellars, Costa Mesa, CA. And Lewin said, ‘€œWe’€™ve done several Scotch whisky dinners. Now we’€™re talking about an Irish dinner pairing foods with Irish whiskey and beers.’€

Cross-merchandise.
Put Irish creams in close enough proximity to Irish whiskey to make the link in consumers’€™ minds. Or create a separate Irish section that features all Irish products.

Special promotions.
‘€œOne thing we’€™ve done over the years is to give customers a discount on wine if they buy a bottle of Irish whiskey, particularly around St. Patrick’€™s Day,’€ said Frank Pagliaro, owner of Frank’€™s Union Wine Mart, Wilmington, DE. ‘€œWe’€™ll offer wine at 25% off with the purchase of Irish whiskey.’€

Jameson Launches Interactive Outdoor Campaign

In New York and Los Angeles in December, Jameson Irish Whiskey began using live wall projections, like the one shown here, to more fully engage potential consumers in high foot-traffic areas in those two cities. ‘€œPassersby will notice giant projected ads ‘€˜chatting them up’€™ as they walk by, as real-time ‘€˜conversationalists’€™ will be writing and reacting to people [walking by],’€ said Wayne Hartunian, Jameson brand director, Pernod Ricard USA.

‘€œOne of the primary reasons for Jameson’€™s tremendous success is the brand’€™s ability to establish personal connections with consumers,’€ Hartunian continued. ‘€œAnd our projection campaign takes that personal connection ideal to a whole new level.’€
Jameson is also projecting outdoor ads in Boston, Chicago, Denver and Minneapolis, though initially without the interactive elements. The brand also has unveiled a new radio ad in 20 markets, as well as a trade communications initiative.

The trade campaign features an ad, ‘€œDefying the Economic Downturn,’€ which highlights the brand’€™s strong growth rates over the past six months. Indeed, according to AC Nielsen, the brand’€™s dollar sales were up 33% for the six- month period ending 10/18/08. And data from the National Alcohol Beverage Control Association shows Jameson sales rose by 27% in the control states for the 6-month period ending September 2008.

Hartunian said the trade campaign also includes a ‘€œfirst-of-its-kind category management tool for the Irish whiskey category, which provides a fact-based story on the tremendous growth of the category. It also gives retailers specific ideas on how to increase their Irish whiskey sales.’€

Cordial Irish Spirits

The Irish are nothing if not friendly and cordial. But Ireland’€™s two great cordials ‘€” Irish Mist and Celtic Crossing ‘€” can be friendly to retailer sales, too.

Both brands are steeped in tradition and made with aged Irish whiskey and hints of honey. Both are also often seen in the same light as other great liqueurs such as Drambuie and Grand Marnier ‘€” as an after-dinner drink enjoyed by an older generation.

However, ‘€œCordials aren’€™t seen as after-dinner drinks in the U.S. the way they are in Europe,’€ said Paul Caffrey, brand manager at Skyy Spirits for Irish Mist. ‘€œIrish Mist is doing okay, but we see a chance to ride the growth of the Irish whiskey category. We have an opportunity to go after younger consumers, so a key goal this year is to modernize and update the brand.’€

Plans include lots of sampling on- and off-premise, several new cocktails that feature Irish Mist, and a likely packaging change sometime this year.

Celtic Crossing is appealing to a younger audience, too, and is starting to make a dent with its chilled shot machine program and targeting consumers online.

Young or old, there’€™s an audience for these classic cordials as after-dinner drinks or as part of the enduring cocktail culture.

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