That Irish whiskey chalked up yet another record-breaking year is no longer breaking news, but rather, business as usual for the fastest-growing spirits category. Buoyed by the rising tide of consumer interest in brown spirits, especially whiskeys, Irish’s double-digit growth continues unabated. Indeed, despite five years or more of phenomenal increases, major players agree that the market is still underpenetrated and there’s plenty of opportunity for the category to develop in the U.S. market for years and even decades to come. A rash of new distilleries is aiming to meet that demand. Many Irish brands are sprucing up their packaging for the long haul. But the real scoop about this ripening category is renewed focus on the liquid in the bottle, with new expressions, new niches and new avenues for consumers to explore.
The numbers show the segment chugging along at a very good clip. Indeed, Irish whiskey remains the fastest-growing spirits category, according to the Beverage Information Group. Volume was up about 20% to 2.11 million 9-liter cases in 2012 (the last year for which statistics are available). Indeed, revenue was up 23.7% to $415 million, according to DISCUS (The Distilled Spirits Council of the U.S.). Even better, much of the category activity was at the top-shelf. Revenues were up a whopping 86.6% in the superpremium Irish segment in 2012.
The mighty Jameson continues to dominate the Irish whiskey category, comprising about 80% (more than 1.6 million cases) of the total Irish whiskey depletions (just over 2 million cases) in the U.S. Indeed, the Pernod Ricard brand gained another 20.4% in 2012, according to figures from Beverage Information Group.
Brown is the New Green
American consumers’ fascination with brown spirits, especially whiskey, translates well into Irish. Many observers think that approachable Irish is a gateway into whiskey, especially for less-experienced drinkers.
‘There is a whiskey renaissance happening. We are seeing that across all segments, and Irish whiskey is no different in that respect,’ exclaims Yvonne Briese, Marketing Director, Diageo North American Whisky and Irish. ‘What makes Irish unique in the whiskey category is its approachability.’ Diageo’s Bushmills is the number-two brand in the U.S. market. ‘We are happy with our performance,’ says Briese. ‘Our base brand Bushmills Original is doing quite well, and from there people are able to explore our other, more sophisticated expressions such as Black Bush made with a higher percentage of malted barley,’ she contends. ‘And we have some really spectacular single malts’Bushmills 10-, 16- and 21-year-old malts. Scotch has nothing on us.’
‘Overall, we’re still seeing a lot of interest in whiskey,’ echoes Ken Reilly, Category Marketing Director at William Grant who oversees the Tullamore Dew brand. ‘And Irish is a natural gateway into whiskey in general for first-time consumers, which is very heartening.’ Tullamore Dew is the number-three brand in terms of volume in the U.S. Currently, the Tullamore Dew brand is close to 800,000 cases worldwide, says Reilly.
‘The entire whiskey category has been growing exponentially for us,’ concurs retailer Louis Dachis, president of Merwin Liquors, with three locations in Minneapolis. ‘Our Irish section is definitely growing, too. We used to stock just the standard players, Jameson, Bushmills. Now we’re adding a lot of new and different Irish whiskeys to the shelves.’
Growing Shelf Space
There seems to be plenty more room on retailers’ shelves for Irish spirits, for those new brands and new expressions, especially in secondary markets.
‘Although Irish whiskey is one of the fastest-growing it’s also one of the smallest categories at the moment,’ points out Paul Di Vito, vice president of Irish Whiskey for Pernod Ricard USA. ‘So a big factor on growth will be education of the trade, getting them to give Irish whiskey an extra foot of space on shelves and a couple of extra bottles on the backbar.’
Pernod Ricard’s Irish portfolio includes Powers, Paddy, Redbreast and category leader Jameson. Although powerhouse Jameson is a star player in the major markets; the brand and the category are underpenetrated in many parts of the country, says Di Vito. ‘Jameson, and Irish whiskey, has a huge amount of growth to go. There are so many regions ‘ Texas, Missouri, Florida, Louisiana, Georgia ‘ that also happen to be big whiskey markets, but are in their infancy in terms of Jameson and Irish whiskey. Opening up those growth markets is a big part of our strategy.’
‘We’ve added more SKUs and more shelf space. Irish now accounts for about 15% of total whiskeys,’ notes Broc Smith, owner of Sarasota Liquor Locker in Sarasota, FL. Although he sells a lot of Jameson Original, Jameson Gold Reserve, the higher-tier Bushmills malts and Redbreast 12 Year Old are also doing well, he reports. ‘We’ve been seeing more customer interest in the higher-end whiskeys; it’s a natural growth curve,’ says Smith.
Scaling the Top
At Merwin Liquors, retailer Dachis also sees this urge to explore higher tiers. ‘With whiskeys across the board, consumers are looking for an upgraded experience. In Irish, we’re seeing more malt whiskeys, more aged expressions and special releases, and people are trying them.’
‘As people get into the category, they are exploring more, looking to try different things. With our Irish portfolio there is plenty to explore, something for everyone,’ declares Mara Melamed, senior brand manager for Whiskey at Beam. The company is the latest major contender in the Irish arena, with its acquisition of the Cooley Distillery in January 2012.
Indeed, Beam has been busy in the Irish sector. 2 Gingers is the newest addition to the Beam Irish portfolio. In December 2012, the company acquired the brand from Minnesota pub owner Kieran Folliard, who developed 2 Gingers into the number-two selling Irish whiskey in Minnesota before the acquisition. Beam is expanding the brand to more markets; currently it is in 19 states. Support includes lots of sampling and involves 12 brand ambassadors imported from Ireland. Beam retained Folliard as chief ambassador. ‘Because Kieran was in the pub business for so long and is a bartender at heart, he is focused on building the brand with bartenders,’ comments Melamed.
Key to the 2 Gingers’ marketing will be Folliard’s trademarked drink called the Big Ginger, made with 2 Gingers, gingerale, and a squeeze of lemon and lime juices. Trial will focus on the refreshing and approachable cocktail rather than a neat shot.
2 Gingers has an evident appeal for women. One of the initial statistics from the Minnesota market was that 40% of volume was coming from women, explains Melamed. ‘And that’s something we’re continuing to see as we grow the brand in new markets. We are seeing a lot of traction with women; it’s kind of the entryway into whiskey for them.’
A brand new player in the whiskey segment is actually an old hand in the Irish market. Liqueur maker Irish Mist is launching a classic Irish blended whiskey. Irish Mist Whiskey will hit retailer shelves in late January in selected markets. ‘We believe that this is an opportunity to get back into the Irish whiskey category (we had Tullamore Dew a couple of years ago),’ says Andrew Floor, Senior Marketing Director, Dark Spirits for Campari America. ‘The Irish whiskey category is still growing very quickly and offers a great introduction to whisk(e)y for the novice consumer given its smooth, easy-drinking characteristics. An Irish whiskey brand helps round out Campari America’s whisk(e)y credentials. We have a very strong portfolio of whiskies from the US, Scotland, Japan and now Ireland.’ Support for the launch will focus on ‘liquid to lips’ samplings in the key markets of Massachusetts, New York, Illinois, Pennsylvania, Michigan and Ohio.
Best Kept Secret
The flagship of Beam’s Irish portfolio is Kilbeggan, which recently underwent a repackaging. When Beam acquired Kilbeggan, it wasn’t very well known in the U.S. but the distillery had been around for over 256 years, explains Melamed. The company used the idea of Kilbeggan being a well-kept secret as a starting point for a new advertising campaign, ‘The Best Kept Secret in Whiskey.’ The bottle was also dusted off with redesigned packaging to modernize it for the U.S. market.
Like 2 Gingers, Kilbeggan also has a signature drink strategy, the Irish Boxer, which is cider and a shot of Kilbeggan. ‘Kilbeggan is distilled in the oldest licensed distillery in Ireland, and it’s double-distilled so it retains a lot of flavor. That brand is more premium, more focused on the trade-up with consumers,’ comments the brand manager.
Three other distinct whiskeys fill out the Beam Irish offerings. Tyrconnell is a single malt; lighter than most, and an ideal entry into the single malt category. Connemara is the only peated Irish single-malt, with a smoky flavor profile that would appeal to Scotch drinkers. And Greenore is a single-grain Irish whiskey, with a corn mash bill that may lure Bourbon fans. ‘Those brands are more for experienced whiskey drinkers or people want to experiment with different flavor profiles,’ concludes Melamed.
For its part, Pernod Ricard has been active in its equally diverse Irish range. The company continues its distribution of the higher-end Jameson Black Barrel, relaunched Paddy Irish Whiskey and repositioned its Powers brand. ‘Black Barrel continues to go from strength to strength,’ says Di Vito. During 2013, distribution was expanded to six additional markets, for a total of 13. This year will see even wider distribution with national availability the goal. ‘Black Barrel is already outperforming Jameson 12 Year by twice the velocity,’ notes the VP.
Flavor in Fashion
A number of American producers have successfully released flavored whiskeys; now Irish is embracing this trend. Diageo was a pioneer in the field of flavored Irish whiskey, with the launch of Bushmills Irish Honey in 2012. ‘Bushmills Irish Honey has been a real success for us. On the initial launch, we sold right through the allocation within the first several months. We feel it’s still time to grow and nurture that variant. It still has a lot of upside for us,’ says Briese.
Pernod Ricard saw a key opportunity to capitalize on the flavor trend with the relaunched Paddy Irish Whiskey brand. The first two variants are the cinnamon-apple flavored Devil’s Apple and the Irish honey flavored Bee Sting. Flavored whiskeys are bringing younger legal-age drinkers to the Irish category, as well as more women, both driving growth of Irish, according to Di Vito. ‘With the really fun names, approachable and tasty liquid with a clear whiskey undertone,’ Paddy is going after the flavor market at an entry-level price point. ‘The evolution of those drinkers is going to benefit Irish and whiskey later on as well,’ says Di Vito, alluding to eventual trade ups to Powers, Redbreast and Midleton.
Last fall, the Powers range was repositioned with updated packaging and a return to its original export strength of 43.2% (86.4 proof) for Powers Gold Label, and the addition of a single pot still expression, Powers Signature Release. The ultra-premium Powers John’s Lane was released last March. ‘Part of the repositioning is to no longer hide the fact that Powers is a very expensive whiskey to make,’ explains the VP. The new packaging for Powers Gold Label was inspired by the brand’s history, reflecting the superpremium nature of the whiskey and bringing Powers Gold Label in line with the look of the other whiskeys within the Powers family. Additionally it’s a non-chill filtered product, which accentuates the single pot character. Single pot still Irish whiskey is a rapidly expanding niche in the U.S. ‘Powers is going to allow us to talk about single pot still character to a new drinker, as we move forward and grow the category,’ points out Di Vito. Powers will have a full campaign for its repositioning. ‘The initial focus is on trade communication in key markets, answering the ‘why,’’ says Di Vito, ‘why we have repositioned Powers, what is different about the liquid and where we are taking the brand.’ Advertising, including digital outreach programs, carries the tagline, ‘With Knowledge Comes Powers.’ Tasting the product will be key, believes Di Vito, with a massive sampling campaign, especially comparative tastings to educate consumers. ‘Powers is a gateway to single pot still products.’
Midleton Distillers (and Irish Distillers), where Jameson and several other Irish whiskies are produced, announced a new Master Distiller, Brian Nation, who trained under renowned Master Distiller Barry Crockett. The company also announced the debut of the highly anticipated Redbreast 21Year Old as well as the first U.S. appearance of famed Green Spot and Green Spot whiskeys; all are highly allocated single pot still expressions. ‘Fans will be clamoring to get their hands on a bottle,’ exclaims Di Vito.
Moving On Up
‘Consumers are beginning to branch out from the mainstay variant of brands they know, trying something new as they expand their whiskey knowledge,’ comments Reilly. New for William Grant is Tullamore Dew Phoenix launched in September. The name refers to a 1785 air balloon disaster that burned down most of Tullamore town and commemorates the citizens rising from the ashes and rebuilding. The overproof variant at 55% ABV is a limited edition with just 2,500 9-liter cases now available in the U.S. at an SRP of $54.99 per bottle ‘Its sweet spot is in the area of discovery, an opportunity to try a whiskey that delivers on the proof yet with the smoothness of taste which characterizes Irish whiskey.’ Reilly professes to be very pleased with trade and consumer reactions to Phoenix, which is only available through this year. After that, plans are to offer annual limited releases to complement the full time Original and 12 Year Old Tullamore Dew line up.
One of the biggest moves during 2013 was the upgraded packaging and presentation of the higher marques, Tullamore Dew’s 10 and 12 Year Olds and Phoenix. That repack was designed to increase gifting during the holidays. Supporting these moves is the global ‘Irish True’ campaign, which will continue through 2014. Production was just wrapped up of a new television commercial, which will be part of the overall digital strategy for Tullamore Dew.
The main marketing vehicle for Bushmills is the ‘Since Way Back’ campaign. The promotion involves collaboration with key ‘influencers,’ notably rising musicians and actors. Recently the brand partnered globally with the musical group Of Monsters and Men, which headlined the Bushmills Live concert at the distillery last summer. The focus in the U.S. is a partnership with Aaron Paul, who won an Emmy for his bad boy role in ‘Breaking Bad.’ ‘We are collaborating with Aaron on content as well as some traditional advertising, in digital space and outdoor billboards,’ says Briese. ‘He is an ascending star.’
‘It seems whenever you open up an Irish newspaper, you find someone in Ireland is building another distillery,’ remarks Reilly. ‘That bodes well for the future. The news is that the supply of Irish whiskey is meeting the challenge of the demand.’
That includes, of course, William Grant’s facility in the town of Tullamore, slated to come on line in September. ‘This will give us the flexibility to innovate and experiment with ABV levels, casks and barrel finishes. We’re looking at what we want to do with Tullamore Dew over the next 10, 15, 20 years. Whiskey is a game that requires discipline and patience,’ adds Reilly.
Last fall, Italian spirits company Illva Saronno announced a partnership with Walsh Whiskey Distillery, producer of The Irishman and Writers Tears whiskeys. According to company reports, the agreement calls for an initial investment of 25 million Euros to construct a whiskey distillery in Ireland along the banks of the Barrow River, in Royal Oak, County Carlow. Plans call for completion of the distillery in 2016 with an annual production capacity of more than 400,000 cases.
John Teeling, who founded Cooley Distillery in 1987 and later sold that facility to Beam, is reportedly back in the whiskey game. With sons Jack and Stephen and a group of investors, Teeling plans to convert the Great Northern Brewery in Dundalk into a distillery.
‘We are in a renaissance of craft distilling in Ireland,’ posits Donal O’Gallachoir, brand manager for Glendalough Irish Whiskey, remarking on the rash of new distilleries planned or opening, including the company’s own. ‘For too long there have been two large distilleries and one medium-sized one in Ireland,’ he adds. ‘Now, we want to bring back that craft, that variety, that independent streak that used to be rife all over Ireland. The more distilleries the better.’
‘We see the new distilleries as a rising tide that floats all boats,’ comments Diageo’s Briese. ‘It’s a signal of great things to come.’
New Niche for Old Spirit
There’s a new spirit arising out of Ireland, one that’s nearly as ancient as the island itself, and wreathed about with faery stories and folklore. Variously spelled as poitin, poteen or potcheen, and often construed as Irish moonshine, this high-proof white liquor was outlawed on Christmas Day, 1661 by English King Charles II. Produced in hidden glens, unlicensed poitin acquired a romantic aura of illicitness. Three centuries later, it was legalized and a small number of poitins is now produced lawfully. Kilbeggan Distilling Company, for example, makes a poitin, available only at the distillery. ‘One of the great things about being a small, nimble distillery is that we can do a lot of experimentation,’ comments Melamed. ‘Poitin is a spirit that reflects the trends of the whiskey industry with [American] white dog and moonshine, in keeping with consumers’ interest in becoming more knowledgeable about whiskey.’
‘Poitin is a key part of Irish folklore, history and legend,’ notes Reilly, who grew up in a part of Ireland rife with hills and forests ideal for concealing illegal stills. ‘It shows there is real interest from consumers in exploring other expressions of Irish spirits.’ William Grant, he quickly adds, has no plans for a Tullamore Dew poitin.
Currently in the U.S. market, Bunratty Potcheen has a modest presence. Now newcomer Glendalough Irish Whiskey is launching its Poitin in the New York and Boston markets.
‘In the U.S. it will be seen as a new niche in Irish whiskey, but poitin has a unique heritage,’ says Glendalough’s Brand Manager O’Gallachoir. ‘The liquid has such a complex flavor profile that it is really going to connect with those consumers who have been drinking Irish whiskey and want to educate themselves further.’ The word poitin comes from the Irish for small pots, referring to small pot stills. Poitin is made, says O’Gallachoir, from a malted barley base, putting it more in league with single malts. Glendalough offers three expressions of poitin. Original is a traditional recipe, with a mash bill of 80% malted barley and 20% sugar beets, distilled in small pot stills and aged in barrels of Irish oak. Sugar beets add an appley sweetness and complexity; the use of oak hearkens back to when the illicit spirit was hidden in drygoods barrels; there is no char to the oak and the spirit is clear. Bottled at 40% ABV, Original has an SRP of $29.99. Mountain Strength Poitin is bottled at 120 proof, priced $33.99. Based on a bootlegger’s style, Sherry Cask Poitin gets a honey color and additional sweetness of honey and raisins from the cask; priced $34.99. ‘We think this is the first genuine style of poitin using the old methods,’ says O’Gallachoir.
‘The industry sees the Irish whiskey category doubling in size over the next five years in the U.S. Everyone expects that trajectory to continue for the next 10 to 20 years,’ points out Di Vito at Pernod Ricard. ‘We don’t see it slowing down; it’s been an exciting time to be involved with brown spirits.’
In some ways Irish whiskey is a developed category, in a lot of other ways it’s still burgeoning,’ opines Diageo’s Briese. The great thing about it is there is no one single whiskey that’s perfect for everyone. There are so many options, so many things to be done in the space of innovation of whiskey. And the great thing is, consumers are ready to try them all.’
Like its counterparts in the whiskey category, the Irish liqueur brands have been busy with new additions and repacks. The target is to attract Millennials and younger legal-drinking age consumers.
‘It’s a really exciting time in the cordials category, there’s a lot going on,’ exclaims Stephanie Jacoby, Brand Director for Baileys Irish Cream. The Diageo brand is the leader in the creams category.
‘Right now we are seeing that the liqueurs category is in growth overall and a lot of that is driven by cream liqueurs,’ says Jacoby, adding that Baileys is growing as well. ‘We had a great fiscal year last year, up 4% in volume and 8% in net sales.’ Jacoby credits the launch of the new campaign, ‘Cream With Spirit,’ and a brand refresh for much of that growth.
The brand also launched a new flavor, Baileys Vanilla Cinnamon, last fall. ‘It’s a really delicious, flavor-forward liquid, which mixes well with a lot of other spirits,’ enthuses Jacoby.
‘Carolans’ performance has far surpassed the cream category average this year,’ says Andrew Floor, Senior Marketing Director, Dark Spirits, Campari America. The brand is another major player in the Irish Cream category. ‘While the cream category is essentially flat (up 0.5% versus a year ago), Carolans has grown 8.1% in the past year,’ says Floor.
Campari America’s other entrant in the category is Irish Mist, an Irish whiskey-based honey liqueur. The big news there is the debut of an Irish Mist Irish Whiskey in January. In 2013, Irish Mist had a flat year owing to a package change, a new target consumer and migration from cordials to the Irish whiskey section on the shelf, according to Floor. ‘Three big changes at one time and the brand has held flat, which isn’t bad,’ he concludes. ‘In our store, Baileys sells very well, and we carry other creams like Carolans and St. Brendan’s,’ reports Sarasota Liquor Locker owner Broc Smith.
How Irish liqueurs sell depends upon the market, says Louis Dachis president of Merwin Liquors, with three locations in Minneapolis. ‘I have a college-area store where I sell a significant amount of Irish creams; an inner city location where I don’t; and blue collar store that’s in between.’
‘Baileys had a total renovation of the brand, including the packaging and the bottle, for sleeker and more modern look,’ says Jacoby. Launched at the beginning of last year, the new bottle has been heightened and the shoulders lifted, to give a more elegant profile and pose a more alluring and impactful prospect on retail shelves. It also features a fresh interpretation of the iconic label, and new typography. ‘The bottle redesign was meant to elevate the brand, make it more contemporary and stylish, more relevant among modern women,’ notes the brand director.
Another contender in the cream cordials category got a new look in 2013. O’Mara’s Irish Country Cream introduced a redesigned package that included an enhanced bottle style and label design. Since 2008, O’Mara’s Irish Country Cream has grown at nearly double digits,’ according to Brand Manager Hannah Venhoff. The label redesign includes a more prominently featured O’Mara’s Irish Cream logo in a Gaelic type style and features a picturesque Irish landscape. The new bottle is more polished and features a shamrock cartouche in the shoulder.
Supporting O’Mara’s repack is a retail campaign with the tagline ‘O’ So Smooth.’ In-store POS encourages simple usage as a standalone drink or in a variety of cocktails.
Taking a Shot
Cordials is a huge category, often a catchall for anything that doesn’t fall neatly into other categories. To help analyze trends, Jacoby and her team have segmented it into classes: approachable shots, craft and classic cocktails, light European-style aperitifs, and lifestyle brands. Baileys, says Jacoby, fits into the approachable shot group, and has designed marketing of the new flavor around that idea.
‘We know that shots make up quite a bit of category volume, and they are popular among younger consumers, 21 to 29 years old, and women make up about half of that volume,’ explains Jacoby. The signature to show off Baileys Vanilla Cinnamon is the Glamour Shot, with GoldschlÃ¤ger Cinnamon Schnapps and a glamorous garnish of edible gold flakes. Other shots leverage Baileys and other Diageo brands like Ciroc, which co-stars in The Rich and Famous Shot, and Crown Royal Maple makes an appearance in The Royal Brunch Shot.
Besides the continuation of the successful ‘Cream With Spirit’ campaign, Baileys has a new PR platform called ‘Stylish Shots on the Go,’ which debuted around launch of Vanilla Cinnamon. Aimed at the target demographic, 21- to 35-year-old women, the pop-up experiential events are held at beauty salons, complete with photo booths where participants can get a remake and then pose for their very own ‘stylish shots,’ then share the photos through social media channels. With those elements, says Jacoby, ‘We have the right drivers in place for growth.’