Bourbon Isn’t Having All the Fun

Rye Whiskey

In mid-summer, Heaven Hill released a reformulated and repackaged Pikesville Rye for national distribution, the latest milestone in the return of rye. The lone surviving major Maryland-style rye, it’s now available nationally in a six-year-old, 110 proof iteration.

“Pikesville is purely a reaction to the marketplace forces that have been creating an awful lot of demand,” says Heaven Hill’s spokesman Larry Kass. A lower proof version of the lower rye-content style spirit has been available for some time in the Maryland area, but with numerous cocktail aficionados clamoring for the product, Heaven Hill started planning as they were able to build up rye stocks.

Heaven Hill, like other major distillers, was barely able to maintain distribution of their rye; in their case, Rittenhouse Rye, which has become one of the more popular brands. “But now we’re at a point where we can expand our distribution of both. Those of us who have been looking at this category have clearly seen a passionate interest in traditional straight rye American whiskey, which was tapped out pretty quickly,” Kass says.

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“The growth of rye whiskey has been phenomenal, given that as late as 2000, rye volumes were virtually nonexistent with only a handful of brands in the U.S. market,” says DISCUS Chief Economist David Ozgo. “By 2014, there were over 100 brands, and the sheer numbers tell the story. While it still represents a small share of the overall American whiskey category, its growth is skyrocketing.”

Numerous niche brands have been entering the market, and lately the bigger suppliers have followed suit. Bulleit Rye has been said to bolster the brand significantly, and Russell’s Reserve rye from Wild Turkey is in high demand. Jack Daniel’s, which has issued an unaged and a “rested” rye, plans in the next year to issue a fully-aged rye.

The halo effect of rye has even bled over to Bourbon: Beam Suntory this year released an Old Grand Dad Bottled in Bond with the label noting “high rye.” The company also upgraded Jim Beam Rye to 90 proof. Dickel’s rye has also done well. “After its launch in late 2012, George Dickel Rye continues to see solid traction and has become the number three best-selling rye in the country,” Kragel says.

There’s still more room for rye to expand, says Beam Suntory national whiskey ambassador Adam Harris; specifically higher proof and single barrel expressions. “Those looking for more whiskey flavor and proof will find it with things like Knob Creek Rye, and there’s an opportunity to get people to drink rye on the rocks. People love rye in cocktails, but we have yet to tip the scales so that people are drinking rye on the rocks.”

The Rise of Moonshine

Moonshine has boomed due to the growth in flavored varieties and the two category leaders, Ole Smoky and Junior Johnson’s Midnight Moon, are looking forward to maintaining and building share. Ole Smoky is about to launch its first major marketing initiative.

“The rate of growth has slowed somewhat and we decided it was time to create a really great marketing campaign to build both the category and our brand,” says Meg Bruno, head of marketing for Ole Smoky, which offers 20 varieties (the biggest sellers being 40 proof blackberry and apple pie and the 100 proof cherry and white lightning).

“The category still needs to prove itself; we’re still the new kid on the block and retailers who took in multiple brands may have seen it slow. Now they need more support from brands,” she adds.

Joe Michalek, president of Piedmont Distillers, maker of Catdaddy as well as Midnight Moon, says the tipping point was the inclusion of flavors in 2007, and as interest in moonshine TV programs. As flavored spirits and other cultural influences grew, so did moonshine.

“Now that there are about 75 brands with about 125 SKUs at a minimum, and some competitors with significant resources out there, we’re seeing a lot of interest,” he says. “We have close to a 50 percent share of white whiskey and a fairly loyal franchise out there with Midnight Moon, but we’re in a proverbial street fight at retail. I think this will all shake out in the next 18 to 24 months and we’ll get back down to the number of brands and offerings reflective of the volume, because right now there are more brands than there is demand for this segment of spirits.”

Midnight Moon’s leader is also apple pie, with almost 50 percent of the brand’s business, but as Michalek says, ”How many apple pie moonshines does a retailer actually need?”

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