NORTHERN EXPOSURE

SALES OF CANADIAN WHISKY ARE FINALLY ON THE UPSWING,
AND THE MARKET WILL CONTINUE TO BENEFIT AS BRANDS DEVELOP NEW WAYS TO EXPAND THEIR CONSUMER FRANCHISES.

BY HOWARD RIELL

While sales of Canadian whisky have been trending down for at least a decade, that decline was surprisingly ended in 2002, when the category showed a 0.5% gain nationally to 15.4 million 9-liter cases. Canadian whiskies bottled in Canada — “imports” like Canadian Clubw and Crown Royal — gained 2.9%, while products shipped in bulk and bottled in the U.S. fell 1.0%. However, ad expenditures rose for the entire category by a healthy 28.7%, to $32.9 million, which may help explain where some of the positive momentum is coming from. Now, marketers are looking to advertising, promotions and relationship building to keep that momentum going. And, it appears that the arrow continues to point up throughout most of 2003.

Crown Royal, of course, has been leading the way with sales of more than 3 million 9-liter cases nationally in 2002 (up 7.6% over 2001), more than double that of its nearest competitors, Allied Domecq Spirits USA’s Canadian Club, at nearly 1.4 million (up 1.5%). Seagram’s VO, from Diageo, was a hair’s breadth behind, but saw a slight year-to-year sales decline.

OPTIMISTIC OUTLOOK

While the category itself remained “pretty much stable” last year (in 2003), according to Jim Lorenz, U.S. brand manager for Crown Royal and Crown Royal Special Reserve, growth came mainly in the premium area. That’s where Crown Royal plays, and the brand was on course to have a “fantastic year” in 2003, Lorenz said. Depending on market, the brand retails for $19.99 to $24.99 for a 750 ml Special Reserve sells for $30 to $35.

Halid Izzet, brand manager for Allied Domecq’s Canadian Club, said he sees “a bit of a turnaround in the Canadian whisky market. From the latest Nielsen figures, what we can see is that the total whiskey category is stabilizing after five or 10 years of pretty constant decline… and Canadian whisky is starting to rebound; it’s moving into positive figures.”

For Canadian Club, he cited remarkable Nielsen statistics: a 52-week average of +2.3%, with the brand up 7.5% for the past 26 weeks, 12% over the last 13 weeks and 21.4% in the last month.

“The Canadian whisky category is fueled by the ease of the drink and the resurgence of the classic cocktail,” said Joe Karcz, group product director for Jim Beam Brands Co., which markets Windsor and Kessler brands. “Canadian whiskies have long been known for their smooth, light flavor, making them ideal for cocktails.”

“The category had declined quite a bit over the last few years, (but) those declines seem to have moderated,” said Dan Kelley, brand director of Brown-Forman’s Canadian Mist. “I think there’s some new interest in the category.”

BUILDING A BRAND’S IMAGE

“In terms of growth, I think there is still a significant amount of share stealing going on,” said Jack Kavanagh, vice president, marketing services at Barton Inc., which markets Black Velvet, Black Velvet Reserve and Canadian LTD. “That’s where a lot of the growth is coming from… with the exception of Crown Royal.”

Black Velvet and Canadian LTD grew nominally over the last year (2003), he added, while the company’s other brands were flat. The year just passed was Black Velvet Reserve’s first in national distribution, and Kavanagh said executives were “very pleased with it.”

Black Velvet is continuing brand-building activity in 2004, including some consumer rebates.

The strategy for Black Velvet throughout the past year was to continue building the image of the brand with the support behind it. That included a golf program in the spring that Kavanagh termed “very successful.” Another initiative included an ongoing rodeo program that began last January and ran throughout the calendar year. It will continue throughout 2004.

POWER OF THE PURPLE BAG

“Really what’s helping drive the brand is that we continue to execute on an advertising campaign we’ve had for about 30 years,” said Lorenz. “We continue to reinforce that. We’ve been building a strong connection with our consumers through a relationship marketing program we have called, “The Society of the Crown.” We have the ability to connect with (them) through both e-mail and direct mail.”

Crown Royal is accenting “It’s All in the Bag” merchandising campaign.

The brand’s annual sales are on course to rise about 8% in 2003, said Lorenz. “The strength of Crown Royal really lies in its premium positioning,” he noted. “We’re benefiting from the growth of premium spirits overall.”

A promotional program stemming from the purple bag is called, appropriately, “It’s All in the Bag.” Running both on- and off-premise, it “plays again around the adoration that consumers have for Crown Royal and the bag,” said Lorenz. Consumers have the opportunity to write in and say how they use the purple bag in unique and interesting situations. A contest connected to the program will give winners a chance to choose from a warm-weather getaway, a ski trip or a shopping spree.

The brand’s mix of national and local advertising will continue. For the holiday season just passed, Crown Royal offered a value-added pack that contained a pair of glasses and accompanying premium wooden coasters.

‘HEALTHY, POSITIVE FACTORS’

Canadian Club’s Izzet is encouraged by the fact that “with each month, we’re seeing more momentum in the brand.” Allied Domecq executives have realigned into what they term a “Move to Market” strategy. The result, said company spokesperson Jack Shea, is that “instead of having a national sales force selling Canadian Club, it’s sold by three different business units — one for control states, one for northern states and one for the south.”

Part of the new strategy enabled the company to add 100 retail account managers, who now more closely monitor competitive pricing and help the brand both react more quickly and anticipate changes.

Canadian Mist has garnered attention with the introduction of a 750 PET package. The brand successfully debuted its 1.75 liter PET “Easy Pour” bottle three years ago; the new package is being affectionately referred to within the company as “Son of Easy Pour.”

The proprietary design includes a special thumb grip. “We think this is really going to capture the consumer’s attention,” Kelley noted. Brown-Forman is spending half a million dollars just for television — the first time it has taken to the airways with Canadian Mist.

LEADING BRANDS OF CANADIAN WHISKY

(Thousands of 9-Liter Cases)

FB=Foreign Bottled; USB=U.S. Bottled Source: Adams Liquor Handbook 2003

In addition, during 2004’s first quarter, Canadian Mist is kicking off a hockey promotion at the point-of-sale with logoed hockey jerseys and hockey goal displays. It will also use small, hanging inflatable logoed zambonis as well as logoed zamboni key chains.

According to Jim Beam’s Karcz, the category as a whole “needs to raise its visibility and take advantage of those opportunities.” During the first quarter of ’04, Jim Beam will place increased support behind its Windsor and Kessler brands, including advertising, improved packaging and expanded support behind key sponsorships.

Ultimately, maintaining a positive sales momentum for Canadian whisky depends upon these and other supplier efforts, as well as retailers recognizing that Canadian is not a moribund category. It still comprises 10% of all spirits sales in the U.S. and, as the latest sales figures show, deserves to be merchandised as a growing category. *

In May, the magazine cover the beer industry wants to forget asked, “Is Beer Dead?” Inside, in an article entitled “U.S. Beer Business Continues Decline,” Ad Age probed the social and demographic factors prompting a shift from beer to wine and spirits, and beer’s falling numbers.

After three years of lackluster beer sales, analysts had exhausted milder analogies that compared beer’s fortunes to perfect storms, battlefield encounters or bouts of illness. It was only natural, if premature, to start talking about the death of beer.

The overall figures are certainly depressed, but this is more frustrating than it is fatal. And, while aggregate figures may indicate that the category has problems, they also mask a lot of variation within the category, including strong performances by some brands or segments that might be instructive for the rest.

The big picture is this: in 2004, the beer category grew overall by 0.7%, according to Adams Beverage Group research, solidifying in hard statistics the developing perception that the beer industry is a stagnant giant. While premium and sub-premium beers are hurting, imports put on a brave show (up 1.8%), and there was growth in what might be thought of as the two extremes of the beer spectrum: light beer at one pole, and specialty or craft beers at the other.

In 2004, mergers further internationalized the beer landscape, government regulations brought clarity to the long dispute over the formulation of malternatives (flavored malt beverages), and spirits and wine caused more handwringing at the brewery.

But beer still claims over half the dollars Americans spend on beverage alcohol. And, considering that it is less expensive per drink than spirits or wine, beer is clearly the leading adult beverage choice by a good margin.

LIGHT BEERS LEAD THE MAJORS AGAIN

In 2004, Americans pursued their attraction for products that promise health through reduced calories or carbohydrates. Despite the fact that the low-carb phenomenon seems to be waning, light beers overall grew by 4.4%.

Just as Diet Coke has become the habitual selection for a substantial number of soda drinkers, dieters or not, light beers seem to be the reflexive beverage of choice for a large number of beer drinkers, oblivious to the irony of pairing these beers with an order of super nachos.

Six of the ten top-selling domestic brands — and nearly half the beers consumed in the country — are light beers, and five of those posted increases in 2004. Bud Light retained its number one position, growing by 3.7%.

The next light beer in the top-ten ranking, number three brand Miller Lite, grew by an impressive 11.1%, a gain that would have been unheard of a few years ago for the perpetual second-place brewer.

When A-B’s Michelob Ultra burst on the scene two years ago as the leading low-carbohydrate beer, Miller was slow to capitalize on the fact that their flagship Lite happened to be low in carbs as well as calories — and always had been. The aggressive repositioning of Miller Lite as a low-carb brew, and the leadership of new Miller president Norman Adami, seems to have breathed new life into the company.

“The spirits and wine guys have been successful in a very important area — the spirits guys for about five years, and the wine guys for about ten — and that’s the effort to raise and premiumize the image of their category.” — DAVE EICKHOLT, President, Diageo-Guinness USA

Coors Light fell by 2.0%, but the remaining light beers in the top ten — all A-B products — posted growth that ranged from barely significant (Natural Light: 0.7%) to breathtaking (Michelob Ultra, growing 39.8%, from an admittedly smaller base).

The sustained health of these “healthy lifestyle” beers has inspired new light brands. Despite fears of cannibalization, A-B launched Budweiser Select; Heineken risked Amstel Light by launching Heineken Light and Beck’s released its first light beer.

THE SAGGING MIDDLE AND THE IMPORT PARADOX

Just as top-selling light brands nearly all fared well, their full-carb and -cal siblings slumped: Budweiser (the number two brand overall) was down 4.5%; Busch (number six), down 3.1%; Miller High Life (number eight) down 2.1%; and Miller Genuine Draft (number 10) down by a painful 9.1%.

Contrast this with the sales of the big imports, where eight out of the top ten gained sales, some significantly. Corona Extra (up 1.9%) led a contingent of Mexican beers that for several years now has seen business expand — in 2004, for example, Tecate grew 0.4%, Modelo Especial increased a hefty 18.2%, and Corona Light upped sales 6.4%. Part of the explanation is that they are in the sweet spot of demographic trends, with a continuing surge in the Hispanic-American population. But other imports — such as Guinness, Heineken and Amstel Light — also continue to grow, so there has to be more to it. Clearly, the sophistication of an import and the appeal of a lifestyle beer make a powerful combination.

Leading IMPORTED Beer Brands

(000 2.25-Gallon Cases)

Source: Adams Beverage Group – *Marketed by Heineken USA as of January 2005

Interestingly, it can be argued, almost counter-intuitively, that some of the top-selling imported beers — Corona, Heineken, Labatt Blue and Beck’s, for instance — do not differ very much from mainstream American beers. They are all of the same, dominant international style as Bud or Coors, and are sold alongside their domestic counterparts. In a sense, these are no longer “foreign” beers: they are marketed and consumed as global products — perhaps even as stealth domestics.

MERGER MANIA

Soon, it may be even harder to tell domestics from imports. Interbrew had already blurred the distinction: for example, the Belgian conglomerate sold a number of its brands in the United States through Canadian brewer Labatt. Now with the merger of Interbrew and South American AmBev, the newly-titled InBev, headquartered in Belgium, is the largest brewing company by volume in the world. (Anheuser-Busch is the largest brewer by sales, reflecting the lower price of many of AmBev’s South American brands.)

InBev boasts 200 local brands, which it divides into global flagship brands (Stella Artois, Brahma and Beck’s) global specialty brands (Leffe, Hoegaarden) and multi-country brands (Bass, Staropramen). It’s a useful distinction that U.S. beverage analysts may want to emulate. Mainstream and specialty beers, as well as light brands, behave differently abroad just as they do at home: lumping them into a category called “imports” is as useful as a single figure for domestic beer sales would be.

“Small brewers used to think, ‘our beer is so good, all we have to do is make it.’ Now we know we have to do more for our brand.” — KIM JORDON, Co-founder and CEO, New Belgium Brewing

Following Coors’ first ambitious international moves in 2002, 2004 saw a protracted wrangle over the merger of Coors and Molson, which concluded early this year with the creation of Molson Coors to form the world’s fifth largest brewing company. Interestingly, it is the union of two companies both still in the hands of their founding families.

SAB/Miller, formed by the purchase of Miller Brewing Co. by South African Breweries in 2002, is now a mature venture. Miller brought its American brewing legacy to the deal; SAB brought an understanding of selling beer in developing country markets, plus plums like the Czech classic, Pilsner Urquel. The new company has extended its reach with purchases in Western Europe, Eastern Europe, Central America and China.

SPECIALTY BEER

In 2003, for the first time in eight years, the specialty beer segment grew at a faster rate than the other relatively small, exclusive segment, imports. In 2004, specialty beer growth at 7.2% was greater than any other segment of the alcohol business. About one-tenth of America’s specialty brewers enjoyed double-digit growth in 2004.

The specialty segment, comprising so-called “craft beers,” made by local brewpubs, microbreweries, and traditional regional companies, represents only 3.2% of the total beer industry. But it occupies a disproportionate share of media and public attention, as witnessed by recent coverage of high-end, high-priced beers in The New York Times and The Wall Street Journal. Paradoxically, at a time when big brewers are discounting, the media has become enamored over the prices charged by high-end beer.

Leading DOMESTIC Beer Brands

(000 2.25-Gallon Cases)

Source: Adams Beverage Group

By two different measures, Colorado’s New Belgium Brewing Co. stands as a good example of this segment. Information Resources Inc. (IRI) recognized its flagship beer, Fat Tire Amber Ale, in IRI’s 2004 Beer Power Ranking of 25 top beers, all distinguished by a combination of volume, growth and profitability measures. And the Brewers’ Association included the company on its list of “Tiger Breweries,” based on size and growth performance.

With distribution in 15 states, New Belgium, which grew 16% in 2004, is at capacity for their current facility. Asked why specialty beer is blossoming, Kim Jordan, co-founder and CEO, said “I have my hunches, though they sound pretty pat. For years we’ve been saying that people have been trading up. They are more comfortable investing in small pleasures: lattes, fresh bread, specialty beer. I think this is borne out in all the enthusiasm for cocktails: people want more interesting products; they’re willing to pay more for them. We fit in with that desire. The economic situation in this country is not all that fabulous, so people aren’t doing terribly extravagant things, but they are interested in these small luxuries.”

The brewery recently launched its first TV commercials to limited markets. The series show a young man finding a vintage bicycle at a garage sale, renovating it, then riding it at sunset, with the tagline: “Follow your folly. Ours is beer.”

The TV commercials mark a certain coming of age by the specialty brewer. “They are meant to grow our relationship with customers over our brands,” said Jordan. “We’re committed to the idea that branding is more than just showing up in the marketplace. Maybe this applies to the whole segment. Small brewers used to think, ‘our beer is so good, all we have to do is make it.’ Now we know we have to do more for our brand. What you focus on is where you go.”

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While finewine.com may sound like one of those web sites targeted at international wine snobs, it’s actually the name of Cecile Giannangeli’s two-store, brick-and-mortar retail operation, with outlets in McLean, VA, and Gaithersburg, MD, both specializing in selling wine. Oh, and a powerhouse web site of the same name is also part of the business.

Cecile Giannangeli, owner (along with her husband Al Giannangeli) of finewine.com, a two-store chain that caters to the Washington, DC region.

Before she had her own stores, Giannangeli was part owner of the Virginia-based wine shop Arrowine. She opened her own store in 1989, three blocks away, and called it Cecile’s Wine Cellar. The store took off and, after 10 years, she branched out. At that point, she wasn’t able to legally sell wine from Virginia to her neighbors in Washington, DC and Maryland, so she decided to set up shop in Gaithersburg, MD and went into partnership with her husband, Al Giannangeli. The second store, christened finewine.com, coincided with the launch of an e-commerce site. She also renamed her original emporium in Virginia Cecile’s finewine.com. She acknowledges her partner, and husband, for taking the business to another level. Cecile affirmed, “Al had the strategic vision as well as being the one who developed the entire finewine.com web site. He continues to be a driving force of our marketing and promotional content.”

Neither store sells spirits or beer, only wine. Cecile wants to bring good wine to everyday folk, and tries to offer wines within every price category, from $4.99 on up. “We recognize that this is a beverage and not an art form; we always try and keep that in perspective. The bottom line is that you either like the wine or you don’t.”

Both the Gaithersburg, MD store (seen here) and the McLean, VA store are thriving, even though finewine.com does not sell spirits because of the control jurisdictions in which the two-store chain is located.

In servicing the metro Washington, DC area from her two stores, Giannangeli has to navigate the rules and regulations of a control state, Virginia, which sells distilled spirits products through state stores, and the laws of Montgomery County, MD (each county in the state of Maryland has its own regulations), which essentially functions as a control jurisdiction. She explained why they moved into Maryland despite the arduous legal structure that exists there. “It is impossible to be a regional force in this market without being able to legally sell to our neighbors in Maryland. I would have been breaking the law with only a Virginia license selling to DC and Maryland. This way we have a legal model.”

Targeting Female Consumers and Singles

From the beginning, Giannangeli has aimed to create a space that was comfortable for women to browse and shop. She feels that, for the most part, wine stores can be intimidating to women. “I noticed that a lot of women liked anonymous shopping and preferred to pick up wine at places like Costo.” Aiming to change all that, she started the Women’s Wine Tasting Club. “We started the club so that intelligent, college-educated women could read a wine list in a restaurant with confidence. The meetings are fun and educational.” Once a month at both wine stores, about 50 wine-curious females show up to taste and discuss wine. Topics run the gamut from wines of specific regions to choosing wines to suit spicy, ethnic cuisine.

Taking wine into all arenas of life, Cecile also started up a singles night at the Gaithersburg store. She explained, “A lot of singles come in at the Maryland store, so we decided to do a singles night so they could meet each other.” Both stores also offer wine flights at the end of the workweek — when shoppers most appreciate the break. They usually have a guest speaker discussing a series of themed wines in an informal and friendly manner. A recent Friday night had a supplier come in to talk about and offer a taste of wines from Piedmont, while customers came and went as they pleased. “It’s a great way to start the weekend,” Giannangeli said.

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.

The 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.

Allied 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.

Crown 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.

Mike 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, 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.

Like so many trends, low-carb has enjoyed its heady days and at long last has begun to cool down. But as savvy marketers of beer, wine, spirits and non-alcoholic beverages know full well, it’s not going to disappear.

This Atkins-inspired, one-time craze leaves behind a legacy — a sizable group of people who remain committed to consuming fewer carbs. This translates into a niche profit opportunity for retailers and suppliers.

Anheuser-Busch’s Michelob Ultra actually began the trend of low-carb beverages, and had huge initial sales in the marketplace.

Indeed, research indicates that Americans are showing signs of finding the golden mean in their eating and drinking habits. According to The NPD Group’s 19th Annual Report on Eating Patterns in America, “It appears that Americans are beginning to find a balance between the need for convenient, inexpensive meals and their expanding waistlines,” said Harry Balzer, vice president of The NPD Group.

“It seems the whole low-carb phenomenon is kind of on the wane,” noted David Henkes, principal and executive director of the Adult Beverage Insights Group for Chicago-based Technomic, Inc. “We’re seeing that in food as well as in beverages, where the interest seemed to peak probably six to eight months ago when everybody was jumping on the bandwagon. That’s not to say it won’t exist as a niche phenomenon.”

“In general, the low-carb trend has plateaued,” agreed Anishka Clarke, Beverage & Tobacco Analyst for Standard & Poor’s. “It’s still something that food and beverage manufacturers are aware of and taking into account with their products and future marketing plans, though. When it comes specifically to beverages, we see companies taking advantage of some of the positive aspects of spirits. For example, I believe spirits producers will take advantage of the fact that their products may have zero carbohydrate content, and that their labeling can now include that they have zero carb content,” Clarke said.

Indeed, low-carb-inspired cocktails are now springing up on drink lists, in a variety of books and publications and in suppliers’ merchandising materials. And the ever-growing cocktail culture is increasing awareness of zero-carb spirits.

Michelob Ultra Starts Trend

Still, the major low-carb beverage alcohol players, at least in positioning, are the beer producers. It began with the debut of Anheuser-Busch’s Michelob Ultra, in the fall of 2002. The new brand boasted 2.6 grams of carbohydrates and 96 calories, an apparent no-brainer for beer consumers who also obsessed about their waistlines. By by the end of 2003, the brand had sold 41 million 2.25-gallon cases to become the 10th best-selling beer in the U.S. And although the rate of Ultra’s growth has slowed, A-B says the brand is doing just fine.

Meanwhile, after Ultra exploded on the market, Labatt USA (now InBev) followed with Rock Green Light, which claimed 2.6 grams of carbohydrates and less than 92 calories. And the brand shipped 1 million cases after its first three months on the market. Soon, however, Ultra’s phenomenal success was met by a formidable challenge from SABMiller, which began trumpeting that the venerable Miller Lite, while low in calories, was also low in carbs. The ad campaign, begun more than a year ago, turned into a tremendous success, and was countered by A-B’s own ad campaign exclaiming that Bud Light was also low in carbs.

Rolling Rock’s Rock Green Light used a low-carb proposition to drive a successful launch for the much smaller brand.

According to Rob Olejniczak, marketing director, Miller Trademark, Miller is using the low-carb angle, “as a springboard from which to talk about our products’ attributes with consumers. We’re capitalizing on Miller Lite’s product benefit by simply pointing out the facts: that Miller Lite has 96 calories and 3.2 grams of carbs.”

“This ‘Amazing Facts’ ad campaign has simply been about Miller Lite facts,” added Erv Frederick, vice president, Trademark Marketing, Miller Brewing Company. “Because there has been a lot of focus on carbs, it’s important for us to let consumers know that there’s a significant difference between Miller Lite and the other mainstream light beers.”

For its part, Coors came out with Aspen Edge low-carb beer last spring, hoping that it would not cannibalize sales of Coors Light, the company’s sales engine.

Still, “carb-mania is beginning to subside,” noted Olejniczak,”but carb-consciousness and the demand for great taste will stay with us for a long time, and we’ll manage our brands accordingly.”

In fact, in October, a new Miller TV campaign zeroed in not on carbs but rather direct taste comparisons between Miller Lite and Bud Light, and between Miller Genuine Draft and Budweiser.

Opportunity for Others

“Today we all know at least a few people who’re on low-carb diets,” said Yuri Kato, the publisher of www.CocktailTimes.com. “I think people realize what we drink is as important as what we eat.”

Spirits companies are beginning to make consumers aware of the zero-to-low carb content of their products. For example, a Mojito contains just 4 grams of
carbohydrates.

Aside from the profitability of low-carb drinks, he reasoned, the trend also gives the industry “an opportunity to educate consumers about distilled spirits. People know that beer contains higher carb (content) than wine or spirits, but not a lot of people know that the majority of distilled spirits contain zero carbs.”

A ruling issued by the Alcohol and Tobacco Tax and Trade Bureau (TTB) last April, said that the term “low-carbohydrate” could be used in the labeling and advertising of alcoholic beverages containing no more than 7 grams of carbs per serving. The ruling prohibits false, misleading or implied statements that consumption of low-carb alcohol may play a role in maintaining a healthy weight or in weight reduction.

Standard & Poor’s said soon after the new ruling that it expected spirits and wine manufacturers to take advantage of it, as beer companies had already done. In an industry survey published in early September 2004, S&P’s noted that, “spirits companies, whose products for the most part have no carbohydrates, can devote additional resources entirely to marketing without having to invest in reformulating. Similarly, wine companies can also take advantage.”

In fact, last April, Diageo Chateau and Estate Wines (DC&E), part of Diageo, announced that three of its wine brands — BV Coastal Estates, Sterling Vintner’s Collection and a new brand offering, Century Cellars — all met the definition of a “low-carb” alcohol beverage as recently established by the TTB.

DC&E began producing point-of-sale materials, including bottle neckers and in-store displays, informing consumers that the three brands did, in fact, meet the new TTB guidelines. Also included in the point-of-sale information is other macro-nutritional information, such as fat, protein, calories and serving size. For example, materials for BV Coastal Estates 2002 Chardonnay include the fact that the wine contains 3 grams of carbohydrates, 124 calories, 0 grams of fat and less than 1 gram of protein per five-ounce serving.

Coors Brewing got into the low-carb game last year with Aspen Edge.

“We have not developed any specific products that are low-carb,” noted Zsoka McDonald, director of media relations for Diageo North America. “We have been educating consumers about the low-carb nature of some of our products. We did an education campaign across several of our spirits brands last year. There were some events around the Super Bowl, and a bit of advertising about the low-carb nature of some of our products like Tanqueray, Smirnoff, Cuervo, Crown Royal, and Johnnie Walker.”

The firm’s research shows that consumers “want to know what is in the food and beverages they are consuming in general,” said McDonald. “Consumers are more concerned about carbs and other macro-nutrients. So we’ve actually gone a step further and supported some of the consumer groups that have called for labeling on alcoholic beverages.”

Educational work needs to be done. According to a survey conducted by Ipsos Public Affairs, a leading global survey-based market research group working on behalf of Diageo, 63 percent of Americans did not know that spirits like vodka, tequila, gin and whisky are lower in carbs than wine and beer. These spirits, according to Guy Smith, Diageo’s executive vice president, “have no carbs.”

Lower-Carb Wines

Industry insiders are divided about how well low-carb wines will be accepted. Thus far, most of the attention has been garnered by Brown-Forman, which has rolled out One.6 Chardonnay and One.9 Merlot. Both are named after the number of carbohydrates per five-ounce serving. Each is produced by California-based StonyBrook Vineyards.

Brown-Forman Wines debuted One.6 and One.9 nationwide last year, hoping to establish low-carb wines as a viable niche on retailers’ shelves.

Low-carb wines are produced from blends that are naturally lower in carbs. A lot of variation can be found in the carbohydrate levels from different regions and even from micro-climate to micro-climate. The One.6 Chardonnay is light-bodied, fresh and crisp with a hint of melon and citrus fruits. The One.9 Merlot is smooth and medium-bodied with flavors of cherry, blackberry and traces of oak, according to the company. A six-ounce serving of the One.6 Chardonnay has 1.9 grams of carbohydrates and a six-ounce serving of the One.9 Merlot has 2.2 grams of carbohydrates.

“It’s one of those no-brainers. When there are other (brands) doing exceptionally well, wine should be participating as strongly,” says Andrew Varga, global brand director at Brown-Forman Wines. B-F, perhaps best known for Jack Daniel’s whiskey, owns several wine brands including Fetzer and Bolla, and markets others including Korbel and Michel Picard.

The low-carb idea was hatched before last fall’s harvest. Winemaker Cara Morrison crafted the wines by choosing the right varietals and “fermenting them as dry as you can” to cut the sugar, Varga said.

One.6 and One.9 wines are available in retail stores throughout the U.S. and sell for $9.99 to $11.99 for a 750 ml bottle. Among major national retail chains carrying the brands are Albertson’s, Safeway, RiteAid, Target, and Wal-Mart.

PHOTOGRAPHY BY DAN WAGNER

Ireland is a land of contrasts and contradictions, a place where the ancient and the recent blend together seamlessly. Known around the globe for its traditional music and dancing through such spectacles as Riverdance and Lord of the Dance, it’s also home to one of the world’s most popular and modern-sounding rock bands, U2. What was long considered the last peasant country in Europe is now the world’s second-largest exporter of software after the U.S.

This same dichotomy can be seen in Ireland’s two main spirits exports — Irish whiskeys and Irish creams. The first traces its origins back one and a half millennia to Irish monks who brought the secret of distilling to the Emerald Isle. The intoxicating potion they created was called uisge beatha (water of life). Irish creams, on the other hand, are a creation of the modern world, having been launched just 30 years ago with the debut of Baileys Original Irish Cream. Today, Baileys is one of the most recognized spirits brands in the world and is two-and-one-half times larger than the combined sales of all Irish whiskey brands in the U.S.

Category Growth Seen in ’04

Although Irish can claim to be the world’s oldest whiskey, it remains the smallest in sales volume, not only of whiskeys, but of all distilled spirits categories in the U.S. The collective category only broke the half-million case barrier for the first time in 2004 and its share of the entire distilled spirits market remains well below 1%. Relative to itself, however, Irish whiskey is a dynamic and exciting category and has enjoyed a double-digit growth rate over the last decade that is the envy of the entire industry.

Leading the way for Irish whiskey in the U.S. market is Jameson, the flagship of Pernod Ricard’s Irish portfolio, which also recently surpassed Power’s to become the number-one Irish whiskey in Ireland. A big reason for the brand’s success is that it has a year-round marketing budget and a level of support not enjoyed by most of the category’s other brands. “We just launched a very dynamic new advertising campaign for Jameson in November,” explained Suzanne Freedman, who handles marketing for all of Pernod Ricard USA’s Irish brands. “It’s a print, radio, outdoor and Internet effort. Essentially the premise behind the campaign is that Jameson is a great-tasting whiskey. Basically, what we’re trying to impart to the consumer through this ad campaign is that there are many reasons why people think Jameson is so popular, but at the end of the day, people just love the way it tastes.”

Irish Brands “Own” St. Pat’s Day

As might be expected, the period around St. Patrick’s Day has been the most important for Irish whiskeys, as it is for just about everything Irish. It’s no secret why The Chieftains and other major names in Irish music can be found on U.S. tours in March. “Irish brands are fortunate in that they are able to experience two holidays, not just the November/December Christmas holiday, but they own St. Patrick’s Day,” said Freedman. “However, over the past two-to-three years Jameson has actually been growing at a faster rate outside those two holiday periods than it does during them. That’s really good news for us, because it means that the brand is de-seasonalizing itself and becoming more of a mainstream, year-round whiskey brand.”

Jameson, the category leader, has seen sales increase by 15% to 18% annually over the past few years.

Still, the March 17th period remains an important part of the overall Jameson marketing mission. “We support the holidays tactically with materials for the trade, for the consumers to engage in different types of promotions, value-added packaging and gift packaging, festive case cards and displays,” continued Freedman. “However, we engage in high-level promotions outside St. Patrick’s Day as well.” Examples she cited include a Jameson and ginger ale summer promotion with co-packs and a new rack display program that won’t be available to retailers until early April. Starting in April, Jameson will also be launching a consumer recruitment program that will tie in with different concerts and offer consumer sampling opportunities.

For Bushmills, however, the big deal is always in March. “Bushmills really puts everything into St. Patrick’s Day,” said Freedman. “Everything we do stresses the Irishness of the brand.” And the brand has been growing by 5% to 7% annually. “The fact is we’re very excited about the brand,” Freedman said.

Bushmills targets St. Patrick’s Day and the “Irishness” of the brand in its merchandising materials.

For St. Patrick’s Day this year, one of Bushmills’ efforts will be tie-ins with American beer brands that will vary from market to market, using an Irish-American theme.

Rounding out the Pernod Ricard USA Irish whiskey selections are: Power’s, which Freedman concedes that because of its price, quality and popularity among the Irish, is growing at about 10% a year without any marketing efforts; Red Breast, a $45 per bottle whiskey, of which the U.S. is only allocated about 2,000 cases a year, and at the top of the price heap, Midleton, an excellent whiskey which she refers to as being “in that sort of $100 range.”

Other brand executives are also enthusiastic about the prospects for the entire Irish whiskey category. “The whole Irish category, the Irish phenomenon is continuing in the United States, which augurs very well for all the brands,” said Mark Marcon, senior brand manager, C&C portfolio, which includes Tullamore Dew, for Allied Domecq. “Tullamore Dew itself just continues to grow. There’s just such awareness of the whole Irish category that virtually anything you do is going to work if you’ve got a powerful brand in that category itself. It’s very much a voyage of discovery for this whiskey aficionado.” Marcon also said, “The numbers show a turnaround in Scotch whisky, even blended Scotch whisky. You’ve seen a turnaround in Canadian whisky. You’ve seen the dynamic growth in Irish whiskey. There’s been a true appreciation for brown goods again. But within that category, the one that’s growing the fastest is Irish.”

Tullamore Dew, from Allied Domecq, has continued its annual growth, and while small, is the third best-selling Irish whiskey in the U.S.

Alan Lewis, senior vice president, sales & marketing, for Dublin-based brand owner C&C International, said, “With Tullamore Dew we intend to exceed the category growth by exploiting what we call a ‘building block’ program, building the brand in three or four markets each year by overinvesting in those markets and then following up with continued support in those markets.”

“One of the most amazing things I’m seeing now when I go out to liquor stores, even in the control states, is Irish whiskey sections,” continued Marcon. “All of a sudden you’re not just another whiskey, you’re a category now. And for the liquor boards and the independent stores and the chains to recognize that there’s an Irish whiskey category is a big step forward for us.”

In addition to the category’s major brands, in recent years there’s been an exciting expansion of the Irish whiskey selection as a number of companies have stepped up and found a bevy of brands to offer consumers.

RUM’S RISING STAR

New expressions and new flavors drive rum to new heights.

By Robert Plotkin

Sales of rum last year continued soaring skyward, posting increases of 6.6% to about 20.8 million 9-liter cases, according to Adams Beverage Group Research. It now ranks as the second largest category of spirits in the U. S., with flavored rums accounting for roughly a third of the category’s sales.

John Gomez, group marketing director for Bacardi, thinks that much of rum’s success can be attributed to its unrivaled mixability. “Existing consumers are responding to the proposition of mixed drinks made with rum, as evidenced by the growing popularity of the Mojito. Rum gives a cocktail personality. Seventy-one million people turned or will turn the legal drinking age from 1997 and 2015. That expanding population will only bolster rum’s overall franchise.”

Jeffery Zarnow, ceo of Starr African Rum, agreed that the cocktail culture has propelled rum to the forefront, adding that the Mojito has become the third most ordered drink in New York City.

Stuart Kirby of Captain Morgan and Diageo added that rum’s broad market appeal explains the category’s dynamic growth. “The primary market segments for rum are men and women between the ages of 21-29. Its rich flavors, mixability and affordability make the whole category attractive to consumers.”

According to E. Malcolm B. Gosling, the seventh generation of the family that first produced Gosling rums, “Historically, rum producers did not market the spirit to its full potential. But in this age of consolidation, the larger companies are now successfully managing rum, and through their marketing efforts, consumers and critics are recognizing the many attributes of rum. Frankly, it’s no longer seen only as the product that makes drinks with cute little umbrellas.”

Bacardi Big Apple is the latest flavor to debut from the best-selling rum in the U.S.

Gosling added that “a lot of entry-level consumers are being attracted to the category through the flavored rums. This actually translates into consumers who develop a long-term loyalty for the category, and as they grow older, they develop more interest in the aged rums.”

“Look for the superpremium segment of the rum category to grow rapidly now,” emphasized Lori Tiezen, senior vice president at Moët Hennessy, importer of the new superpremium 10 Cane Rum. “As more upper echelon rums become available, expect to see a significant exodus of consumers from the other spirit categories.”

Another propelling force in rum’s climb to stardom is the American consumer’s continuing education into the differences between spirits. Enthusiasts and aficionados are becoming more knowledgeable about rum, the nuances between the different appellations and quality factors such as methods of distillation, water source and aging styles.

LEADING BRANDS WATCH

Category leader Bacardi remains the brand most consumers think of when they choose rum. Bacardi’s sales in the U.S. grew 3.8% to nearly 8.5 million 9-liter cases in 2004, almost double that of second place Captain Morgan. The company also holds the fourth sales slot in the market with Castillo Rum, which last year hit 1.2 million cases sold.

Parrot Bay is part of the expanding Captain Morgan franchise.

Their world-famous range now includes Bacardi Carta Blanc, Superior Gold, Bacardi Select and Bacardi Añejo. Superpremium Añejo Bacardi 8 Reserva Superior is crafted from an 1862 recipe, a blend of continuous-distilled and pot-distilled rums and aged a minimum of 8 years in charred American white oak barrels.

Bacardi has maintained its strong presence in the flavored rum segment. The company’s flavor portfolio includes Bacardi O (orange), Limón (citrus infused), Bacardi Razz (raspberry), Bacardi Vanila (vanilla) Bacardi Cocó (coconut) and new Bacardi Big Apple Rum. The company also recently debuted the Island Breeze line of low-calorie rum-based spirits. Featuring only 48 calories per 1.5-oz. serving, the line comes in three flavors: Key Lime, Coconut and Wild Berry.

Diageo has firm control of the second and seventh sales slots with Captain Morgan and Myers’s, respectively. Captain Morgan grew a hefty 12.9% to more than 4.7 million 9-liter cases. This volume includes the Parrot Bay line extension, which increased almost 38% to just over 600,000 cases. Diageo recently extended the Captain Morgan range with the release of Captain Morgan Tattoo, a black spiced rum with a “sweet-to-heat” finish.

Not resting on its laurels, the Parrot Bay range, which already includes Parrot Bay Pineapple, Parrot Bay Coconut and Parrot Bay Mango, added a fourth with the launch of Parrot Bay Passion Fruit. “Its introduction will fill consumers’ growing demand for increased versatility in cocktail options,” said Hernando Ruiz-Jimenez, vice president and national brand group director.

Diageo’s Myers’s Original Jamaican Rum is comprised of a blend of nine different rums that are each aged up to four years in white oak barrels. The range also includes Myers’s Platinum Jamaican Rum, a clear, lighter version of the famed original.

Bacardi has also introduced Island Breeze, a line of rum-based, low-calorie spirits in three flavors.

Sitting alone in the third spot is Malibu Caribbean Rum, which after 20 years continues to be the best-selling coconut-flavored rum in the U.S. Its sales surged 25% in 2004 to 1.3 million cases. Following the successful introduction of Malibu Mango and Malibu Pineapple Caribbean Rums, the brand has expanded its franchise with this year’s rollout of Malibu Passion Fruit Rum.

Imported by Jim Beam, Ronrico Puerto Rican Rums is the fifth best-selling brand. Made at the Serrallès Distillery, the popular range includes a white and gold version, as well as three flavors, Vanilla, Citrus and Pineapple Coconut. “Ronrico appeals to a wide demographic because of its high quality, great taste, outstanding value and varied offerings,” said brand director Carl Larsen.

Cruzan Rum holds down the sixth spot with annual sales of 435,000 cases, an increase in 2004 of 14.5%. Among its all-star lineup of Virgin Island rum is Cruzan Black Strap, a blend of medium- to heavy-bodied aged rums that is barrel-aged after blending. The rum has so many layers of refined flavors that it drinks a bit like an alembic brandy. Cruzan Single Barrel Estate is a limited production, handcrafted spirit made from a blend of triple-distilled rums. The constituent rums are aged up to twelve years in oak bourbon barrels and recasked for secondary aging.

Malibu Passion Fruit is the latest addition to the Malibu line of flavored rums.

Cruzan is another pioneer of the flavored rum segment. Made in St. Croix, the 55-proof rums are triple-distilled and aged in oak bourbon barrels between two and three years, after which, they’re filtered and natural flavorings are added. The distillery’s flavor portfolio has grown to eight with the 2004 additions of Cruzan Raspberry Rum and Cruzan Mango Rum. [New to Cruzan’s repertoire is a line of 30-proof fruit-based liqueurs called Shakka, a Hawaiian word meaning “How’s it going?” Created with bartenders in mind, the highly mixable liqueurs come in three flavors — grape, kiwi and apple — and carry a suggested retail price of $19.95.]

Another brand that also has risen in popularity along with its flavors is Whaler’s, from Heaven Hill Distilleries. Sales of these classic Hawaiian spirits continue to grow along with the category. Whaler’s Original Vanille is a dark, aromatic rum infused with natural vanilla flavors. The Whaler’s line also includes Killer Coconut, Pineapple Paradise and Big Island Banana.

Sales of Mount Gay continued climbing in 2004, increasing by 3.8% to 190,000 cases. Imported by the newly named Remy Cointreau USA, Mount Gay is the oldest and most recognized brand of the Barbadian rums. The prestigious line includes best-selling Mount Gay Eclipse, Special Reserve and Mount Gay Extra Old, a blend of the oldest, most prized rums in the Mount Gay reserves.

Whaler’s Original Rum has also used flavored line extensions to help grow sales.

“I believe consumers care increasingly more about the rum in their glass,” said Nicolas Guillant, national brand manager for Mount Gay. “There is still a lot of education to be done, but we are moving towards creating a far better understanding of rum. Contrary to vodkas, rums are unique and one can perceive the differences easily. We believe consumers can taste the quality that goes in every one of our bottles.”

In 2004, the distillery launched its first flavors with Mount Gay Vanilla and Mount Gay Mango. Both of the 70-proof blend of Mount Gay Eclipse rum and natural flavors — Madagascar vanilla and Mexican mangos.

Appleton Estate Jamaica Rum had a banner year in 2004, increasing sales 18% up to 144,000 cases. Imported by Brown-Forman, the distillery’s flagship is the altogether luxurious Appleton Estate 21-Year Old, a blend of pot-distilled and continuous-distilled Jamaican rum aged in American white oak barrels for a minimum of 21 years.

“I believe that the majority of consumers are in the initial discovery phase when it comes to añejo rums,” said Chuck Shive, brand manager for Appleton Estate Jamaica Rum. “They’re discovering that ‘sipping’ rums are equal in quality with other premium spirits and that aged rums make fabulous cocktails and drinks.”

One of the leaders in flavored rums, Cruzan’s latest version is this Raspberry Rum.

The Appleton Estate range includes popular Appleton Estate V/X, Appleton Estate Extra, and new to the U.S., Appleton White Jamaica Rum, an aged rum slowly filtered to remove all trace of color.

For its part, Gosling’s will celebrate its 200th anniversary next year. Its flagship brand, Gosling’s Black Seal Rum, a dark rum aged and blended in Bermuda according to the secret family recipe, actually dates to 1860, and it has become the basic ingredient for famous Dark ‘n Stormy cocktail, made with ginger beer.

This year, the company introduced its first new product in more than a century, Gosling’s Gold. The 80-proof product ($17.99 suggested retail) combines rums from both pot stills and continuous stills, with a smooth and rich taste. It can be served neat or mixed in fruit-based cocktails.

Available across the U.S., Gosling’s has launched a significant marketing campaign to educate American consumers about the brand. A new company has been formed, based in New England, to spearhead the marketing effort in the U.S. Called Gosling-Castle Brands, its president and ceo is E. Malcolm B. Gosling, whose family has run the company for seven generations.

OTHER NEW AND NOTEWORTHY BRANDS

Rum is a global phenomenon. While most spirits are associated with a small handful of originating countries, rum is handcrafted across a wide range of latitudes. The following is a selection of new and noteworthy rums not mentioned above.

* 10 Cane Rum (Imported by Moet Hennessy USA). From Trinidad, this superpremium rum distilled from the first pressing of the cane grown in rich, volcanic soil. The brand exudes elegance. It’s crafted in copper alembic stills and aged in small French oak barrels for six months. The introduction of 10 Cane Rum is glad tidings for the growing legions of people who appreciate ultra-fine silver rums.

* Angostura (Imported by Angostura USA). A line of premium Trinidadian rums made from blends of molasses-based, continuous-distilled rums and aged in charred, American oak barrels. Its top marks are 8-year-old Angostura 1919 and Angostura 1824 Limited Reserve, which is aged for 12 years and then recasked.

* B.R.N.I.R. (Castle Brands of New York). Short for British Royal Navy Imperial Rum, it is likely the rarest, most exclusive rum available in the U.S. From 1655 to 1970, this was the rum doled out to sailors in Her Majesty’s Navy. Since 1970, this blend of pure pot still rums from Jamaica and Guyana has rested in vast underground warehouses in England. It is imported in wicker-encased demijohns.

* Brugal Añejo (Shaw-Ross). While the entire line is finding success in the U.S., it’s the three-year-old Brugal Añejo that’s garnering critical acclaim. Made in the Dominican Republic, the rum has a long lasting finish and a modest price tag.

* Charbay Rum (Domaine Charbay). Created at family-owned Domaine Charbay in St. Helena, CA, this superpremium rum is triple-distilled in an alembic Charentais pot still from a proprietary blend of Hawaiian and Caribbean sugar cane syrup. The producer also markets Charbay Tahitian Vanilla Rum, which is infused with Tahitian vanilla beans. Both are priced at $38 per 750 ml.

* Doorley’s X. O. (Spirits of Hartford). A superpremium Barbadian rum produced by R. L. Seale & Company made from a blend of molasses-based, barrel-aged spirits and finished with a second maturation in sherry oak casks.

* English Harbour Extra Old Rum (Antigua Distillery Ltd.). An elegant spirit from Antigua comprised of a blend of bourbon-barrel aged rums up to 21 years old.

* Flor de Caña Centenario (Shaw-Ross). Made in Nicaragua from a blend of molasses-based, continuous-distilled rums, Centenario is a sublime spirit aged in small oak barrels for no less than 21 years.

Leading Brands of Rum

(Thousands of 9-Liter Cases)

* Gosling’s Family Reserve Rum (Castle Brands of New York). Crafted at Bermuda’s oldest surviving business, Gosling’s Family Reserve Rum is made from the same blend of rums as the famed Black Seal, but aged considerably longer in oak. The result is a rich and complex 80 proof rum ($70 suggested retail).

* Grand Havana (Grand Havana Rum Corp. of Miami). Now made on Grenada, Grand Havana Rum is a Cuban-styled spirit double-distilled in copper pot stills and matured in sherry casks for up to seven years.

Gosling’s Black Seal Rum is being presented in this co-pack with Bermuda Ginger beer, which makes the renowned Dark ‘n Stormy drink.

* Inner Circle Rums (Spirits of Hartford) — These classic rums date to 1873 and are pot-distilled from sugar cane grown in Fiji and Australia. The range includes an 80 proof, 90 proof, 115 proof and a 151 overproof.

* Ron Matusalem Gran Reserva (Skyy Spirits). Gran Reserva is solera aged approximately 15 years and comprised of rums between 8- and 32-years old. These barrel-aged rums are produced by several West Indies distilleries.

* Montecristo (Side Bar Spirits). The brand is made in Guatemala from a premium blend of continuous-distilled and pot-distilled rums. The constituent elements are further aged in American ex-bourbon barrels between 12- and 23-years.

* Oronoco (Diageo). This handcrafted superpremium from Brazil’s rainforest is triple-distilled from fresh cane juice and blended with well-aged Venezuelan rums.

* Pampero Anniversario (Diageo). This highly acclaimed, special reserve rum comes from Venezuela and is a super-premium blend of pot still and continuous still rums aged in oak barrels a minimum of eight years. It has an entrancing color that is a sight to behold.

* Prichard’s Fine Rum (Prichard’s). Made in Kelso, TN, Prichard’s is the closest representation of a traditional American rum that exists. It’s made from sugar cane molasses from Louisiana, spring water and five times distilled in copper pot stills. To ensure smoothness it’s aged in small American white oak barrels. The distillery’s range also includes Prichard’s Crystal Rum (80 proof), Prichard’s Cranberry Rum (70 proof) and Sweet Georgia Belle, a savory peach and mango rum-based liqueur (70 proof).

Made in Trinidad, the superpremium 10 Cane Rum was recently introduced by Moet Hennessy USA.

* Pyrat XO Reserve (Patrón Spirits). Made on the island of Anguilla, Pyrat XO Reserve is a blend of pot still rums matured in French oak according to the Solera aging system. The rums in the blend have a range in age from 8-40 years.

* Rhum Barbancourt Estate du Domaine (Crillion Importers). — This sophisticated rhum agricole is double-distilled in Haiti from fresh cane juice and aged a minimum of 15 years in French oak barrels. The extended aging has a profound affect on the rhum.

* Rhum Clément (Clément USA). Made since 1887 and once again available in the U.S., estate-bottled Rhum Clément is one of the preeminent rhum agricoles, a traditional style of rum in which fresh cane juice is distilled, rather than molasses. The range includes Clément Première Canne, an ultra-premium silver rhum; Clément Créole Shrubb, an 80-proof liqueur made from silver and aged rhums and orange peels; and Clément V.S.O.P. Rhum, an exemplary barrel-aged rhum.

* Sea Wynde British Royal Navy Rum (Castle Brands). Sea Wynde is an ultra-premium rum made from a blend of pot still rums from Jamaica and Guyana. The rums were aged in oak casks from five to eleven years old.

* Starr African Rum (Starr African Rum LLC of Beverly Hills). Distilled from sugar cane grown on the African island of Mauritius, the column-distilled rum is light-bodied, aromatic and brilliantly flavored. It’s marketed in an attention-grabbing red pyramid-shaped bottle.

* Zaya Gran Reserva (Wilson Daniels). A masterful superpremium made in Guatemala by La Nacional. The gran reserva rum is double-distilled in copper pot stills and aged in oak barrels for 12 years. *

70 Years of Industry Leadership

1935-2005

The Repeal of Prohibition had been in effect for just over a year when a publication called Liquor Store & Dispenser debuted in beverage alcohol outlets across the U.S. Its purpose was to provide a service to the retail trade by addressing a wide range of issues critical to the business of selling beverage alcohol product. Indeed, the editorial in the January 1935 issue was titled, “Successful Merchandising,” an area of focus that is no less important to retailers today.

In the past 70 years, the magazine has gone through a number of evolutionary steps, as has the industry it covers. By the 1950s, the magazine was simply called Liquor Store, a title that remained until the late 1980s. By then, it was obvious that the American consumer had changed and so had the beverage alcohol retailer, who, unless prohibited by state law, had expanded his product selection beyond wine, beer and spirits. With that in mind, the magazine’s name was changed to Beverage Dynamics, primarily to reflect the increasingly “dynamic” nature of the beverage alcohol industry.

Throughout the 1990s, we increased our distribution to channels beyond traditional wine and spirits shops, to supermarket chains, convenience and drug outlets and eventually to mass merchandisers, keeping abreast of the retail changes that continue to affect the beverage alcohol industry today. At the same time, we’ve maintained our focus on the independent beverage alcohol operation, whether single store or chain, and evolved with them. For example, for many of our readers, the merchandising of beverage alcohol and foods have become increasingly important, as have the synergies of various categories of non-alcohol beverages, and we’ve increased coverage in those areas to keep up with the changes. Even more importantly, we’ve tried to keep our readers apprised of the latest changes in retail technology, with the ascendancy of the Internet and our computerized world.

Through it all, our mission has remained the same: to serve beverage alcohol retailers by providing them with timely, incisive coverage of their industry.

What follows, then, is a 70-year retrospective of the beverage alcohol industry as presented in the pages of Beverage Dynamics and its earlier incarnations over the past seven decades.

THE ANNUAL Beverage Dynamics
ADVERTISING & PROMOTION AWARDS
2005

The Beverage Dynamics Advertising & Promotion Awards competition is designed to recognize and honor excellence and creativity in advertising, promotion, merchandising and packaging for the beverage industry. Also included are materials designed for restaurant and bar merchandising and promotion. Entries are judged for creativity, effectiveness as a sales communication tool and production quality. All winning entries will be featured and credited in Beverage Dynamics magazine. Please note the general rules and specific preparation instructions for each category.

GENERAL RULES

What Is Eligible

• Any original material appropriate to the categories defined below, introduced to the market between April 2004 and May 2005.

How to Enter

• Prepare entries as specified under each category heading. Photocopies of entry form
  are permitted. Fill out entry form for each entry, submit in duplicate (one copy attached
  to the back of the actual entry; the second attached to the entry fee check). If more
  than five entries are being submitted, please provide a manifest list to ensure that all
  items are accounted for. All entries become the property of Beverage Dynamics.

Recognition

• Entry forms will be used for award certificates and publication of winners in Beverage Dynamics. Entrant is responsible for supplying full and accurate information. Promotion/advertising/graphic agencies submitting materials on behalf of clients are responsible for notifying client of participation in this program.

Entry Fee

• The entry fee is $175 per entry and is non-refundable. Check must accompany entries. (For multiple entries submit one check, attach all duplicate entry forms.) Make check payable to Adams Beverage Group.

Where to Send Entries

• All entries must be received at the editorial offices of Beverage Dynamics,
  17 High St., 2nd Floor, Norwalk, CT 06851

Deadline

• 5 p.m., Wednesday, July 22, 2005.

Judging and Awards

• Entries will be judged on the following criteria: creativity, effectiveness as a sales
  communications tool and production values. Winners in each category will receive
  award certificates, and winning entries will appear in Beverage Dynamics.

More Information

• If you have any questions about the Advertising & Promotion Awards, call Richard Brandes, 212-353-3832.

Categories, Instructions and Definitions

Print Advertising (Categories #1-10)

Submit actual print ads, mounted on black display board with a minimum 1-inch border on all sides. Attach each copy of the entry form to back of the board. For campaign, hinge vertical sides together with black tape (“accordion” style, not “book” style.) Bound supplements (for category #8) may be placed in a plastic sleeve, then the sleeve mounted. All print entries must be accompanied by a high-resolution (300 dpi, at least 2″ X 3″) jpeg image of each entry on CD. Companies submitting more than one entry in categories 1-10 may gang all images on one CD. Please clearly label each image (category, subject) on the CD.

1. Print Ad-Full Page, Consumer

• Individual, full-page advertisement appearing in any consumer publication.

2. Print Ad-Full Page, Trade

• Individual, full-page advertisement, appearing in any trade publication.

3. Print Ad-Campaign, Consumer

• Three or more full-page ads for the same product/brand with a related theme, appearing in any consumer publication.

4. Print Campaign-Full Page, Trade

• Three or more full-page ads for the same product/brand with a related theme, appearing in any trade publication.

5. Print Ad-Small Space

• Individual, fractional ad (less than a full page), appearing in any publication.

6. Print Ad-Small Space, Campaign

• Three or more fractional ads for the same product/brand with a related theme.

7. Holiday or Special Ad

• Advertisement with a specific holiday or special promotional theme, appearing in any publication.

8. Special Supplement or Insert

• An advertising supplement or insert, appearing in any publication.

9. New Product Ad

• Individual advertisement launching a new product, appearing in any publication.

10. Corporate Image Ad

• Advertisement aimed at enhancing/highlighting the overall image of a company, appearing in any publication.

Television/Video (Categories #11-13)

Submit television and video entries on VHS (1/2-inch) video cassettes only. Spot and campaign entries must be on separate cassettes. Label each cassette clearly (brand, title, # of spots in campaign). Provide a CD with clearly labeled jpeg images from spot/video for publication.

11. Individual Television Commercial (any length).

12. TV Campaign

• Series of three commercials for the same product/brand with a related theme.

13. Special Video

• Film or video used for promotional, educational and other related purposes.

Radio (Categories #14, #15)

Submit radio entries on standard audiocassette. Campaign and spot entries must be on separate
cassettes. Each cassette must be labeled clearly (brand, title, number of spots in campaign).

14. Radio Spot

• Individual radio commercial, any length.

15. Radio Campaign

• Series of three commercials for the same product/brand with a related theme.

Outdoor Transit (Categories #16, #17)

Submit outdoor/transit advertisements on CD. Include clearly labeled jpeg of each entry, DO NOT submit actual pieces.

16. Outdoor or Transit Ad

• A single billboard, poster, bus shelter or other outdoor/transit ad.

17. Outdoor/Transit Campaign

• A series of three or more outdoor/transit ads for the same product/brand with a related theme, or a group of ads, designed to be displayed together with a related theme.

Product Packaging (Categories #18-23)

All packaging entries must be submitted on CDs. Please clearly label jpeg of each entry (category,
subject). DO NOT submit actual packages, bottles or labels. For Redesign submit clearly labeled “before” and “after” images.

18. Best All-Around Packaging

• Do not include new product packaging (see #19), redesigned label (#20) or value-added packaging (see #21-23). All other products are eligible.

19. New Product Packaging

• Products introduced after January 2002. Line extensions (new flavors, varietals, etc.) may be entered.

20. Redesigned Label/Packaging

• Entry must include separate, clearly labeled “before” and “after” versions.

21. Co-packs

• A single package including two separate food/beverage/snack brands.

22. Gift Carton/Gift Tin

23. Gift Sets/Gift Packs

In-Store Displays (Categories #24-33)

Display entries must be submitted on CDs with jpegs of entries clearly labeled. DO NOT submit actual display pieces. For motion display, include a brief written description of motion.

24. Shelf Talker/Wobbler

25. Bottle Necker/Neck Hanger

26. Banner/Streamer

27. Dangler/Mobile

28. Case Card

• Shown with or without product display.

29. Take One/Sweepstakes Case Card

30. Motion Display

31. Floor Bin or Rack

32. Electronic Signage/Displays

33. Multi-Case Floor Displays

Collateral Materials (Categories #34-44)

Submit all collateral materials on CDs with jpegs of entries clearly labeled. For Sales Brochures (#35), Recipe Books (#36) Drink Menus (#40) and Table Tents (#41), please also submit a sample of the printed piece; mounting is not necessary. 34. Poster

35. Sales Brochure/Sell Sheet

36. Recipe Book

Premium Items

An item intended as a value-added premium to consumer, either given away with purchase or offered for purchase by mail.

37. Branded Wearables

38. Promotional Glassware

39. Other Premium Items (from inflatables to humidors)

On-Premise (Categories #40-44)

These categories focus on suppliers efforts in on-premise establishments.

40. Drink Menus

• Send 35mm slide plus menu.

41. Tabletent

• Free-standing card for on-premise tabletop display. Submit drink menu in above category. Please send clearly labeled jpeg of entry on CD plus piece itself.

42. On-Premise Signage

• Includes neon, banners, mirrors, etc. Please send CD with jpeg of entry.

43. Backbar Riser or Glorifier

• Free-standing bottle display piece (submit only jpeg of entry on CD).

44. Tap Handles

• Send only jpeg of entry on CD.

Direct-Mail Promotions

For Direct Mail entries, submit one sample of the actual mailing and a CD with an image representative of the campaign theme.

45. Single Piece/Multi-Piece

• Any mailing consisting of one or more elements.

Public Relations (Categories #46-48)

Compile a comprehensive overview of the event/campaign including press releases, press clips, photos, a summary of the objective and any other relevant materials. Please also include at least one jpeg image from entry on CD, representative of the campaign theme, for publication. For Press Kit, please submit one sample and a CD with jpeg of entry.

46. PR Single Event

• Any one-time public relations, community affair or media event.

47. PR Campaign

• Any two or more events, for the same brand, with the same theme and objective.

48. Press Kit

• Containing new releases, background information,
  photographs, etc., that was issued to the news media.

New Media (Categories #49-51)
Submit materials for these categories as described below.

49. Web Site

• Include the site’s URL (address) on the entry form and submit jpeg of entries on a CD.

50. Web Banner Advertisement

• An advertising banner, with or without link designed to appear on another company’s site.Include the site’s URL (address) on the entry form and submit a CD with jpeg of entries.

51. CD-ROM

• Submit one sample of the actual CD, and any relevant collateral materials.

CLICK HERE FOR PDF OF
2005 Awards Entry Form