No longer viewed as an old man's drink, whiskey is benefiting as consumers explore new flavors and cocktails
Whiskey sales are surging as legendary drinks like the Old Fashioned and the Manhattan make a comeback, and bartenders concoct new combinations like the Kentucky Margarita and other bourbon-based cocktails.
Vodka remains the spirits category leader with $758.2 million in dollar sales at food stores for the 52 weeks ending March 7, a 6.8% rise from the same period the previous year, according to the Nielsen Co.
But whiskey is showing strong growth, driven largely by Irish whiskey, whose dollar sales at food stores with more than $2 million in sales were $19.7 million for the 52 weeks ending March 7, a whopping 27.4% increase from the previous year.
Sales of other whiskeys also posted growth, albeit on a smaller level. Canadian whiskey, for instance, generated $191.4 million, a 4.7% increase, while bourbon stood at $228.4 million, a 5.5% rise.
It's all part of the movement toward brown spirits, which include all whiskeys (bourbon/straight, blends, Canadian, scotch, Irish) as well as cognac and brandy. White spirits refer to vodka, gin, tequila and rum.
“There's been a lot more movement in bourbon and whiskey,” said Nick Buys, grocery director of Orchard Market, a two-store retailer in Spring Lake, Mich.
U.S. sales growth for whiskey and brown spirits outperformed the growth rate of the overall spirits category in 2008, according to Nielsen. Overall whiskey dollar sales rose 5% to $626 million in food stores with more than $2 million in sales (excluding supercenters) for the 52 weeks ending March 7, according to Nielsen. By comparison, total spirits generated $2.7 billion, a 3.9% increase.
The whiskey trend is going global with sales on the rise in 27 other countries, including Venezuela, Russia, the Netherlands, Poland, Mexico, Turkey and Bulgaria.
“Brown spirits have had a renaissance,” said Nick Lake, Nielsen's vice president of beverage alcohol.
One reason brown spirits have taken off in the last 12 to 14 months is that spirits makers have modernized their brands, according to Lake. Such efforts are resonating with consumers, he said.
Take the Canadian Club brand of Canadian whiskey. It recently launched a new print ad campaign with the tag line, “Damn right your dad drank it.”
One ad shows a 30-something man about to go fishing with friends, along with the copy, “Your dad was not a metrosexual. He didn't do pilates, moisturize or drink pink cocktails. Your dad drank whiskey cocktails.”
And Jim Bean has introduced Ri 1 (pronounced Rye One), a hip brand of ultra-premium rye whiskey.
The trend is having a positive impact on the distilled spirits industry as a whole. From about 1980 to 1996, the industry was in a state of continuous decline, thanks in part to two big tax increases in 1985 and 1991 and beer taking away market share.
From 1980 to 1996, the industry lost about one-third of its volume, according to David Ozgo, chief economist for the Distilled Spirits Council of the United States, Washington.
Almost that entire decline was in the whiskey segment, Ozgo said.
“Whiskey lagged considerably behind white goods,” he said.
That changed several years ago when sales started to pick up in single-malt scotches, Irish whiskey, high-end bourbons and Canadian whiskey.
Ozgo attributes the turnaround to several factors, including more experimentation with mixed drinks.
“Whiskey is a flavor profile that to a large extent has not been completely explored by today's consumer,” he said.
Likewise, bar “mixologists” are using whiskey in recipes for new premium drinks like the Kentucky Margarita, a combination of bourbon, triple sec and sour mix served in a salt-rimmed martini glass.
Along with tasting new drinks, cocktail drinkers are starting to request old-fashioned drinks like the Old Fashioned and the Manhattan.
“The consumer palate is fickle,” Ozgo said. “They like to explore, and whiskey was the next logical frontier.”
The growth trend in whiskey is helping certain subsegments take off. That's the case with rye, which is getting more interest now than it did since the end of Prohibition, Ozgo said.
Rye generated $1.9 million in food stores with more than $2 million in sales (excluding supermarkets) for the 52 weeks ending March 7, a 23% increase from the year earlier.
“A niche product like rye is taking hold again,” he said.
Vodka is the category leader at Orchard Market, but bourbon and other whiskeys are picking up, said Buys. Strong performers include Jack Daniels and Maker's Mark.
“Maker's Mark bourbon is on the high end and it's still doing well,” said Buys.
Another popular brand is Wild Turkey's American Honey Liqueur, whose sales started to rise at Orchard Market last year.
The liqueur is a blend of honey and Wild Turkey Bourbon Whiskey.
Jerry Post, beer and wine manager for Dorothy Lane Market's Washington Square store in Dayton, Ohio, attributes the growing popularity of brown spirits to their unique flavor and positioning in the market.
“People feel they're more sophisticated,” he said.
It's all part of a premiumization trend occurring in the spirits industry as consumers become more discerning about the types of alcohol they drink.
The economy is also playing a role. As consumers go out less, they're entertaining more at home, and view high-end spirits as an affordable luxury, said Nielsen's Lake.
While cross-merchandising is common for wine, it's also started to show up more in the spirits aisle. Supervalu's Jewel-Osco banner, for instance, ran a promotion last month that awarded a free 12” Tombstone pizza (a $3.67 value) with purchase of a 750 ml bottled of Jim Beam bourbon for $14.99.
WHISKEY A GO-GO
Irish and Rye whiskey are posting particularly strong growth
|WHISKEY CATEGORY||DOLLAR SALES (IN MILLIONS)||% CHANGE|
|SOURCE: the Nielsen Co., based on dollar sales in food stores with more than $2 million in sales (excluding supercenters) for 52 weeks ending March 7, 2009, vs. same period in 2008|
THAT'S THE SPIRIT
After years of declining new product introductions, spirits experienced the most new offerings of all beverage alcohol categories last year, followed closely by beer.
|NUMBER OF BRANDS LAUNCHED:||2002||2003||2004||2005||2006||2007||2008|
|Flavored Malt Beverages||19||13||9||8||11||8||5|
|SOURCE: the Nielsen Co., based on food store sales|