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Canadian Whisky Seeks Renaissance With Upscale And Small-Batch Brands

November 10, 2011

Canadian whisky passed a milestone in 2009 when its U.S. sales slipped below 15 million cases for the first time in many years. Last year, volumes fell by a further 2%, to 14.6 million cases, according to Impact Databank. Aiming to shake up the category, marketers have launched an array of new products over the past 18 months.

Diageo North America unveiled its Bourbon-like Crown Royal Black last year at the strategic retail price point of $30 a 750-ml. bottle, while also releasing its first flavored Canadian whisky, Seagram’s 7 Dark Honey ($18). Thus far, Crown Royal Black appears to be meeting expectations. “Black is a rich whisky with more body than the regular Crown Royal,” says Tom Pankratz, a manager at the four-store Happy Harry’s Bottle Shops chain, based in Grand Forks, North Dakota.

At Happy Harry’s, Crown Royal Black’s $30 retail price compares with $19 for regular Crown Royal. “Black’s sales have been strong, without pulling from the rest of the line,” says Pankratz. Crown Royal’s U.S. sales rose less than 1% last year to 4.15 million cases—far slower than earlier years of near-double digit growth.

Seeking some lift beyond Canadian Mist ($10 a 750-ml.), Brown-Forman unveiled Canadian Mist Black Diamond ($16) in August 2010. Now available in 17 states, Black Diamond features a higher rye content and Sherry finish.

More recently, Brown-Forman has unveiled Collingwood, which first launched in Florida, Texas, Kentucky and Louisiana, followed by Washington and Pennsylvania. Collingwood’s rye ratio is even higher than that of Black Diamond. The brand is packaged in a flask-shaped bottle and retails at $25. “We were planning to bottle Collingwood in 5,000-case increments, but we’ve now increased that to 20,000 cases at a time,” says Joe Murray, Brown-Forman’s brand director of Canadian whiskies.

Some marketers predict that flavored Canadian whiskies will become a hot item in coming years. Phillips Distilling Co. repackaged the spiced Revel Stoke Canadian whisky brand ($17) last year. At 45% ABV, Revel Stoke contains spices including vanilla, cinnamon, ginger and coriander. The brand sold 30,000 cases in 20 states last year and has since added 10 new markets.

With its other Canadian whisky label, Phillips Union ($20), Phillips also offers Cherry and Vanilla expressions. The company is now also readying Phillips Union Hot Stuff ($20), which will be flavored with cinnamon. President and CEO Dean Phillips predicts that other spicy variations will crop up. “We like to think we inspire others,” he says. “Our job is to crack open the door and hope the big guys will run through and pump up the entire category.”

Michael Cockram, senior global marketing director of Canadian whiskies and Scotch at Beam Inc., says his company is working on various fruit flavors in its labs. Cockram says the distiller has a flavor that it thinks will prosper in the market. “I can only say that it won’t be cherry, citrus or spice,” he says. “I can’t say much else. We’re studying how we will position the product—whether to sell it as a flavored expression under the Canadian Club brand, or take the Red Stag route and give it an entirely new name.”

Distillers are also releasing small batch creations. Corby Distilleries in Toronto, which markets Wiser’s Special Blend ($23) and Wiser’s Deluxe ($26) in select markets, has now introduced the rye-heavy Wiser’s Small Batch ($30), which is pot-stilled and aged in virgin oak barrels. And veteran independent player Kittling Ridge in Grimsby, Ontario, has won praise from critics and connoisseurs for its Forty Creek range of upscale Canadian whiskies.

One spiced creation from a smaller distiller is a brand called Spicebox, ($20). Produced in Quebec with notes of nutmeg and cinnamon, the brand is listed at major retailers like Binny’s and has been making headway in select U.S. markets.

The growth of garage-style distilleries in the U.S. over the past decade also has extended to Canada. A number of new micro-distillers are now active north of the border, including Still Waters Distillery in Toronto, Shelter Point Distillery in Vancouver, British Columbia and Pemberton Distillery in Whistler, British Columbia. Some aren’t even ready to sell whisky yet, because Canadian law requires that whisky be aged at least three years in barrel.

Most of this new product activity fills narrow niches and won’t offset shrinking sales on the bottom shelves, but marketers say it’s clearly pointing the category in the right direction.

 

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