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Rye Whiskey Rising Fast, Spurred By Dynamic On-Trade Cocktail Culture

November 11, 2013

The U.S. whisk(e)y renaissance and vibrant cocktail culture have created ideal timing for rye whiskey’s serious return to the marketplace. The category, which never really recovered from Prohibition (1920-1933) and was relegated to near-oblivion as other whisk(e)y categories filled the void, is now back on track and making headway with support from some of the biggest U.S. whiskey producers. Rye whiskey is also benefiting from a cult status buzz via the launch of numerous limited-edition offerings. Rye whiskey grew 41% to 275,000 cases in 2012 from 195,000 cases in 2011, according to Impact Databank. This double-digit gain came on the heels of 56% growth in 2011 from 125,000 cases in 2010. Rye’s strong momentum has continued into 2013 with volume growth trending at about the same pace as 2012 and value growth accelerating even faster. Rye is benefiting from the familiarity and leveraging of popular Bourbon brand name extensions such as Jim Beam Rye, Knob Creek Rye, Wild Turkey Rye, Bulleit Rye and George Dickel Rye, as well as the rebirth of some historic brands.

Yvonne Briese, vice president, Diageo brand marketing, North American whiskies, notes that much of the category growth can be attributed to the on-premise trend of mixing pre-Prohibition drinks that traditionally use rye, such as the Manhattan, Old Fashioned and the original rye cocktail, the Sazerac. “The interest in mixology is one of the trends that have fueled the incredible growth the North American whiskey category has seen in recent years,” Briese says. “These classic cocktails were originally made with rye because the spicy notes offered a great complement to the rest of the drink.”

While rye has created a buzz in the on-premise as a cocktail component, it’s also gaining traction in the off-premise. “What has happened, not entirely unpredictably, is that more consumers that are trying rye on-premise, either in a cocktail or perhaps as part of a rye whiskey flight, are buying it at retail for home consumption,” observes Max Shapira, president of Heaven Hill Distilleries. “As more whiskey aficionados move between Bourbon and rye, they may want to try it neat or at least straight to appreciate the flavor nuances and to compare their favorite brands.”

In a manner similar to other spirits categories such as vodka, Scotch and Tequila, rye has also gained publicity from its appearance in television shows. “These last few years, we’ve seen a growing trend towards Americana where consumers are yearning for authentic, hand-crafted products,” says Chris Bauder, general manager, Whiskies at Beam Inc. “Pop culture phenomena like ‘Mad Men’ and ‘Boardwalk Empire’ are certainly helping to shine a spotlight on rye whiskey.”

For now, major distillers are investing in expanded operations and increasing rye production and aging capabilities as well as enhancing packaging and looking at line extensions. “We’re very bullish on the prospects for rye, both domestically and internationally, where we have really only begun to scratch the surface.” Shapira says. “We believe the best is yet to come.”

 

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