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Top Liqueur Brands Try New Strategies to Restore Growth

December 31, 2014

The U.S. liqueur market has been on an impressive upswing of late, advancing by more than 5% in 2013 and enjoying similar results this year. However, the vast majority of that expansion is coming from just three brands—Fireball, Jack Daniel’s Tennessee Honey and RumChata—and many of the category’s longtime leaders are languishing. In fact, every top 10 liqueur brand except those three was either flat or down in 2013.

Many of these struggling brands are attempting turnarounds by unveiling new initiatives on the packaging, product and marketing fronts. Along with Diageo’s recent efforts on Baileys, which SND reported on December 23, brands like Southern Comfort, Kahlúa and Jägermeister are shaking things up in an effort to resume their respective growth tracks.

Despite whiskey-based liqueurs’ impressive success, Brown-Forman has encountered sustained difficulties with Southern Comfort. The brand was down by 5.2% to 1.2 million cases in the U.S. last year after a brief return to growth in 2012 following years of decline. In an effort to remain relevant in a competitive market, in September Brown-Forman launched the seasonal extension Gingerbread Spice (15% abv/$11.99). Earlier in the year, Southern Comfort also ran a two-month TV spot titled “Dance” in its ongoing “Whatever’s Comfortable” campaign.

Trying to move away from the perception of being simply a sweet shot and reverse years of declining volume, Pernod Ricard has been busy on the marketing front with Kahlúa. The rum and coffee liqueur fell off the top five last year amid Fireball’s ascent, as it was down 0.5% to 935,000 cases. As more attention is given to a burgeoning cocktail culture in major markets, Pernod Ricard is stepping up to establish Kahlúa’s presence in that conversation. “Much of our current on-premise business is driven by national accounts, specifically the casual dining sub-channel,” says Brian Mequet, Pernod Ricard USA’s vice president of marketing, liqueurs and rum. “We’re doing more recruiting in new important channels such as neighborhood bars.” For the summer months, Pernod debuted the cocktail-inspired “Kahlúa Summer Shake-Up” campaign that included digital and interactive experiences with themed frozen and iced cocktails as well as ideas for summer entertaining. More recently, Kahlúa was featured in a short film starring actor Jeff Bridges titled “The White Russian,” referencing the popular 1998 film “The Big Lebowski,” and so far the short has received more than 2 million views. Next March, Kahlúa will get its first spring seasonal, Kahlúa Salted Caramel.

Another notable brand that has struggled in recent years within the shot segment is Jägermeister. In the U.S., where it’s handled by Sidney Frank Importing Company, the German import declined by 10.4% to 2.2 million cases last year and has lost around 800,000 cases in yearly sales over the past half-decade. Jägermeister does roughly 40% of its business in the on-premise. However, a proliferation of flavored vodkas and whiskies has pressured the brand. “Consumers have significantly more shot options today than five years ago,” says Marcus Thieme, Mast-Jägermeister’s regional director for North America. “But the shot occasion is extremely relevant to our target group of LDA-to-30 Millennials.” Sidney Frank appointed Deutsch NY as its lead integrated agency for Jägermeister in February, tasking it with leading a new generation of consumers to a reappraisal of the brand. Last fall, its first seasonal offering, Jägermeister Spice (25% abv), was rolled out to key markets—including the U.S., Germany and Hungary—to tap into new consumption occasions by encouraging consumers to enjoy the product neat at room temperature or mixed with cola.

Southern Comfort, Kahlúa and Jägermeister all have a lot of lost ground to make up, and it surely won’t be easy to do so in such a competitive environment. But they’re certainly doing all they can to try.

A full feature on the U.S. and global liqueurs markets appears in the December 1&15 issue of Impact Newsletter.

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