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Canadian Whisky Looks To Rise With Upscale Innovation

November 9, 2017

At first glance, the numbers don’t look pretty. Excepting its flavored expressions, Canadian whisky’s U.S. depletions have endured four straight years of decline, and Impact Databank projects that trend to continue this year. Since 2012, the core Canadian whisky category, excluding flavors, has lost more than 1.3 million cases, or about 9% its volume, with six of the top 10 brands declining in 2016.

Despite challenges raised by changing demographics and competition from other brown spirits, Canadian whisky has reason for optimism. In addition to getting growth from flavors, the category’s key players are courting new consumers with a widening array of connoisseur-level offerings—particularly rye whiskies.

Pernod Ricard and Beam Suntory are playing up the rye angle. Pernod Ricard recently revamped its J.P. Wiser’s Rye ($20), upping the rye content to 60%. Pernod is also active in Canadian whisky with its higher-end labels Lot 40 and Pike Creek, which retail at around the $30 mark. Beam Suntory meanwhile, last year unveiled a Canadian Club 100% Rye at $20.

Some key smaller players are also tapping the high end with rye. This summer, Deutsch Family Wine & Spirits entered the Canadian category with the acquisition of Masterson’s Rye (along with Bib & Tucker Bourbon) from 3 Badge Beverage Corp. The pot-distilled, 10-year-old Masterson’s Rye is packaged in individually numbered bottles and retails at $70. While the franchise is currently at less than 10,000 cases in the U.S. market, Deutsch Family CEO Peter Deutsch says Masterson’s has enough aged stock to “quickly expand the brand to national distribution.”

Meanwhile, the Pendleton brand ($25), owned by Oregon-based Hood River Distillers has expanded by about 40,000 cases over the past two years, and could make a run at the quarter-million-case level by year-end. Extensions like Pendleton Midnight and 1910 Rye are growing from a small base, and combine for about 22,000 cases. And last year, the franchise extended further with a 20-year-old offering, Director’s Reserve ($125).

Diageo, whose Crown Royal brand leads the category, is mounting a new push to make Crown Royal “the go-to status brand” for African-American consumers through its upscale XO offering. Crown Royal XO ($50), which debuted in 2014, is a blend of 50 different whiskies and is finished in Cognac casks. Crown Royal has helped lead the way in flavor innovation—Impact Databank projects its Regal Apple and Vanilla expressions to reach 1.3 million cases and 500,000 cases respectively this year.

Campari America’s category marketing director for whiskies, Mike Price, says consumers are migrating to more premium marques of the Forty Creek brand, which is now at about 65,000 cases. “Forty Creek Barrel Select ($21.99 a 750-ml.) is our flagship, but our Copper Pot Reserve ($26.99) and Confederation Oak Reserve ($64.99) expressions have developed a strong fan base,” Price notes.—Daniel Marsteller

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