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As Bourbon Booms, Marketers Firm Prices And Look To Premiumize

November 25, 2013

While it’s easy to focus on volume gains in a category that’s added more than 5 million cases to its global total since 2005, the thriving Bourbon segment has been demonstrating even faster growth on the value side, with key players across the industry raising prices and releasing a wide array of trade-up options. According to Impact Databank, the Bourbon category rose 4.5% to 16.7 million cases in the U.S. last year, matching its global growth rate. In the 52 weeks through September 14, Nielsen data shows the segment up 11% by value in the U.S., significantly outpacing its 7% volume advance over the same period.

“There’s no doubt that Bourbon, and American whiskey in general, has always been viewed as underpriced compared to other whisk(e)y categories,” says Susan Wahl, senior brand manager for whiskies, Heaven Hill. “We and most of our competitors are starting to more aggressively take pricing, with consistent increases on existing SKUs and with premium-priced new entrants. The growing quality of Bourbon, its rising global popularity and critical acclaim, are softening some of those pricing beachheads.”

Like Heaven Hill, Brown-Forman says it intends to be an active participant in driving Bourbon pricing upward. “Price has been steadily increasing across American whiskey,” says Biba Konieczna, B-F’s group brand director, Bourbons and Canadian whiskies. “As leaders in the category, we aim to keep pace and are targeting for 2%-3% price increases during this fiscal year.”

“Accelerating organic demand and less reliance on discounting by established brands” are two key factors driving Bourbon’s overall premiumization trend, according to Andrew Floor, senior marketing director, dark spirits at Campari America. Floor also sees consumers consistently exploring more expensive whiskies as their understanding and appreciation of the category grows. “I believe American whiskey is still in its infancy in terms of category development, so I don’t see these volume or value trends slowing down dramatically for some time,” he adds.

Campari has been making inroads at Bourbon’s high end with its Wild Turkey Rare Breed and Russell’s Reserve entries, as well as its new rye/Bourbon hybrid Forgiven, retailing at $50 a 750-ml. Brown-Forman, meanwhile, is aiming higher yet with this month’s release of its Jack Daniel’s Sinatra Select ($165) in key U.S. markets. Sinatra Select was previously available in travel retail only.

Diageo has also been cultivating upmarket demand with its Bulleit 10 extension, launched earlier this year at $45, and its announcement in recent days that it would unveil two new ultra-premium Bourbon brands, Orphan Barrel and Blade & Bow, in 2014. “Premiumization continues to be a strong trend,” confirms Trish Mannion, senior brand manager, American whiskey, Diageo North America. “Where we see opportunities and where it make sense, we will look to take price.”

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