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Mainstream Canadian Whisky Brands Struggle To Lift Pricing And Volume

December 8, 2014

Canadian whisky’s major players have added flavors and higher-end line extensions, but the category has still struggled, with U.S. sales volume merely flat last year at 14.57 million cases, after being flat in 2012 as well.

A whisky lover who’s been away for a decade or more would be surprised to find that Canadian whisky prices haven’t budged much. At Cardinal Warehouse Wine & Liquors in Chicago, recent ads featured a 1.75-liter bottle of Canadian Club at $15.88, with a $5 rebate lowering that price to $10.88. Cardinal was offering the same bottle size of Jameson Irish whiskey at $36 and Jim Beam Bourbon at $18.

Cardinal general manager Jeremy Brock can’t remember when Canadian Club was so cheap. “The rebates are important for selling Canadian brands,” he says. “The young people are drinking Bourbon or craft beer, and customers in their mid-30’s and older are more likely to be stepping up to Scotch.”

Canadian Club did manage a 1.7% increase to 1.2 million cases last year, and continues to innovate. A small batch Canadian Club Sherry Cask is now offered at $25 a 750-ml., while a 9-year-old Reserve ($20) and Classic 12 ($25) have updated their packaging. As for flavors, Canadian Club Dock No. 57 Blackberry retails at $16 a 750-ml. But the core Canadian Club is still driving 95% of all volume, says Claire Richards, Beam Suntory’s brand director of whiskies and Cognac.

Category leader Crown Royal, which saw its sales rise nearly 3% last year to 4.33 million cases, has received plenty of buzz this fall for its Monarch label, touted as a 75th anniversary blend recalling the brand’s beginnings as a gift to the visiting King George VI and Queen Elizabeth before World War II. Monarch retails at $75 a 750-ml.—a hefty premium to most of the Crown Royal line, which includes Black ($30), Maple Finished ($25), Reserve ($44) and XO ($50), aged in Cognac casks and released in December 2013.

For a time, Monarch may cap the line, since Diageo has plans to discontinue its ultra-premium Extra Rare ($175) in the face of shrinking stocks of old whisky. Many retailers say Monarch, with a more Bourbon-like mashbill and caramel overtones, is flying off the shelves. But Diageo intends for Monarch to be only a temporary release. “I’d be surprised if it’s still around a year from now,” says Yvonne Briese, Diageo’s vice president of marketing for whisky.

Still, Diageo isn’t standing pat. Earlier this fall, it released a new expression called Crown Royal Regal Apple, retailing at $25 a 750-ml. The new flavor became a priority after Diageo noticed that the core Crown Royal was often being served in a cocktail called the Washington Apple with equal amounts of DeKuyper Sour Apple Pucker Schnapps and cranberry juice. Briese is coy when asked about more flavors joining the line, saying only that “the possibilities are pretty tremendous.”

Constellation Brands-owned Black Velvet, whose sales jumped nearly 4% last year to pass 2 million cases, has cemented its position as the category’s No.-2 brand. Black Velvet benefits from its low price (about $10 a 750-ml.) and aggressive discounting, but its flavors seem to be delivering. Two years ago, the brand debuted its Toasted Caramel at $12.50, and followed last year with Cinnamon Rush at the same price. There’s also the competitively priced Black Velvet 8-year-old Reserve at $13.

At Brown-Forman, senior brand manager Pedro Berrueco is targeting a young audience in seeking to revitalize Canadian Mist, whose volume retreated more than 3% last year to 1.54 million cases. Canadian Mist’s U.S. sales have been falling since the mid-1980s when it peaked at 4.5 million cases. “My goal is to get our sales to be flat this year,” Berrueco says. “We want to stay above 1.5 million cases.”

So far, Berrueco hasn’t been willing to plumb the pricing depths, although Canadian Mist can retail as as low as $13 a 1.75-liter with the help of a $2 rebate. A year ago Brown-Forman bet that flavors would pull the brand up, but that hasn’t happened. The company is dropping its vanilla and cinnamon flavors while keeping peach and maple. There are no immediate plans to bring back Canadian Mist Black Diamond ($15 a 750-ml.), which was jettisoned a year ago. A separate upscale Canadian brand from Brown-Forman, Collingwood ($27 a 750-ml.), is performing “okay,” Berrueco adds.

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