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Premium Players Give Gin Much-Needed Boost

December 10, 2014

Gin has often taken a backseat to more prolific and innovation-driven categories like vodka and whisk(e)y, and by comparison, its outlook has remained much more mixed. However, like its rival categories, gin is experiencing strong premiumization trends that have seen brands like Bombay, Beefeater, Tanqueray, New Amsterdam and Hendrick’s outperform the overall market. Those five brands accounted for 18% of global gin volume in 2013, according to Impact Databank, and nearly all of the category’s growth.

The premium gin segment remains buoyed by recent classic cocktail trends and the category’s upscale, craft-inspired positioning. “In the last few years, we’re seeing increased growth in both value and volume as you move up the category,” says JC Iglesias, global brand director, English gins for Chivas Brothers. “So while value-priced gins saw declines and standard quality gins were flat, premium gin grew at just under 5% and the super-premium segment grew by over 20%.”

In 2013, the U.S. gin market fell 1.5% to 9.9 million cases. Only two of the top seven brands posted growth—Tanqueray and New Amsterdam. Seagram’s—the U.S. market’s largest gin brand at more than 2.3 million cases—continues to slide, as it fell by another 2.9% last year. Still, Pernod Ricard USA has invested heavily behind the brand, recently unveiling a full package revamp for both its core Seagram’s Extra Dry (retailing at roughly $12 a 750-ml.) and Distiller’s Reserve labels, and this year extending the packaging update to its Seagram’s Twisted flavored gin range. According to Pernod Ricard USA brand director Juli Falkoff, the Twisted lineup is gaining traction in the U.S, and last year grew by more than 5% to around 250,000 cases. This fall, Seagram’s extended the range with the addition of a new Melon Twisted gin, bringing its flavored stable to a total of seven entries.

Seagram’s portfoliomate Beefeater has also faced some challenges stateside, even as the super-premium brand aims to move further up the pricing ladder, taking cues from the U.S. market’s thriving craft spirits segment. Last year, Beefeater debuted its limited edition Burrough’s Reserve ($70)—a small-batch expression rested in oak barrels and intended to be served neat—in the U.S. But while the brand appeared to stage a U.S. comeback in 2012, rising 3.9%, Beefeater suffered a 2.8% setback to 515,000 cases in 2013.

Diageo’s Tanqueray ($20-$25), however, has fared slightly better at the high end, eking out a 1.1% gain in the U.S. last year. The market’s second-largest gin brand, Tanqueray has focused on upscale innovations in recent years, reintroducing its citrus-infused Malacca offshoot in 2013, and following up this year with the launch of a limited edition Old Tom gin.

Meanwhile, Bacardi Ltd.’s Bombay—which includes both the Original and higher-end Sapphire expressions—has held steady stateside, at roughly 1.17 million cases. Sapphire is successfully tapping the cocktail segment with its lemongrass- and peppercorn-infused Sapphire East spinoff, which, according to Valerie Brass, Bombay Sapphire’s global director of gin, “has been growing ahead of plan.”

Much of gin’s dynamism in the U.S. market has been driven by two brands—E.&J. Distillers’ New Amsterdam and William Grant & Sons’ Hendrick’s. Launched in 2007, New Amsterdam managed to reach the 100,000-case-mark in its first year on the market and since then, New Amsterdam has risen to become the U.S. gin market’s fourth-largest entrant, growing to 750,000 cases on a 2% increase last year. Meanwhile, Hendrick’s has risen consistently in recent years, surpassing the 200,000-case-mark on 20% growth in 2013. The brand has emerged as a favorite among bartenders and mixologists, and the U.S. market’s thriving cocktail culture has been key in boosting the brand. Though Hendrick’s remains focused on its sole flagship gin, the brand has played up its cocktail cachet in recent years with 2013’s launch of Quinetum, a limited edition, on-premise-only quinine cordial, and this year’s debut of Kanaracuni, a small-batch, trade-only gin made with a concentrate of Venezuela’s Scorpion Tail botanical.

“Premiumization is key, and gin is seeing a particularly high influx of a more ‘luxury’ liquid,” says Hendrick’s senior brand manager Kirsten Walpert. “We’ve found that this has made the younger, greener drinking crowd more open to gin, which we’re seeing compete in the premium white spirits space like never before.”

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