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Flavored Whiskies Propel Top Spirits Marketers’ Growth, But Surge Is Slowing

September 9, 2016

The world’s leading spirits marketers are finding it challenging to achieve significant progress as key categories like vodka, rum, Scotch whisky and liqueurs are showing little if any growth. The top 10 spirits marketers experienced aggregate volume growth of just 0.9% in 2015, according to Impact Databank.

However, there are two notable growth avenues that are paying big dividends for several of spirits’ top players—and only one of them is in the premium segment: flavored whiskies (the other, Indian whisky, is mostly sub-premium).

Flavored whisk(e)y volume has more than doubled over the past two years, and is on pace to eclipse the 10-million-case mark this year. While Sazerac’s Fireball is largely responsible for the segment’s stunning success—the Canadian whisky-infused brand accounts for nearly half of total flavored whisk(e)y sales—other leading entries have become big sellers in their own right. Flavored whisk(e)y has been a key catalyst in the Bourbon boom, expanding the appeal of storied brand franchises such as Jack Daniel’s, Jim Beam, Evan Williams and Wild Turkey. The category has also reenergized leading Canadian whiskies Crown Royal and Black Velvet. And while the category is very much a U.S. phenomenon, some of its leading brands—most notably Jack Daniel’s Tennessee Honey (which exported around 800,000 cases in 2015)—have found success overseas.

Flavored whisk(e)y is dominated by the world’s leading spirits marketers. Sazerac, Brown-Forman, Diageo and Beam Suntory collectively control more than 70% of category volume, and all four marketers enjoyed solid double-digit growth in flavored whisk(e)y in 2015. However, it appears as though the category is cooling off in 2016. Fireball, which pushed past the 4-million-case threshold on 11% growth last year, was up by 8% in control states in the first half of 2016 and by 6% in IRI channels in the 24 weeks ending June 12. Jack Daniel’s Tennessee Honey and Tennessee Fire, which together sold around 2 million cases worldwide in 2015 on growth of more than 30%—were up by 5% in IRI in that same 24-week period. Crown Royal’s flavored whisk(e)y business, which soared past the million-case mark on the strength of its Regal Apple extension, grew by more than 300% in IRI channels in 2015. In the 24 weeks ending June 12, though, that figure had fallen to 34%. Regal Apple appears to be ceding share to Jim Beam Apple, which is carrying the Beam flavor franchise now that other extensions like Red Stag, Jim Beam Maple, Kentucky Fire and Jim Beam Honey have seen growth slow. In fact, Jim Beam Apple has fared so well of late that it propelled the Beam flavor range to aggregate growth of 50% in control states in the first five months of the year, according to NABCA.

Still, whereas in the past few years it appeared as though flavored whisk(e)y was essentially thriving across the board, the leading players are increasingly taking share from each other, rather than from other categories.

With Bourbon experiencing dynamic growth in the U.K., Germany, France and Japan—and remaining a stalwart in Australia—there appears to be considerable upside for flavored whisk(e)y in these markets and others. To date, most of the leading players haven’t made much of an overseas push, but that will likely change in the near future.

For the full report on the world’s top 10 spirits marketers, see the September 1&15 issue of Impact—Peter Zwiebach

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