Flavoured whiskey: Honey to the Bee?

In the early 16th century, adding honey to a flagon of hot water and whisky was seen as a way to banish lingering colds and flu but, sneezing and sniffles aside, producers the world over are starting to see the commercial benefits of adding a squeeze of honey to their whisky brands.

Jim Beam’s Honey Bourbon is one of a growing raft of flavoured whiskeys to hit the market

Flavoured whiskies were the fastest-growing spirits category in the US in the first quarter of 2012, rising 155% to 94,000 cases (Nielsen), thanks to the soaring success of a number of big brands which have released flavoured expressions during the past two years.

Jack Daniel’s Tennessee Honey launched in May 2011 and sold 320,000 cases in its first year on the market, while relative category stalwart Jim Beam’s Red Stag Black Cherry, released in June 2009, has seen growth rise 58% to 300,000 cases in the same period.

Campari’s Wild Turkey American Honey noted similar results, with volume increasing by 28%. Other smaller, but equally successful players have also seen their flavoured expressions gain pace in the past year, such as Evan Williams Honey Reserve and Cherry Reserve and Seagram 7 Crown’s Honey and Cherry.

“In the US, the flavoured whisky category is certainly very vibrant but still quite new,” observes John Hayes, global managing director for Jack Daniel’s. “There’s a lot of consumer acceptance for flavoured whisky as flavoured vodka is very large here.”

Entry level whiskey

The addition of flavours such as cherry, honey and cinnamon are seen as softening the robust nature of American whiskey and bourbon, giving the spirits a sweeter and more accessible flavour profile.

The success of Tennessee Honey, according to Hayes, is mostly down to adventurous non-whisky-drinking male and female consumers, who generally find whisky unpalatable, but are enticed into trying a “more approachable” version of its staple Black Label product.

Irish whiskey, on the other hand, has a naturally smoother flavour profile, but that hasn’t stopped distillers across the pond from looking seriously at the category. Diageo’s Bushmills led the charge in April with the launch of Bushmills Irish Honey into the US. And while it is too early to predict success for the new expression, Diageo anticipates “a very healthy future”.

Cooley, the Irish distillery taken over by multinational player Beam in March, has since hinted at the possibility of releasing a flavoured offshoot of one of its core brands in the near future, building on its reputation as an innovator and newly forged corporate ties with Beam’s Red Stag brand.

Mickey Finn Apple Irish Whiskey Liqueur launched in June alongside the Euro Championships

Irish Distillers Pernod Ricard, meanwhile, has said that while it’s not planning to release a flavoured Irish whiskey in the short to medium term, it is also actively looking at the potential growth of the category.

“We’re in a fortunate position where Irish whiskey is enjoying enormous growth right now, and a lot of that  momentum is coming from the US,” says Brendan Buckley, global innovation and category development manager at Irish Distillers Pernod Ricard. “The rate of growth of some flavoured brands is quick and allowing new entrants to come in. By having more entrants, it will naturally draw more attention to the category and create critical mass.

“There is potential that in a short space of time it will encroach on the flavoured vodka and rum categories, and as such we are seriously watching the sector.”

Buckley adds that if Pernod Ricard launches an Irish flavoured whiskey, it will be a “less expected flavour than honey”. His view of avoiding the medicinal cliché is shared by liqueur producer BABCO, which at the end of last year released Mickey Finn Apple Whiskey Liqueur, an apple-flavoured blend of American and Irish whiskies.

Global phenomenon?

Although Mickey Finn’s apple-green whiskey has been launched specifically with the American market in mind, Dublin-based BABCO is only testing the Stateside water in California, choosing to make its global mark in Europe first to coincide with the Euro 2012 football tournament held in June.

“We’ve launched in Europe with our Golden Boot campaign, targeting the markets that we’re strongest in and can get growth through the Irish bars,” explains John Davies, co-founder of BABCO. “We are supplying 150 bars in Ukraine and Poland, with more coming on board in the UK, France, Germany, Scandinavia and Barcelona. We’ve been working in America for 10 years and if there’s one thing we’ve learned, it’s to start somewhere, get it right and then move out. So it will be another six to nine months before we start looking at other US states and cities with strong Irish connections to roll our first whiskey out.” For more on BABCO’s Golden Boot campaign, see the August edition of The Spirits Business.

With both American and Irish brands focusing on the US market thus far, the question remains whether the category’s success will be mirrored in other areas of the world. Like Mickey Finn, Jack Daniel’s is testing the out-of-America markets – which aside from Canada have not been introduced to flavoured whiskeys – with the release of Tennessee Honey this June to the UK, South Africa, Australia and New Zealand markets.

Jim Beam, on the other hand, has noted the potential for a honey expression to succeed in the Western European market, launching Jim Beam Honey only into the UK, Germany and also Australia.

“Things are changing now in Europe and the US is leading that,” says Spiros Malandrakis, alcoholic drinks analyst at Euromonitor International. “The fact that flavoured whiskeys are much more accessible because of their sweeter flavours, even to audiences who are not so aware of the nuances in whisky drinking culture, could be a stepping-stone for younger and female audiences in mature western markets to get into the whisky category. This kind of product could have an opportunity in emerging nations as well, which is something that hasn’t been tapped into until now.”

Bushmill’s Irish Honey plays strongly on its heritage and core ‘handcrafted’ values

But while American, Irish and even Canadian whisk(e)y producers are taking the opportunity to tap into a wave of new whisky drinkers, Scottish distillers have so far shown no interest in the category.

Notoriously tight regulations governing the ingredients of Scotch (only water, malted barley, whole grains of other cereals, yeast and caramel colouring are allowed) and prohibiting the production, blending or distilling of any other whisky in the country, may be partly to blame, but there is no restriction on using Scotch whisky to produce other beverages.

“Scotch whisky-based liqueurs, such as Drambuie and Bruadar, have been made for many years, and can refer to the Scotch whisky constituent on their labels, as long as all the alcohol used is Scotch whisky and as long as they are clearly identified as liqueurs,” explains a spokesperson for the Scotch Whisky Association (SWA).

Scotch undoubtedly has a potential place in the flavoured whisky arena alongside Ireland, the US and Canada and, with the correct branding and labelling that adheres to EU and US regulations, there’s no reason why we shouldn’t see a couple of the major Scottish players releasing a flavoured expression over the next couple of years.

European revival?

Branching into the category could even help revive Scotch growth in the flagging western European markets, where the eurozone crisis has stifled demand, creating renewed interest in the category and attracting new young and female drinkers.

But although the ability and market is there for Scotch producers to diversify with whisky based liqueurs, concerns have been raised as to whether the move could be damaging to the quality perception of the category as a whole.

“We have to be careful that this is not [just] a trend as a lot of the category is built on heritage,” says Kevin Abrook, marketing manager for innovation at William Grant, which is eyeing up the flavoured whisky category with cautious interest. “I’m sure other companies are looking at it as well; everyone sees how well Jack Daniel’s Honey and Red Stag are doing and that they are capitalising on a strong brand name.

“The problem with ourselves and other Scotch companies is that you can’t add flavour and trade off the name. I’m sure all of us are thinking how we can get into this market without denigrating the brand name on one hand, but on the other finding a way around not calling it Scotch whisky.

“It’s not that we don’t want to get involved, but we have to make best use of the trademarks we’ve got and carve out an opportunity in that area.”

With the US, Canada and now Ireland taking advantage of consumer demand for innovation in the global whisky category, the question remains whether honey could be the medicine Scotch needs to revive western European growth – or if it can afford to ignore the opportunity.