Nordics thirst for premium brands and booze cruises

19th March, 2013 by Chris Mercer

Far from being a homogenous area, the Nordic countries offer a diverse array of challenges and opportunities, as Chris Mercer discovers

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A cocktail culture reverberating out of Copenhagen and a rising thirst for international brands offer pockets of opportunities for distillers in Scandinavia, but there is no one-size-fits-all approach that applies to spirits sales in the region. “Whilst we cluster the markets together, each have their significant differences in regulations and routes to market,” says Philip Ainsworth, Chivas Brothers’ regional director for Northern Europe.

That said, there are some obvious similarities. Sweden, Norway and Finland all operate monopoly retailers in the off-trade, with high duty tariffs on spirits to deter over-consumption. At least the retail contracts tend to be long-term once signed.

Another potential bind is that those three countries, plus Denmark, all spent 2011 enduring a decline in consumer demand in many major spirits categories, according to Euromonitor International statistics.

However, headline figures appear to hide a broad, if slowmoving, drift towards international brands, predominantly at the expense of traditional spirit aquavit. Opportunities are diverse, covering most whiskies, gin, rum and some vodka, with a supporting role for Tequila and Japanese whisky in Norway, Baileys in Finland and Jägermeister in Sweden.

Cognac is big in this region, too, particularly in Norway, but the fabled French spirit has lost kudos on the domestic market in the past five years, Euromonitor figures show.

Across the Nordics, “growth is stable, single-digit but from a good base”, says Ainsworth. He name-checks labels such as Ballantine’s blended Scotch, The Glenlivet single malt and highend gin brands Beefeater 24 and Plymouth.

Western Europe’s star performer
In Sweden, Chivas draws extra benefit from its parent group, Pernod Ricard, having acquired Absolut vodka owner Vin & Sprit in 2008. This has strengthened links with monopoly retailer Systembolaget. “Outside the monopolies, we have been able to build on the bartender relationships strongly forged with Absolut,” Ainsworth says.

Bo Lundberg, Diageo’s Nordics director, sees potential for more premium spirits, particularly Zacapa rum, Tanqueray gin, Johnnie Walker blended Scotch and single malts Lagavulin, Talisker and Singleton. Presently, Diageo’s biggest brands in the Nordics are Smirnoff, Captain Morgan and Baileys.

Lundberg says Diageo is taking share from major competitors in the region, which is important for “driving profitable growth” and is “one of the best-performing regions within Western Europe”.

It’s all relative, of course, but the Nordics continue to draw commitment from major distillers in the midst of Europe’s malaise. Average disposable income per person is ahead of much of southern Europe, topping US$30,000 in Norway and sitting at around $23,000 in Denmark.

In 2011, William Grant & Sons set up a permanent outpost in Stockholm, while a spokesperson for Edrington Group explains that the distiller can also see plenty more room for premium brands in the region.

However, barriers to premiumisation range from high income tax to a ban on spirits marketing in Sweden, Finland and Norway. Restricted space in monopoly retail stores and high taxes can make even the cheapest brands appear expensive. In Finland, one of the only sectors in growth in 2011 was “cut brandy”, a mix of vodka and brandy. Try premiumising that.

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