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Scotch growth hindered by lack of flavoured whisky

Scotch’s failure to extend into flavours or promote its mixability has enabled American whiskey’s strong growth, the owner of Jack Daniel’s has claimed.

Jack Daniel's Tennessee Honey
Jack Daniels’ portfolio includes premium, mixable and flavoured product extensions, which Varga claims is the secret to its success

According to Paul Varga, CEO of Brown-Forman, American whiskey’s simultaneous “desirable attributes” of mixability and premiumisation has allowed the category to grow faster than Scotch whisky and vodka.

Speaking in an analysts call to announce Brown-Forman’s Q3 2014/15 financial update, Varga claimed vodka and Scotch whisky brands have failed to adopt both attributes under one trademark.

He said: “Within Scotch, we frequently see leading trademarks positioned very successfully at many price points spanning from standard to luxury, and each case utilising the same trademark name at each of the price points.

“Within vodka, the leading trademarks have not exhibited the same vertical agility. The leading brands at each successive price tranche in vodka typically carry a different brand name.

“By contrast, however, vodka has shown tremendous horizontal agility, if you will, through flavoured vodkas and premixed RTDs which provide consumers with a broad range of flavour options for the consuming occasion.

“Scotch, on the other hand, has had little success extending their trademarks along the same flavour or mixability dimension.”

Varga highlighted Jack Daniel’s as an example of an American whiskey brand that features premium, mixable and flavoured expressions within its portfolio.

“Uniquely within American whiskey and best evidenced by our own Jack Daniel’s, the category’s brands have shown the ability to be successful along both of these attractive dimensions within the same trademark,” he pointed out.

In its Q3 financial update yesterday, Brown-Forman revealed its super- and ultra-premium whiskeys have now reached the one million annual case sales milestone for the first time.

However, Varga added that despite the “exciting” announcement, the ultra-premium segment of American whiskey is still at a “very early stage” of development.

Compared to Scotch whisky, which counts the price bracket as 30% of its total sales, ultra-premium American whiskey comprises just 2% of the category’s total market.

As such, Varga pointed out that the highest end of American whiskey has a “10-15-fold opportunity” if it can develop in a similar vein as Scotch.

“Any way we view the data, we see this as an enormous long-term opportunity for Brown-Forman within the category that is most important to us and that we know best,” he said.

“And while my focus today has been on this one particular ultra-premium whiskey achievement, we also intend to apply these same capabilities to the significant opportunities we envision for other premium-plus brands such as Herradura, Sonoma-Cutrer and Old Forester to name just a few.”

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