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US whiskey brands ‘pushing envelope’ of flavour

Far from being reliant on its core expressions, American whiskey is seeking to broaden its appeal – but it is vital for the category to innovate meaningfully in order to maintain its upward trajectory.

American whiskey volumes have surged over the last five years

*This feature was initially published in the January 2016 issue of The Spirits Business magazine

These are good times to be an American whiskey distiller, as a word with the president makes clear. No, not Obama, but Mark McCallum, who has been president of Jack Daniel’s since February.

“Yeah, the category’s been enjoying a wonderful renaissance for a number of years now,” he says. “It really did start in the US, although we see the growth in American whiskey happening globally in many markets.”

A generation ago things looked rather different for a category in slow and seemingly terminal decline. As Woodford Reserve’s master distiller, Chris Morris, told SB in March: “There was a feeling of ‘hang on for the ride down’” when he joined Brown-Forman in 1976, 20 years before Woodford was born. Today the brand is a key player within Bourbon’s super-premium category, whose domestic volumes surged by 124% from 2009 to 2014, according to the Distilled Spirits Council of the US. And this year, in the six months to October, Woodford grew by around 30%.

Behind the scenes there has been a tectonic shift in spirits consumption in the States. “There was a 25-year run on vodka. Then in the last three or five years, consumers have been switching to American whiskey,” says McCallum. “Vodka’s slowed right down, with many brands actually in decline, and American whiskey has been taking significant market share here in the US.”

Vodka vs whiskey

Melanie Batchelor, VP global spirits at Campari America, agrees that the category has been enjoying “really great growth”, but doubts it has all been at vodka’s expense. “I wouldn’t say it’s a direct correlation,” she says. “I think we’re seeing overall trends in the category where consumers are premiumising, and are also looking for brands that have authenticity and interesting process stories.”

Vodka still accounts for one in three spirits consumed by Americans, though the recent explosion in flavour was perhaps less to do with the brand owners’ unbridled creativity than a desperate bid to keep the category buoyant. The boom years came to a sticky end with endless whipped cream and cupcake variants. McCallum refers to it as “the ridiculousness of the tail” and says: “We understand because we played on the edges with Finlandia. We learned before we got to 10 that continued flavour innovation was of minimal value.”

Yet the need to keep innovating is a potent force in the land of Starbucks, where millennial consumers have been weaned on the notion of endless choice. Why have coffee when you can have a mocha cookie crumble Frappuccino? And by a similar token, why have straight whiskey when you can have it flavoured? This sub-category, said to be close to, if not bigger than, Scotch in the States, grew 27% in the year to August, according to the latest IRI figures.

The leading brand is Jack Daniel’s Tennessee Honey, introduced in early 2011, with US case sales of 670,000 last year when it was joined by its cinnamon-flavoured stablemate, Tennessee Fire.

“We know they’re brands for consumers who want to drink Jack Daniel’s but don’t because of their perception of whiskey and of Jack Daniel’s in particular,” says McCallum. By broadening the franchise, new drinkers can be recruited into Jack’s family and then converted to the mother brand of Old No.7, which he describes as a “tough drinkin’ whiskey”. He feels the move into flavours is logical given the spirit’s proven mixability, with half of Jack Daniel’s drunk mixed, usually with Coke. Despite this he has no plans so far to increase the range.

Flavoured variants are growing increasingly popular in American whiskey

Flavour pioneers

“Jim Beam’s up to about 10 flavours and I think already their analysis would say maybe the majority of them aren’t going to be of high value,” he says. “I’m pretty sure the lessons of vodka are well learned, particularly by the global brand owners.”

The real pioneer of flavoured whiskey was Wild Turkey whose Honey Liqueur was created by master distiller Jimmie Russell back in the 1970s “as something his wife would enjoy”, explains Batchelor. Rebranded as American Honey 10 years ago, before Campari acquired the brand for US$575 million (£378m) in 2009, it is “a high priority” for Batchelor, but, she insists: “We’ll not be getting into the game of proliferating Wild Turkey with lots of flavours.” To date, the only others have been American Honey Sting, and a new peppered maple version called Buckshot, which is being rolled out as a permanent fixture.

For all the new entrants into American whiskey, the need to establish a point of difference is as strong as ever – and Batchelor reckons there is a risk of mistakes being repeated.

“Inherently, what our category is all about is traditional authenticity, and I think it’s fairly masculine as well. All those cues that are so important to the category don’t lend themselves to tons of flavour innovations.”

‘Pushing the envelope’

Peter Gyimesi, chief marketing officer for Popcorn Sutton’s Tennessee White Whiskey, says: “There’s certainly been a proliferation of flavours and some have been better received than others. Are some folk pushing the envelope? Sure they are, but the consumer is king.” Named after the famous moonshiner, Marvin ‘Popcorn’ Sutton, the whiskey was launched in 2010 in a partnership with Hank Williams Jnr.

“Our consumers and the trade love the authenticity of craft spirits and Popcorn Sutton definitely fits in with that,” says Gyimesi, who admits the c-word has been “overused a bit”. He claims: “You’ve had some larger players trying to adopt the phrase, which has led to some confusion. Historically the term ‘craft’ has meant higher-quality ingredients, authentic processes and smaller batch distillation.”

Winston Edwards, brand ambassador for the Texan whiskey Balcones, says: “We do consider ourselves ‘craft’, but it is often used as an indication of size when it means so much more. To us, ‘craft’ is about attention to details and having a hands-on approach to your spirits.”

McCallum says: “The buzz around craft whiskey is wonderful for the category and we benefit enormously from it. That said, there have been something like 500 new whiskey entrants in the US in the last five years. Some are genuine craft whiskey and some are not.” Of course, it depends on your definition and the importance of scale. “We don’t pretend to be small and local, and we know folk who see craft in that light are not likely to be a Jack Daniel’s consumer,” says McCallum. “But that’s not the majority who are interested in craft whiskey whose principal interest is around the craftsmanship of making whiskey and its authentic nature.”

Balcones has helped drive the craft movement in American whiskey

The great ‘craft’ debate

Big distillers have been challenged in the courts, most recently Beam Suntory for describing Maker’s Mark as ‘handmade’, but the case was thrown out in July. And while craft beer aficionados bemoan so-called ‘crafty’ beers made by the big brewers under folksy, homespun-looking labels, there isn’t the same issue for whiskey, reckons Edwards.

“It wasn’t difficult to make delicious and interesting beers that shined above the staple, ‘lite’ brew,” he says. “Craft spirits don’t have that luxury because the bar is already set pretty high. Big distilleries today are churning out quality products, some of which we consider to be the best whiskies in the world.”

When it comes to innovation, Kris Comstock, senior marketing director of Bourbons at Buffalo Trace, has plenty to report. “We’ve released French Oak experimental whiskey, Sour Mash experimental whiskey and EH Taylor Cured Oak Bourbon,” he says. And, having planted fields adjacent to the distillery with corn, he talks of “a first farm-to-table” whiskey.

As for the overall category and whether it can maintain momentum, Comstock’s CEO, Mark Brown, sounds confident. Among other factors, he mentions the quality and versatility of American whiskey, its positive image, the level of innovation and “the success of Jack Daniel’s in global markets”.

Global ambitions

Melanie Batchelor agrees Jack has “really paved the way” in exports and sees the resurgence in classic cocktails as a cue for others, like Wild Turkey, to pile in behind. Balcones, a multi-award winner at SB’s 2015 World Whisky Masters, is now in its first export market – the UK. “They’re just getting turned on to American whiskey,” says Edwards, “so it’s a key time for us to captivate customers.”

Britain is also the first major foreign outlet for another of Brown-Forman’s whiskeys, Old Forester, whose president, Campbell Brown, says: “Consumers enter the US whiskey world at a relatively young age and up until very recently, there hasn’t been the depth of brands in the UK to allow them to explore and discover.”

He believes Old Forester could plug the gap and keep people within the category as they trade up.

This year is Jack Daniel’s 150th birthday, and McCallum reports strong growth in Turkey, Mexico and Brazil among emerging markets, and in the UK, France, Germany and Canada within established ones. Yet he admits there’s a way to go, with the brand only seriously investing in exports since the mid-1990s.

“Scotch has been there since the Brits were colonising the globe,” he says, “so we’re a little late to the party.”

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