Liqueurs: Producers should tap into low-sugar trend
Consumers around the globe are concerned about their sugar intake, and drinks producers are paying attention, either because of desire to meet a need or to prepare against potential future legislation.
*This feature was originally published in the August 2017 issue of The Spirits Business
Sugar is public enemy number one. The mere whisper of the word is enough to send waves of fear reverberating around any room. From diabetes to heart disease, health organisations and media outlets have bombarded the public with a very clear message that sugar is bad, it’s dangerous, and we need to drastically reduce our intake to live long and healthy lives.
One way that governments are endeavouring to drive home this message is through the implementation of sugar taxes on soft drinks – punitive for brands with a high sugar content; a deterrent for consumers with a penchant for the sweet stuff. Certain countries, such as Mexico, and several US states have already imposed a sugar tax on soft drinks in an effort to curb sugar consumption and reduce health concerns, including about obesity.
The UK is set to follow the trend, with plans to introduce a sugar tax on soft drinks in April 2018. Brands with more than 5g of sugar per 100ml will incur an 18p-per-litre tax, while those producing drinks with more than 8g of sugar per 100ml will be taxed an extra 24p per litre.
THE WAR ON SUGAR
But it’s one small step from implementing sugar taxes on pop and fizzy drinks to imposing a similar duty on alcoholic beverages – equally infamous for their high sugar count. A natural target, surely, would be liqueurs, which must contain at least 100g of sugar per litre and a minimum abv of 15% as dictated by a 1989 EU law – 250g/litre if they’re to be called crème de fruits. In the US, at least 2.5% of the final weight of a product must be sugar for it to be deemed a liqueur. So as the war on sugar heightens, should brands be preparing for the worst?
“It’s difficult to comment on the implications of a potential tax over and above excise tax, which is calculated as a percentage of abv,” says Dino D’Araujo, Amarula global general manager. “Should the additional tax be legislated, we would need to review the impact on a market-by-market basis.”
Craig Greenberg, head of strategic planning and insight at William Grant & Sons (which owns Scotch whisky-based liqueur Drambuie), is quietly optimistic about any potential implications that a sugar tax on liqueurs could bring about. “If a sugar tax did get imposed on liqueurs, it would have to be at a different rate [to soft drinks], but it would only have a marginal impact,” he says. “When you drink a 500ml bottle of Pepsi, let’s say you’re having roughly 30g of sugar. But in a cocktail made with a liqueur, you’re having maybe a 25ml or 50ml serving of the liqueur in your drink. So even though there’s a high level of sugar per ml, you’re drinking a smaller quantity. So the amount of sugar you’re getting is not as high.”
Though Greenberg offers a sanguine answer, Diageo and Pernod Ricard’s refusal to comment on the topic of sugar taxes could be a telling sign of the potential gravity of the situation. Are brands also living in fear of the ‘s’ word? Are they scared of tempting fate?
Hypothetical situations aside, there’s still no getting away from the consumer trend for low-sugar diets and lifestyles. Can we expect to see recipe alterations from liqueur brands as they strive to cater to consumer demands? “We can’t swim against what is an overwhelming consumer trend globally, with greater levels of awareness around calorific content in products,” says Richard Rushton, managing director of Distell, owner of Amarula. “As a responsible marketer of alcoholic beverages, we do have work streams set up in our innovation function looking at alcohol content across categories, as well as calorific or sugar content of products.”
Innovation and trend setting has always been at the forefront of the spirits industry, but consumers are storming ahead in search of low-sugar offerings. How are producers planning to keep up? “There is a general trend towards healthier alternatives, and I do think we will see more innovation in this arena from all sectors of the market,” notes D’Araujo. “That being said, cream liqueurs tend to play to a light consumption, a small treat, for which there will likely continue to be demand.”Cream liqueurs certainly present an interesting area of discussion for the category. Look further afield, and it’s not just sugar that has caught consumers’ attention. There are myriad other dietary trends and lifestyle changes quickly catching on around the globe. From gluten-free and dairy-free to vegan-friendly, consumers have never been more in tune with what they put into their bodies – and we are already seeing brands pay attention to their needs.
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Diageo is a key example. In June 2016, the drinks giant unveiled a dairy-free and gluten-free variant of its Baileys liqueur, made with almond milk, almond essence, cane sugar, purified water and real vanilla. Product testing, however, found Baileys Almande contained a derivative of beeswax and honey, making it unsuitable for vegans. Come March 2017 and both had been omitted from the expression, granting the product “certified vegan” status in the US. A spokesperson for Diageo says: “Baileys already produces a delicious liqueur that is the perfect treat and loved by millions, and we wanted to be able to offer that same quality and delicious flavour to consumers who are also looking for a dairy-free option [and] also vegan and gluten-free.”
Does this signal the start of a flurry of vegan-friendly, gluten-free and dairy-free launches – or even recipe changes? Hopefully not, says Spiros Malandrakis, senior analyst at Euromonitor, who advises producers to cool their heels before they start tinkering with recipes to fit these dietary demands.
“There are a couple of trends now going for a gluten-free, dairy-free, vegan-friendly approach and all that, but I wouldn’t get too excited,” Malandrakis cautions.
“I would mostly call it a fad, not a trend, which I can’t see lasting more than a couple of years before consumers will move onto a new fad as they always have. I don’t think we’ll see a growth shift in terms of trajectory, but we could see brands embracing the latest trends out there and keeping in contact with their core demographics.”
Amarula’s Rushton agrees, to an extent: “Often, it’s easier to innovate around the brand through a line extension or a new offering than it is necessarily to change the existing parent brand.” D’Araujo concurs, insisting there will be no tweaking of Amarula’s original recipe because of these trends. “Amarula has a distinctive taste profile [that] complements our Marula spirit, which is aged for two years in French oak before being blended with a velvety cream,” he explains. “It’s the only cream liqueur in the world made in this way, and something we would not change.”
But there’s one health trend still sweeping the drinks industry that might be a natural, positive fit for liqueurs – demand for lower-abv beverages. Liqueurs, by nature, tend to be much less alcoholic than other spirits, such as vodka, gin or whisky. Low-alcohol cocktails have held a popular position among patrons for a couple of years now as consumer attitudes are swinging more towards a ‘drink less, but drink better’ mentality, and liqueurs play a key role in their creation.
MEETING CONSUMER DEMAND
“The low-abv space is one of the most fruitful places for innovation, and we are going to see all kinds of products coming out to meet consumer demands,” enthuses William Grant’s Greenberg.
“Consumers are becoming more adventurous with flavour profiles and liqueurs play a really important role in complex, interesting drinks. We are seeing more challenging flavours, and with that hand in hand go liqueurs.”
Whether it’s consumer trends towards low-sugar, dairy-free, gluten-free, vegan-friendly or low-abv options, liqueurs – a category often viewed as the underdog of the spirits world – looks on the cusp of a seismic change of fortune.
If brands play their cards right with future line extensions, flavour innovation and marketing, these emerging health-forward trends could prove to be a very sweet outcome for the category indeed.