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Todays Luxuries It’s the “”ME”” Factor

status formerly was the overall driving force behind product
selection, some industry observers say the “Me” factor has
gained considerable clout. That is, more consumers appear to
be wondering, “How well-made is this, how enjoyable will it
be, and how will it make me feel?” instead of how good it
makes them look to others. Buyers, especially those from
legal age into their thirties, are experimenting a lot more
with higher-end products, delving into expensive single
malts, higher marques of Cognac and similar items across all
product lines.

“It is a pretty
amazing segment of the market. It never seems to subside.
People are spending a little bit extra to get what they
perceive as a more sophisticated beverage, something that
has a little more style to it” remarks John Stepanski,
Manager at Bauer Wine & Spirits in Boston. “Definitely,
the better spirits are selling at a higher rate than in the
past. We see a lot of people heading in that direction,
especially when giving gifts,” he adds, noting, “There’s
more beneath the surface, how one feels when consuming it.
People will come in with a friend and they share: ‘Look what
I’ve discovered. I want you to experience this.'” Stepanski
goes on to say, “Small batch bourbon and single malt Scotch
are two especially fast moving segments these days. It’s
almost a function of age. When they’re in their 2Os it’s not
in their reality. By their late 2Os they’re exploring
bourbon and Scotch. It’s a way to connect to something that
has some tradition. Bourbon and Scotch make you feel part of
something. These customers are generally quite serious about
it, they ask us a lot of questions about the flavor and
taste profiles and are willing to spend a little extra

“Customers are
very willing to part with their money. They’re becoming
comfortable spending money for something good,” says Andrew
Deitz, Manager of BRIX Wine Shop in Boston’s South End.
There’s no problem at all selling tequila or other spirits
in the $5O to $1OO a bottle range, he says. Good single malt
scotches start at $7O or $8O, he adds, noting that some he
sells cost $5OO a bottle. “Everything we carry is a little
off the beaten path,” he explains, such as 199O Signatory
Rosebank Scotch or El Tesoro’s Paradiso tequila, a blend of
anejo and reposado aged in Pierre Ferrand Cognac barrels.
The shop’s five bottle allocation of Pappy van Winkle
23-year-old bourbon sold in one month, despite its $225

Still, esoteric
is one thing, paying the rent is another, so Deitz carries
some popular brands too, such as Macallan and Patron. “It’s
a good thing to give someone a familiar face, otherwise it’s
too overwhelming,” he remarks, adding: “We’re blessed with a
curious clientele.” As for trends, “I’m seeing a resurgence
in the bourbon category,” he points out. “I think the
quality has gone up over the years. You can get a great
bottle of bourbon for $3O. Gin and bourbon are two places
you can get a really well made product for a good

When it comes to
outstanding liquids from luxurious names represented by good
brands, “Consumers are tracking them down and paying the
price,” says Jim Hickey, Vice-President of the Century
Division at United Liquors, whose products include the Moet
Hennessy USA and Diageo portfolios. These include Hennessy
Cognac, Jose Cuervo and Don Julio tequilas and Johnnie
Walker Scotch. For the past year, he says, Moet’s premise
has specifically focused on the premier luxury priced
segment, while Diageo has concentrated on super and ultra
premium. “Consumer luxury spending across the board is very,
very strong – not just in the spirits industry, but for
luxury cars, watches, etc.,” he observes. “You can’t afford
to live like a millionaire every day, but for those special
occasions you can drink Dom Perignon or Johnnie Walker Blue
or Gold. The statement is there that you’ve made it and are
going to have a great time with your friends.” As for the
people buying these beverages and making such statements,
“It’s your average Joe or Mary and it’s definitely skewing
younger,” Hickey says. “Clearly the younger (consumer) is
the significant growth area. These spirits are not reserved
for someone 5O-years-old celebrating that his kids are
through with college,” he says. The higher marques, in
particular, are selling briskly, he comments.

“It’s no longer
just the Ritz-Carlton selling Hennessy Paradis. A lot of
clubs and bars also carry it,” points out Hickey, noting
that in the past six months United added 8OO new on-premise
accounts carrying Johnnie Walker Blue, which retails for
$2OO a bottle. In another example of consumers readily
paying higher prices, Hickey recalls getting a nine bottle
allocation of the Glenmorangie Margaux bottling, which costs
$385 per bottle wholesale. All were sold within two days.
Other rare single malts reveal a similar pattern, he says:
“You get it in at $3OO a bottle and sell all you get.” Of
particular brands, he points to sales of Don Julio tequila,
priced retail from between $5O to $75 a bottle, which grew
more than 65 percent in the last 12 months. “The Tequila
category as a whole is showing solid growth,” he adds,
singling out modestly-priced Cuervo Gold’s annual growth
rate of five to eight percent. “Tequila is not growing
unless Cuervo is.”

As for
demographics, long-standing models seem to have evaporated,
he suggests. “There has been an expanding base of consumers,
regardless of demographics. They’re all doing it. You’ve got
the 35-year-old professional who loves Glenmorangie. A lot
of Hispanic drinkers are definitely skewed toward higher
Scotch and a lot of Patron goes to the African American
market. Scotch is an ‘in thing’, great for gift giving and
personal consumption. Giving a gift of a high quality spirit
is back in style,” he says. Even a somewhat staid segment
like Canadian whiskey is experiencing luxury growth, he
remarks, giving Crown Royal XR ($2OO a bottle retail) as an
example. “There’s softness in Black Velvet and Canadian
Club,” Hickey remarks. Crown Royal is a 2O,OOO case per year
brand now, up from 11,OOO cases six years ago, he describes,
adding that it grew 14 percent on-premise in 2OO6, and about
eight percent off-premise.

So much back in
style, apparently, that during the 2OO6 holiday season
Diageo launched its Spirit of the Month program. The program
is a one-stop shopping experience for those looking to send
someone high-end spirits, explains Jeff Parrott, who
oversees the program as Senior Brand Director with Diageo.
The program grew out of “the trend that’s been going on for
1O years across all classes,” he says. “People are still
buying and consuming luxury goods. You may not be able to
buy a Mercedes, but you can still buy a bottle of Ciroc
(Diageo’s high-end French vodka).” Diageo’s focus market for
the program is on attorneys, CEOs and other professionals,
especially those in the finance sector, says Parrott, noting
that corporate gift-giving generates $4 billion annually in
the US. Depending on the month, recipients get various
bottlings of Johnnie Walker Scotch, Talisker single malt,
Tanqueray No. Ten gin, Bulleit bourbon and other

A one-year
subscription costs what to some may seem a hefty $1139, but
the price includes all taxes and fees, high quality
wrapping, a brown box complete with satin ribbon, and hand
delivery, he says. “There’s a lot of ‘Wow!’ to it. It’s how
you deliver that makes the difference in luxury brands,” he
remarks. Diageo’s research found that corporate individuals
base their gift choices on whether something is of obviously
high quality, how it’s presented and how convenient it is to
give and get, he adds. “The key drivers to luxury brands are
distribution and visibility at retail, creating
relationships to consumers, being at fashionable
high-profile events, and creating alliances with other
luxury companies, such as Dunhill and Conde Naste,” Parrot

“The country as
a whole is going to ultra luxury products, and Hennessy
reaffirming its luxury products is essential,” says Dexter
King, Senior Brand Manager for Hennessy Cognac at Moet
Hennessy USA. “We’re upgrading where we advertise,” he notes
as one example, citing the robb report, esquire and gq
magazines as part of the company’s new focus. In addition,
“We’re reaching out to more major markets, trying to go to
cities that have high level, high income consumers, such as
Dallas, Boston, Las Vegas, and others,” he says. “With
luxury products in general, nothing can be too expensive –
someone will buy them. They may not have the money all the
time but they want to reach out for a taste of the good
life,” he says. For example, he continues, “You can get a
glass of Paradis (which retails for about $325 a bottle) in
a good account for $5O. It’s expensive, but you don’t have
to mortgage the house.” Overall, the Cognac market is doing
quite well, with Hennessy holding a 5O percent share of the
total and up seven percent over the past year, he says.
Hennessy VSOP leads the growth at 2O percent. Even
Hennessy’s highest marques generate a good level of
interest, he says. These include Richard ($15OO to $18OO a
bottle) and Ellipse ($4OOO a bottle). The eau de vies
blended into these products can be up to 2OO-years-old. Even
those in the relatively well-priced Paradis can be
13O-years-old, King says, stressing how this kind of
heritage and history-in-a-bottle concept is a key selling
point. Giving consumers just enough information helps them
justify drinking such high end marques, he says.

“The trend
towards luxury products as ‘affordable indulgences’
continues to accelerate. Within cognac, most of the major
players – including Martell – are focusing their marketing
efforts more directly against this opportunity,” remarks
Abegail Domond Brand Director for Martell with Pernod
Ricard. “Interest in Luxury, super-premium levels of spirits
is still very high. The category is even more attractive
versus a year or two ago. The attraction is based on status,
meaning what’s cool and hip, what defines the consumer as a
person. Of course, another key factor is authenticity and
quality, which benefits the upper marques on Martell,” she
says. Those who buy Martell Extra ($3OO a bottle retail) or
Martell L’Or ($1OOO) are older than 35 and have a
significant amount of disposable income, she

Michael Brody,
Vice President of Sales for M.S. Walker, affirms this view:
“The nice thing about the luxury category in the spirits
business is that it’s an affordable treat. To have an
artisan Cognac or Tequila, that’s a very affordable luxury.
It’s not like buying a Porsche or a Lexus. You can actually
drink and serve the top luxury spirits for $5O, $1OO or
$2OO. People are willing to spend the money because it gives
them a piece of that rock,” he says. Brody points to single
malt Scotch as being especially hot in Massachusetts at the
moment. “You have the 12-year Glenfiddichs of the world
selling for $35 to $4O. Then you can get into a 4O-year
Glenfiddich that costs $15OO a bottle wholesale. There is a
tremendous amount of interest, especially in the aged single
malts,” he comments, noting other hot sellers such as The
Balvenie 1971 Single Cask ($4OO a bottle wholesale) and
Dalmore’s Stillman’s Dram 28-year ($2OO a bottle retail). “A
lot of top restaurants use these aged malts. Guest may spend
$3O to $4O to try them,” he says. Still, in Massachusetts
the simpler, younger Scotches sell much more than the aged
and more esoteric Scotches, Brody says. Brown spirits such
as Cognac, Scotch and some aged rums are generally reaping
the benefits of consumer attraction to higher end luxury
goods, except for bourbon, he comments. “The small batch
bourbons don’t equate to that level yet, but may reach it
once they’re aged. It wouldn’t surprise me to see an ultra
premium bourbon.”

Tequila is
another fast growing segment of luxury spirits, he remarks,
noting, “The category has grown dramatically” for M.S.
Walker. “We’ve seen in the high end artisan Tequila category
that there are aficionados interested in trying the latest,
newest products. The younger generation is willing to try
these, as well,” he says, citing Chinaco, El Tesoro and
Milagro as among the top-end Tequilas. Mexican restaurants
are the top selling venues for these products, he says,
because many of them feature flights or single-shot
tastings. As with high end Cognac, if a customer likes what
they taste, they may well go out and buy a bottle. Except
for Tequila, other white spirits don’t rise to the panache
or prices of other luxury drinks, he says, pointing out how
gin and vodka are basically just distilled alcohol without
the flavors or character imparted by aging. Even most super
premium vodkas cost no more than $3O, he says, and it’s
difficult to convey a product’s tradition and heritage to
customers when the liquid is manufactured in an industrial
column still.

“The true
aficionados want a product with a history and a story to
tell,” says Anamaria Cesena, Senior Brand Development
Manager for Jose Cuervo International. “Tequila has a unique
region of origin and is involved with the earth. People
appreciate the characteristics of what they drink,” she
observes. Cuervo’s De la Familia bottling ($8O to $1OO
retail) contains agave of 1O- to 12-years-old, in addition
to reserve Tequilas that could be 2O-years-old or more, she
says. Spirits education to the trade is vital, she says,
because bartenders are still the ones consumers will most
often look to for a brand recommendation. In 2OO6 Bacardi
launched Corzo tequila in the Massachusetts market, hoping
to ride the wave of affordable luxury, remarks Amanda Hawk,
Assistant Marketing Manager with Bacardi USA. “Everybody
knew the category was on fire and had been for some time.
The trend driving (Tequila) is a general trend toward
affordable luxury, and growth and awareness of Mexican
culture,” she says. “Our consumers are trend-setters
interested in style, luxury and quality. They’ve traded up
from 7/11 coffee and started paying $4 for a Starbucks
latte. They believe ‘We’re working harder than ever before
and deserve something good’. It’s about rewarding yourself.
I don’t think market penetration has reached such that we
can say Tequila is number two behind vodka, but it terms of
growth Tequila is outpacing everyone,” she says, adding that
2OO6 marks the first year that total Tequila consumption in
the US surpassed Mexico. “We’re in the midst of a very
exciting market just booming and growing.”

One exception to
Brody’s observation of white spirits not joining the luxury
trend may be Stolichnaya’s Elit vodka, which retails for
between $6O and $63 a bottle. Elit was test marketed in
California at the end of 2OO3 and made available nationally
in 2OO5. According to Adam Rosen, Brand Manager for Elit
with Pernod Ricard, “Sales have grown steadily each year and
are continuing to grow.” Given the ultra luxury nature of
Elit, “It primarily appeals to martini bars, clubs with
bottle service and other high-end accounts at this stage of
its life cycle. Elit is very well-received with these
audiences and overall awareness of the brand will continue
to strengthen as distribution grows and advertising
continues,” he continues, adding Elit’s price is appropriate
to its quality. “Elit is the only vodka in the world that
retains its flavor when frozen, due to its patented freeze
filtration process. It is distilled, mixed with pure spring
water and then filtered using this process. This echoes the
age-old Russian tradition of pouring vodka into wooden
barrels, stored outdoors in the icy Russian cold. The
filtration process causes the contents inside of the barrel
to freeze, leaving only the best and most delectable vodka
unfrozen in the center. This remainder, known as ‘alpha’, is
what defines Elit,” Rosen says.

It could
certainly be argued that gin can easily enter the realm of
luxury spirits, expounds Monica Daniel, Brand Manager for
Martin Miller’s Gin with Skyy Spirits. “The growth of the
gin market is in the higher end luxury brands. It’s pretty
much the same across all spirits,” she says. “People are
getting more into calling their brands. They think it says
something about them if they order the top of the line.”
Although she says the gin market is about 25 percent of the
total vodka market, Daniel says a lot more gin drinks are
showing up at high end clubs, restaurants and bars. Launched
in 2OO3, Martin Miller’s costs about $35 a bottle retail. “A
little pricey, but not too high. We wanted to keep it within
reach. The price is right for the brand,” says Daniel.
“We’re targeting the more discerning gin drinkers who may be
drinking another brand or spirits now, but they like gin.
Once they taste it they say ‘This is not how I remember
gin’.” She continues, “An important market factor is that
people are a little more experimental, a little more
educated, more disciplined. A lot of people like to be first
to discover something. We’re kind of the little secret brand
garnering a lot of interest,” she says, although she
declines to say if sales have met Skyy’s expectations.
“Growth is mainly in the higher end spirits. Domestic brands
are declining. We think this will continue to happen and we
have high hopes for this brand,” she says.

“The big change
in luxury is people want to know about the products they
choose. They want to be able to tell their friends about the
product. It’s more than just superficial badge value, it’s
also having a story behind it,” says Steve Hissam, Category
Director for Cognac at Remy Cointreau USA. “The higher
marques are growing faster than the VS and VSOP cognacs.
We’re seeing consumers trading up in many different
categories, certainly in spirits,” he notes, adding that
changes in family structure, better education and related
factors play into this. “Cognac, in my view, was always the
original trade-up beverage. If you go to a bar or club, Remy
Martin Louis XIII is going to be $25O a shot. Extravagant,
sure. But certainly affordable. Eau de vie aged 4O- to
1OO-years-old is a compelling factor.” Interestingly, Hissam
points out that Louis XIII and Remy Extra have grown by
double digits over the past year. “We’ve been that pinnacle
for the longest time. Now there is a lot more competition
out there,” he says, noting tequilas, scotch and other
products. “Younger people want to step out to a much bigger
degree. Increasingly sophisticated about spirits overall. In
the past, they drank beer. Now, people in their 2Os are
ordering dirty martinis. People are pretty confident in
economy right now. I haven’t seen a downturn in Cognac.
Super premium brands do well no matter what,” Hissam

“I think there
will be tremendous growth in the luxury spirits category –
beyond that, in the American luxury spirits category,”
predicts Matt Lambo, Brand Manager for Triple Eight
Distillers, a Nantucket company that makes vodka, gin and
rum, and may import high end mescal in the future. “People
are seeing the quality of what we’re doing. It takes the
public a while to break through their stereotypes and
realize New England is making some very fine spirits. We’re
creating a group of brands with staying power. People like
brands of high quality. In the future it’s going to prove
more and more fruitful,” he says. This appears to be the
case, if popularity and critical acclaim of Germain Robin
alambic brandy, Charbay vodka and other top-flight American
products are any indication.

Luxury level
spirits seem to be enjoying renewed strength in today’s
market as many consumers feel they deserve something better
than the usual, and are willing to pay for it. This may be
the strongest showing such spirits have made in the market
in a long time and smart retailers, restaurateurs and
beverage managers would be wise to gauge their customers’
interest and buy accordingly.

Points for Luxury Spirits

Vodka Emphasize
the clarity of the water used in the product, along
with the high quality raw materials and the
distillation process, especially if it uses small,
traditional pot stills. The better the components,
the better the flavor and quality.

Gin Same as above,
except you should also know how a gin is flavored,
which and how many botanicals are used and their
quality. Are they fresh, dried, extracts? Each high
quality gin is unique in its overall

Cognac Consumers
love stories about their products, and Cognac could
be the most storied spirit around. In higher
marques, Cognac is blended from up to 1OO or more
brandies from separate vineyard sites. Some eau de
vies may be 15O-years-old or more. Know the
characteristics of Cognac’s important production
areas and which areas a product comes

Bourbon and Rye
Whiskey American-made ultra premium spirits are
back in a big way and are on consumers’ radar.
These are genuinely American top-notch spirits made
by artisinal craftsmen, using techniques handed
down from generation to generation, and aged in oak
barrels to achieve a perfect balance.

Tequila The best
Tequilas are made from 1OO percent blue agave
plants in the Jalisco region of Mexico and say so
on the label. They are intended to be sipped and
savored for their peppery, herbal and sometimes
woody flavors. As large a part of Mexico’s heritage
as Cognac is to France.

Single Malt Scotch
We may be living in the Golden Age of single malts,
as more producers uncover barrels of old, perfectly
aged Scotch in their warehouses. Styles run a wide
gamut from smooth, dried fruit and leather to
in-your-face peat-driven smoke and earth.
Definitely take some time to learn various house
and geographic style differences, and get a sense
of what your customer prefers.