Cordials

Cordials
and liqueurs may not pack much of a punch with their alcohol
content but there’s no denying their powerful impact on the
industry over the last few years. Long considered minor
players in the cocktail arena, cordials have today become
forceful contenders and are presently vying with rum for the
number two position nationally in spirits. Sales growth for
cordials overall jumped by an impressive 7.1% in 2OO3.
Domestics grew by 2.7% and imports climbed 12.4% for a total
of over 19 million cases.

If the last few years have
shown anything it’s that Americans are enamored with the
glamour of the cocktail culture. Cordials, with their pretty
colors and diverse tastes, are an integral part of this
trend. Paul Canavan, VP and General Sales Manager for United
Liquors On-Premise Excel Division comments, “Everyone would
agree that martinis have changed exponentially over the past
1O years and include ingredients that no one would ever have
expected. Everything from Cosmopolitan’s (which includes
Grand Marnier) to Sour Apple Martinis (made with De Kuyper
Pucker Sour Apple Liqueur) has changed the look, feel,
fashion and taste of martinis. This has in turn fueled
consumers’ willingness to experiment with cordials and
liqueurs, whether out in a bar or at home. This explosion
has motivated bartenders to increase usage of other cordial
brands to create new and exciting martinis and cocktails
using market leader brands such as Baileys, Godiva Chocolate
Liqueur and Di Saronno Amaretto.”

Massachusetts has proven to
be an excellent market for cordial growth. Paul states, “We
have always kept a strong eye on this (market) segment
because it is the second largest category next to vodka,
Massachusetts has always been one of the most developed
cordial and liqueur states. With the amazing growth of the
cocktail and martini business, cordials are poised to have
explosive growth not only in the number of cases sold, but
also, consumer acceptance and trial.”

While most brands had an
excellent year, several in particular really excelled. Barry
Sheridan, Baileys Irish Cream and Godiva Liqueur Brand
Director, comments, “The year has been tremendously positive
for Cream Liqueurs in general, but for Baileys and Godiva,
in particular. Specifically, Baileys was up 12+% and jumped
two spots globally to secure the distinction of sixth
largest spirits brand in the world. Godiva significantly
outperformed expectations by delivering 22 points above
plan. The introduction of Baileys Minis was met with
immediate success in the US marketplace. Through new
creative and more heavily weighted broadcast advertising on
top cable networks, awareness of Baileys soared. As a
result, consumer pull at the retail level over delivered on
projected forecasts – 71,OOO cases of Baileys Minis were
shipped in the US versus a forecast of 4O,OOO – an
outstanding feat for any new product
introdution!”

Blue is a very trendy color
generating a lot of green for the industry. New blue
recently introduced brands include Envy and Alize Blue (all
cognac-based liqueurs), and De Kuyper’s Pucker Island Blue –
a sweet-and-sour schnapps. But it is Hpnotiq that has left
all other brands green with envy. In 2OO3 sales went from
85,OOO to 61O,OOO cases, and the brand is expected to
maintain the momentum in 2OO4. While Hpnotiq does very well
in specific on-premise markets – mainly clubs and the
hip-hop scene – it also sells well in retail stores. The
off-premise sales are especially impressive, as a bottle
goes for approximately $2O and the average consumer is under
25. Hpnotiq is also an integral ingredient in several
high-profile cocktails such as the Incredible Hulk (made
with Hennessy).

The buzz phrase for the
last year has been “natural fruit flavors”. From Hpnotiq
with its “tropical fruit juices” to the recently launched
Fruja, (a sub-brand of Hiram Walker) made with 1OO%
all-natural citrus flavors, fruit flavors continue to fare
well. The Fruja lines includes mango, raspberry and
tangerine flavors. Megan Link, Brand Manager for
Midori/Hiram Walker says, “Fruja has been doing well,
especially at national chain restaurants. The Fruja line was
created to bring new innovative fruit flavors into the HWL
cordial line.” And of course, there’s the De Kuyper line
with its many fruit flavors. John O’Reilly, Division Manager
for Future Brands, which carries the Jim Beam Brands’ De
Kuyper and Leroux cordials, says, “Our spirits have really
come of age. It’s the mixability of our products that puts
us in great shape with our cordial line. The Sour Apple is
in its fifth year of tremendous growth.” While Sour Apple is
the best seller, Peachtree and Watermelon are also doing
extremely well. From a brand standpoint, De Kuyper continues
to dominate the industry, growing 5.6% with 2.7 million
cases – more than twice that of its nearest
competitor.

Jagermeister’s growth and
its 2OO3 numbers tell it all. Tied with Kahlua for the #1
slot in imported liqueurs, Jagermeister experienced a 44.4%
increase in sales in 2OO3. Jagermeister sells across a huge
demographic and is tremendously popular everywhere from
sports bars to fine dining restaurants. Bartender Michael
Ray, who works at the newly opened Smith & Wollensky
Steakhouse in Boston, was initially surprised to find that
their bar sells a substantial amount of Jagermeister. He
attributes this to a nostalgic and fraternal instinct (most
of the people ordering Jager are men) saying, “We’ll get a
group of guys out after work who all range in age. The young
ones want shots of Jager because many of them are right out
of college and it’s familiar. And the older ones like Jager
because it reminds them of their college days.” Gary Park,
owner of Gary’s Liquors in Chestnut Hill adds, “Jagermeister
sells well in the store, and it has a tremendous cult
following. The brand continues to focus its efforts in the
on-premise market that drives people to the stores.” His
store has even had requests for Jager ice luges for
functions.

While most brands saw their
sales climb, the coffee flavored liqueur category didn’t
fare as well. All the major coffee liqueurs were down in
2OO3 or were flat. But the main reason that Gary points to
may be evolution of tastes and change in cocktail
preference. People who once drank White Russians, Black
Russians and Mudslides have switched over to Cosmos, Apple
Martinis and other trendy drinks. The market softness hasn’t
stopped innovation in this flavor category – Jim Beam Brands
will be launching a collaborative coffee liqueur with
Starbucks in 2OO5 that they are quite enthusiastic about.
With the brand name recognition of Starbucks and the product
placement in the higher end cordials category, the new
liqueur stands to be well received.

Of course, not everyone is
swept away by the cordials trend. Several bars I spoke with
stay away from generic cordials altogether and some don’t
even make drinks such as Sour Apple martinis. If asked,
they’ll make it the old fashioned way with Midori and
Southern Comfort. Joy Richard, who bartends at Tremont 647
in Boston’s South End, says that while high-end cordials
such as Chambord and Baileys sell well enough, they stay
away from the “trendy” brands of popular new cordials
because everyone else carries them. Instead, they prefer to
create their own fruit-flavored infusions such as
papaya-infused vodka and prickly pear-infused
tequila.

Bauer Wine and Spirits
located on Newbury St. caters to a mix of students,
residents and area businesses. Owner Howie Rubin says that
while they carry some cordials (mainly the proprietary
brands) he believes that the enthusiasm has dwindled. If
people want sweet for after-dinner Howie finds they are
buying a dessert wine instead. He does point out though that
brands such as Limoncello are doing well as a result of the
current Italian liqueur trend. And the 5Oml size bottles of
cordials sell well as stocking stuffers and with people who
want to experiment with cocktails at home.

With the number of cordials
and liqueur brands and flavors being introduced and
competing for space, attaining visibility and name
recognition are key priorities. Exposure to new products
begins at the bar and bartenders are the front line of
marketing. Paul Canavan with United states, “The key factor
with cordial and liqueur growth has been the substantial
growth of martinis over the past years. Martinis have
provided the opportunity to expose consumers to cordials and
liqueurs that they may have not considered exploring or
tasting. Bartenders have become increasingly creative in
developing recipes that have enhanced some of the classic
cocktails, but more importantly they have created new
cocktails that have put the wow back in the cordial and
liqueur business.”

From the bartender’s point
of views, Michael Ray at Smith & Wollensky says, “Trends
are set by the bartender – we’re the ones who are
interactive with a product and can push and sell it.” But he
adds that it’s also important for reps to have “respect for
the people who sell your product” pointing out that there
comes a time, especially these days, when bars get inundated
with new products and some reps can get very pushy about
placement and brand usage. All this does is turn a bartender
off from a product and bartenders push the brands they like
to use. This sentiment concerning aggressiveness and respect
is echoed throughout the bar industry.

United Liquors has long had
a very committed approach to working with the industry, and
Paul comments, “It is almost in some respect that bartenders
are marketing to us rather that the industry marketing to
them. Today’s bartenders are into individuality and want to
stand out in the crowd rather than doing the same as
everyone else. I remember having focus groups with
bartenders to show them marketing plans and recipes for
brands to try to get them on board with certain concepts.
The output that we got from them was pleasantly surprising.
The bartenders who liked the brand scrapped the marketing
plan and recipes and came back with their own creations that
were well ahead of the industry curve. And truly the most
successful restaurants and bars have extensive and creative
menus that incorporate martinis, cocktails, coffee drinks,
and a special cordial section. Menus are so critical to the
success of this category!”

Now more than ever,
consumers are turning to home mixology – wanting to recreate
the cocktail experience they had at a bar. Gary Park, owner
of Gary’s Liquors in Chestnut Hill, says that his staff
definitely fields more questions these days from customers
inquiring about drink recipes. They have the popular
Bartender’s Black Book on hand to assist people and it’s
getting a lot of use. He says, “The key to cordial sales in
stores is that brands have got to get them going on-premise.
Bars directly influence what I see people buying in the
stores. People come in and they want the brand the bartender
gave them.” In terms of best selling cordials in his store,
it continues to be the De Kuyper line. Gary says, “Sales
have been very consistent, we still go through 3 to 4 cases
of liters a week.” Everyone wants to make those Apple
Martinis at home.

The price point for
domestic cordial lines is attractive to consumers as well.
Many of the flavored generics range in price from $7.5O to
$14.5O for a 75Oml bottle, allowing people to buy and
experiment without suffering a big financial hit. But even
the more expensive proprietary liqueurs hold their own in
retail sales as consumers today are very brand conscious.
Michael Ray says, “The Boston cocktail scene is changing.
It’s very much an image thing these days. It’s all about the
glassware, the look of the drink and the brand.” He
remembers the not-too-long-ago days when bartenders would
use generic flavored cordials and brandies instead of
proprietary ones in shots and mixed drinks. No one really
cared about name brands and no one wanted to pay top shelf
either to have a little Grand Marnier in their cocktail.
Nowadays, he points out, you could never get away with
pouring anything but Chambord, Amaretto di Saronno, and the
like, into a mixed cocktail. Michael also sees this trend as
covering the range of establishments from college nightclubs
to upscale restaurants.

Suppliers have lately
realized the value of product education. A variety of
marketing programs and promotions have been developed to
increase knowledge and gain exposure. Tastings, both on- and
off-premise, have been on the rise. In addition to the
consumer, bartenders and servers are increasingly being
targeted for education programs. As Michael Ray says, “In
this industry today, you have to know what you’re selling to
people.” He laughs and says, “If anything, with all the
exposure they get, customers are overeducated these
days!”

While in-store spirit
tastings certainly help to inform customers and pique their
interests, Gary Park says that most brands could be doing a
lot more. He references Campari as a good example of a brand
that is actively promoting itself by doing drink nights and
tastings at bars around town. While an established name,
Campari is not a product a younger consumer would likely
think to order directly. De Kuyper, too, has done a large
push over the last couple of years to educate both consumers
and industry professionals. John O’Reilly, at Future Brands
says, “We educate our salespeople first as they are our
front line. Then we work on-premise. with bartenders and
waitstaff, and off-premise conducting tastings in stores for
customers.” De Kuyper also has developed a Mix Package
consisting of a cocktail recipe book, flair bottle and
cocktail pourer which can be ordered off their website.
Barry Sheridan says, “In the off-premise, Baileys has a
widespread sampling program that impacts the consumer near
influential point-of-purchase locations. In the on-premise,
Baileys has successfully interacted with key trade
gatekeepers by increasing brand education, delivering
influence marketing and delivering the Baileys quality
story.”

With the increase in home
cocktailing, recipes have become a key marketing tool to
entice consumers to buy a particular brand (or several if
the recipe calls for it). Megan Link with Midori/Hiram
Walker says, “Education is extremely important for both
bartenders and consumers alike. We have materials for both
bartenders and consumers that include recipes and how to mix
the cocktails. HWL partners with other Allied Domecq brands
for on-premise promotions.” Fruja also has an interactive CD
that is being used to educate bartenders. And anyone
searching for recipes on the internet need only type in a
brand’s name to find countless websites filled with
recipes.

Barry states, “The focus
behind Baileys has been centered around ‘On the Rocks’
consumption which promotes the best way to enjoy Baileys.
Godiva is primarily promoted by driving consumer excitement
around a single drink – the Ultimate Chocolate Martini,
which is a combination of Godiva, Baileys and Smirnoff
Vanilla. Drink recommendations are communicated on-pack,
with advertising (Baileys) as well as on-line and on
POS.”

Advertising efforts have
certainly been expanded over the last year in the cordial
industry. In fact, advertising increased 11% with nearly $5O
million spent. Many brands have either shifted or expanded
their ad focus from print media to cable television, with
great results. Barry comments, “Broadcast advertising is
Baileys top growth driver. Without a doubt, the significant
increase in overall consumer awareness of Baileys can be
attributed directly to the broadcast advertising efforts.
With Godiva, while there are no advertising plans this
fiscal year, we’ll be zeroing in on a very targeted consumer
base via influence marketing and sampling at highly targeted
events.”

While varying diet fads
have become a way of life for countless Americans, alcohol
consumption, particularly that of spirits, has remained
largely unaffected. Gary says, “One amazing thing about
cordials is that you would think with the low-carb craze
their sales would really slow down. But drinking cocktails
hasn’t been affected at all. People seem to not be
interested in that sort of sacrifice.” Michael adds that in
the restaurant industry he sees after dinner cordial
consumption acting as a substitute for desserts. In fact,
one of the biggest trends at the moment is the cream liqueur
based cocktail. Paul Canavan says, “Some of the new more
interesting martini’s I’ve just tried are a Chocolate Cookie
Dough Martini (made with Godiva Chocolate Liqueur) and a
Creamy’Tini (made with Di Saronno Amaretto). These were
certainly not the usual suspects on the martini/cocktail
scene, however, and they are testament to the rise in
creativity and popularity of cordials and
liqueurs.”

Barry has an interesting
take on why cream liqueurs have not been negatively
impacted. He says, “In this day and age, there is massive
interest and consumption around a trend called ‘Comfort
Cocktails’ – elixirs that are essentially classified as
‘indulgences’. With the low-carb craze, we initially thought
that a category like Cream Liqueurs might be impacted by
such a health trend, but staying true to its essence as an
indulgence, both Baileys and Godiva soared in popularity as
well as consumption. The net impression was that while
consumers will try to become more healthy everyday, everyone
still craves their indulgences at the same
level.”

Young consumers today are
definitely driving cordial consumption and growth. While
many of the new products are being targeted to the so-called
Generation Y, some of the older brands have worked hard to
change their image in order to appeal to that demographic. A
good example of this is Baileys. Barry remarks, “For several
years now, the Baileys brand has moved away from such
stigmas and classifications as being viewed and consumed as
only an ‘after dinner drink’. The last couple of years have
seen revised brand graphics, visuals and advertising
creative that has sought to update the image of Baileys.
Just recently, after 3O years of slight modifications to the
Baileys package, the brand completely redesigned the Baileys
package to drive an even greater contemporary association
and relationship between the brand and its consumers.
Lastly, Baileys has broken new ground, when just five months
ago the brand was the first spirits to produce its own TV
show, entitled Baileys In Tune, which aired on VH1, starring
John Mayer and Paul Simon. This show, in particular,
demonstrates how Baileys is innovating on a marketing front
to more closely reach and influence its core target consumer
base by tapping into a key consumer connection moment that
is contemporary and more attractive to a 25- to 35-year -old
consumer demographic.”

Paul Canavan sums up the
cordial industry with this prediction: “I believe that with
the record amounts of legal aged drinkers entering the
market over the coming years, and the new young adults that
have been turned onto the brands, it is cordial sectors that
will see amazing growth. There are constant rumblings about
line extensions on major brands and as we have all seen,
numerous new cordials and liqueurs that have entered the
market this year. Martini’s and cocktails will continue to
be strong and still provide building blocks to elevate
cordial business. However, it will be the new generation of
consumers that have entered the market over the past five
years that have been exposed to this category that will
skyrocket brands.”