“It’s Jack Daniel’s world we’re just living in it.””
Martin was a star in his own right, a well-paid singer and
actor.
But when Frank Sinatra was in the room, Martin was eclipsed,
and he knew it.
It
Was a Very Good Year
So it is with the Titan from Tennessee. Jack Daniel’s is the
best-selling whiskey in the world. It makes up, all on its
own, 32.4% of the straight whiskey category in the US
market, selling over 4,73O,OOO cases in 2OO6 (Adams Beverage
Group figures). That’s up almost 5% over 2OO5, better
percentage growth than almost any other brand, and over half
the year’s volume growth in the category. It’s big. But
unlike some other category-busters, brands that have grown
so big that they transcend their origins and compete on a
different plane, Jack Daniel’s stays true to its Tennessee
gentleman roots. It’s not a boastful brand. “Jack Daniel’s
is an iconic brand and probably does bring consumers into
the category who would not be considered typical whiskey
drinkers,” says Jack Daniel’s USA brand director Mark Bacon.
“However, Jack’s success is also a success for the category
as a whole. More than half of the top 2O brands also posted
volume gains in 2OO6, so the category as a whole is
experiencing success as well.”
Now there’s a gentleman.
And Bacon’s right, too: 2OO6 was another good year for
American straight whiskey, with most of the declines coming
in largely unpromoted bargain brands. There were a couple
exceptions – George Dickel and Old Forester – but those two
brands are in the process of being re-positioned, and signs
continue to be hopeful for the future. Emma Hollander, the
GM at Boston’s well-regarded Tremont 647 restaurant, says
that it’s partly a matter of bourbon being hot right now –
“Trend is always a big part of it” – but also about it just
tasting really good. “It depends on who you’ve got selling
the drinks,” she points out. “The majority of our staff
drink bourbon, and the people making up the menus drink
bourbon. I am a bourbon drinker; Basil Hayden is my drink of
choice. And, you always sell what you like the most. We tend
to drink a lot of bourbon.”
Come
Fly With Me
Keith Neumann is vice-president of bourbons for Beam Global
Spirits & Wine, what has to be one of the best job
titles going. “Yeah, I have the best job in the company!”
Neumann laughs. He sees bourbon continuing to grow, largely
driven by the success and excitement of the small batch and
specialty bourbons, and the influx of new bottlings. “We’re
continuing to see strong growth,” he says. “If you look at
bourbon as compared to vodka or even tequila, I think the
development of the category is still in its infancy. We
haven’t had anywhere near the same number of brands enter
the category in bourbon yet. That’s changing slowly. Signs
are pointing to people wanting to get into this
category.
“There are some macro
trends helping the overall category,” he continues. “Spirits
as a category is growing, it’s made some gains on beer
recently, and that helps all the products in the category.
We’re seeing a trend to things that are more hand-crafted,
more authentic, and bourbon certainly fits that bill. The
category looks quite healthy. The growth will only be fueled
by more introductions in the category.”
Bacon also sees growth
continuing. “Current forecasts for the category remain
positive,” he notes, “with continuing growth in the 2 to 3%
range and increasing relevance to consumers. Growth has been
driven by a variety of factors: Consumers are trading up
within the category to more premium offerings and are also
discovering the mixability of whiskey with a return to
classic cocktails.”
So there’s Jack, Jim and
Evan, the third largest seller in the category. Evan
Williams, from Heaven Hill, continued its steady climb, with
3.2% growth in 2OO6. But Larry Kass, director of corporate
communications for the distillery, doesn’t necessarily agree
that it’s the specialty and small batch brands that are
driving the category. “Certainly there is a clear upward
trend overall in the American straight whiskey category,” he
allows, but “while it is politically correct to attribute
this to the interest in super-premium single barrel and
small batches, the numbers just don’t bear that out. They
only make up probably 8 to 1O% of the category depletions.
The overall category is growing by such impressive numbers
because of the growth of the big brands – Jack Daniel’s, Jim
Beam White, Evan Williams, Maker’s (at 666,OOO cases,
they’re not as small batch as they’d like everyone to
think!), and Wild Turkey.” (Each of the brands Kass cites
was up at least 3% in 2OO6.)
“This is a pretty unique
situation in a spirit category nowadays,” Kass points out,
“growth across both the top and mid-tier spectrum. Sure,
imported gins, single malt scotches and imported blends are
up, but look at the domestic gins and US-bottled scotches
and you can see the difference in the straight whiskey
category.”
Not so surprisingly, Kass
doesn’t completely buy into the “it’s Jack Daniel’s world”
theory, either, though he has to tip his hat to the
super-premiums to do it. “While Jack Daniel’s is clearly the
8OO pound gorilla in the category,” he argues, “44% of the
growth came from other brands, primarily Jim Beam White,
Evan Williams, Maker’s Mark, and Wild Turkey. [And]
the disproportionate growth at the super-premium end is
indicative of a growing “premiumization” of the category. So
while clearly Jack Daniel’s is growing strongly on a large
base, the category is not a one trick pony.
“Today’s consumer is
genuinely interested in exploring the straight whiskey
category and is eager to be up-sold,” he concludes. “If
properly nurtured, this interest can last into the
foreseeable future. After all, the American whiskey category
has just in the past 1O years or so started to think, act
and market in the same forward thinking way as some of the
other hot spirits categories.”
What’s
New?
There are up-sells at the ready, of course. The Beam Small
Batch collection – Booker’s, Baker’s, Basil Hayden’s, and
powerhouse Knob Creek – is Beam’s high-end offering, and
they also have the mid-range Jim Beam Black Label, an
8-year-old version that Neumann says has “been growing
double digits for the last five years. It’s just a perfect
product. The biggest thing holding it back is
awareness.”
Heaven Hill offers the Evan
Williams Single Barrel Vintage series, a solid package of
quality bourbon at a very reasonable price. Gary Park, of
Gary’s Liquors in Chestnut Hill, loves the Elijah Craig
18-Year-Old, “it’s beautiful,” he says, and “They’re at a
great price. An 18-year-old Scotch is over $1OO, Elijah
Craig 18 is about $55.”
The Jack Daniel’s “Family
of Brands” includes Gentleman Jack and Jack Daniel’s Single
Barrel. “As with Jack Daniel’s, both brands are continuing
to grow,” Bacon says. “We’re attracting whiskey consumers
who are trading up or seeking a different taste profile and
experience, and I know that we’re also gaining consumers
from outside the category who are attracted to the
super-premium image of both these brands.”
Jack Daniel’s stablemate in
parent company Brown-Forman’s portfolio is one of the
strongest super-premium brands, Woodford Reserve. “The whole
spirits business has been reborn through the premium and
ultra-premium end of the business,” says Woodford master
distiller Chris Morris. “The super-prems and above are
enjoying good sales. People are drinking those brands, and
there are more people who are drinking SW [straight
whisky] than ten years ago. That adds up.”
Even a super-premium brand
like Woodford Reserve has developed trade-ups. The Woodford
Reserve Master’s Collection debuted last year with a 4-grain
bourbon, made with rye and wheat as ‘small grains’,
something that enthusiasts had been calling for. They
snapped up the pricey 4-Grain quickly. Paul Souza, manager
at New England Wine & Spirits in Newburyport, did a
bourbon class for his store-based New England Whisky Society
centered around it. “We had three cases of the 4-Grain,” he
said, “and we sold two cases in that one night. At this
point, a higher price almost reinforces the quality. I think
it’s evidence of great strength in the category.”
This year, I joined Morris
in Kentucky for the premiere of the next Master’s Collection
whiskey, Woodford Reserve Master’s Collection Sonoma-Cutrer
Finish. This was a slightly younger version of Woodford that
was finished for three-and-a-half months in a
freshly-emptied Sonoma-Cutrer chardonnay barrel. Morris
applied for and received a special ruling from the ATTTB
that allowed the whiskey to be labeled as a “Kentucky
Straight Bourbon Whiskey Finished in California Chardonnay
Barrels”.
It was a unique experience:
a bourbon with light fruity notes and a crisp wine finish, a
synergistic melding of two delicious drinks into a third. As
Morris said – and demonstrated, with a tasting of a variety
of wood-finished Scotch whiskies – “wine-finished Scotch
whisky is still clearly Scotch. This is clearly different, a
third thing, neither wine nor bourbon.”
Morris used the occasion to
warn against difference for difference’s sake. “Single malts
have that great range: wine finishes, peat levels, great age
ranges. We can’t differentiate as easily as they can because
of the legal restrictions on bourbon. We have to have real
differentiation, like the 4-Grain, the Sonoma-Cutrer, the
Bernheim wheat whiskey. They have to taste really different,
they have to be really different. If they aren’t, it
undercuts things. If you put out an 8-year-old, a
12-year-old and a 19 year old, for example, and they’re only
really different by what’s on the label, that’s damaging.
People won’t buy the next one. But we can really go places
if we do it right.”
One small producer in
Boston has gotten into the act, with a definitely different
idea: Infusion Diabolique Bourbon. Azure chef Robert Fathman
has taken premium bourbon and infused it with figs, cinnamon
and vanilla beans. It’s only available at a handful of
stores and bars, but Hollander loves it in a Tremont 647
signature cocktail, the Sidecar from Hell. “We are the top
distributor for Diabolique,” she says
proudly.
Young
at Heart
Some of the strength of the category also comes from who’s
drinking it. Straight whiskey has managed to avoid the
“graying” of their consumers that is slowly dragging down
segments like Canadian whisky and blended whiskeys (see
sidebar). “There’s definitely a younger crowd buying
bourbon,” says Gary Park, “Late 2Os, early 3Os.”
“It’s a little sweeter
style than Scotch, which is appealing to a younger drinker,”
he theorizes. These younger drinkers aren’t all coming in at
the entry level, either. “We still sell a lot of Jim Beam,
but our small batch sales are really exciting. It started
with Booker’s, Baker’s and Basil, but now we’re into things
like the Jefferson Reserve. We sell a lot of Maker’s, and
the holiday packaging, the different waxes keep people
interested.”
Park sees younger drinkers,
but he sees older whiskeys picking up, and he’s pleased. “I
drink bourbon myself,” he said. “I go back to the old-school
brands: J.W. Dant, George Dickel, Old Fitzgerald, Henry
McKenna. They’re coming back, slowly, but they’re coming
back. They’ve re-packaged Early Times and some of the other
older brands, and they’re doing well.”
All
or Nothing at All
Sometimes, of course, the success of a category can be a
problem. Kass admitted as much to me earlier: “It’s a
problem, but it’s a good problem. It comes as a result of
success. This isn’t anything that we haven’t been dealing
with for a long time: demand is strong and you produce, then
a few years later you have a lot of stock. With American
straight whiskey becoming popular, that challenge has come
home to roost.”
Joe Howell, the whiskey
manager at Federal Wine & Spirits in Boston, is selling
high-end whiskeys as fast as he can. “The only trouble with
American whiskeys,” he says, “is getting them. Sazerac
(Buffalo Trace) is hard. I get three bottles of George T.
Stagg, three bottles of Eagle Rare. It’s been tough. I’ve
talked to everyone who will listen. I have customers calling
me from other stores, I’m looking for it everywhere. It
shouldn’t be that hard. I have some extreme bourbon fanatics
and it’s a shame I can’t do more for them.
“I try to handsell
everything,” Howell says, explaining how he has built
Federal’s high-end bourbon sales. “I’d like to do more
tastings; I’ve had Jimmy Russell and Fred Noe in. I’d like
to get Buffalo Trace in on that. I have over 2OO bottles of
whisky open. But I can get people over from Scotland to do a
tasting easier than someone from Kentucky. The consumer
should be able to see and taste and enjoy these
whiskeys.”
Kris Comstock, Buffalo
Trace’s brand manager, defends what looks like shorting.
“Supply is a real issue,” he says. “We worked on the Sazerac
Rye (6-year-old) packaging and put the whiskey away before
it got hot. We’re still allocating, and will be for quite a
while. We’re getting a few more thousand cases, but that’s
like spitting in the ocean.
“We’ve gotten ahead of
ourselves with expanding sometimes,” he explains. “Buffalo
Trace is our flagship brand. We’ve been making it since
1999, which seems like a long time. People want us to do a
line extension, but 99% of the people in the world have
never heard of it! Our long-term goal for it is for everyone
to afford it and get it everywhere. My long-term is 2O47.
I’ll be giving tours in a walker. But we’ll have Buffalo
Trace everywhere. You’ve got to think that far
ahead.”
It’s somewhat amazing that
this category’s biggest problem is now keeping up with
demand. After years of putting away whiskey they weren’t
sure there’d be a market for, distillers are now scouring
warehouses for forgotten gems, and expanding their
facilities for the first time in decades. “It’s a great and
terrible time,” says Larry Kass, and he’s right on the
money.
But just like the Great
Tequila Scare, when gloom and doom was predicted because of
a huge agave shortage . . . we’ll get through this. All you,
and the producers, and the brand ambassadors, have to do is
keep the interest in the category alive ’til the cavalry
comes over the hill in a few years, and we’ll see American
Straight Whiskey start living up to its promise. As Frank
said, “The Best is Yet to Come.”
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