Liqueurs – Mixmasters

While cocktails and mixers are opening up new opportunities for the wider liqueur market, cream liqueurs are keen to stress they are not just for Christmas, says Tom Bruce-Gardyne

“What does the Pope drink?”
“Crème de Menthe”
“Right, gi’us a pint o’ that.”

Such drinks have come a long way since Billy Connolly joked about Scottish tourists in Rome at a time when liqueurs seemed in terminal decline. They lived in the dark recesses of the national drinks cupboard where their sweet, sticky contents crystallised for 364 days a year. They were then brought out to placate or sedate ageing relatives on Christmas day. They had an occasional role as a filling in fancy chocolates and were sometimes ordered as an indulgent digestif in restaurants. And that was about it.

Baileys broke the mould by pioneering the cream liqueur market in the mid-seventies and by deliberately targeting women. The fact that women make up half the adult population would not have been obvious from studying the UK drinks industry at the time. Innovation among female-friendly drinks had barely moved beyond Babycham and Pony – “The drink with a kick”. By 1990 cream liqueurs had hit 496,000 cases in the UK. A decade later they had reached 1.24 million cases and by 2004 sales were over 1.8m according to the International Wine & Spirit Record. In the off-trade, ACNielsen put cream liqueurs up 7% in volume and 2.3% in value in the year to October 2005.

Baileys has two-thirds of the UK market for cream liqueurs, and to get there it has always advertised heavily. It has certainly had the money to do so with a shelf-price pegged to that of a mainstream spirits brand. At 17% abv, the Treasury only plunders £2.33 in duty on every 70cl bottle compared to £5.48 for Scotch.

Having sponsored Sex & the City, Baileys brought us its Serve Chilled TV campaign over Christmas. In one advert a young, mixed-race group of friends are relaxing by a pool. One of the guys goes inside to fetch some Baileys, has trouble with the ice and so pours the bottle straight into an ice-bucket, adding a straw. With its sunny, Californian backdrop the advert reinforces the brand’s “anytime, anywhere” message, while the use of a man challenges the view of Baileys being just for the girls. Personally, I have never seen men drink it, but according to Peter O’Connor, the brand’s global PR chief, they now account for 40% of total purchases and up to 50% of consumption.

Cream of the crop

In 30 years, Baileys has become a global superstar with sales of over 6m cases. In the UK, to combat signs of middle-age it has developed a raft of range extensions. These mimic the hair dye and anti-wrinkle cream of those core consumers who want to cling on to their youth for as long as possible, just like their beloved Baileys. Among new variants have been Baileys Glide (now discontinued) and before that came Baileys Minis, an idea inspired by the hotel mini-bar. It has proved a clever way of getting the brand out of the drinks cupboard and into the fridge. This makes it not only far more visible, but a ready alternative to any half-opened bottle of wine.

A more worrying sign of ageing has been the deep discounting of Baileys in the all-important litre-size where most of the action takes place in the UK off-trade. Having never dipped much below £12, Baileys dropped to £9.99 a litre for Christmas 2004. This was a disaster for its distant, but closest rival among Irish creams, Carolans, whose owners C&C International had unfortunately chosen to raise prices at that moment. With Baileys back at £9.99 last December, Carolans was not going to be caught out again and so chose a festive £6.99 to maintain a price position of two-thirds that of the market leader. Off-promotion Carolans sells for around £8.99.

Brian Walsh, MD of C&C International, suspects Baileys price slashing stems from the global slowdown in cream liqueurs and the need to maintain volumes come what may. Not long ago Diageo was predicting that its wonder-brand was going to hit 10m cases by 2008. This now looks wildly optimistic. Of course the shelf-price is set by retailers and some may have cut their own margins to use a discounted Baileys to drive foot-fall and poach punters from rival stores. But two years in a row smacks of collusion on the part of Diageo which is having to divert ever more of its promotional budget into price promotion.

Scots alternative
With aggressive discounting in the multiples and with much of the on-trade sewn up by Baileys, whose brand-call remains rock solid, it would appear a tough category to break into, yet Columba Cream has managed to double sales since Kenny Mackay and his team relaunched the brand last June. “We looked at the market and did not see anyone trying to take a real premium position on Baileys except for Drambuie,” Mackay explains.
Columba’s USP is its make-up – only single malt Scotch whisky, cream and honey are used – and its provenance, being Scottish not Irish. It has already built a good franchise among independent retailers north of the border and has moved in on department stores like Harvey Nichols and the London on-trade. Bars have been targeted with a six-pack and glasses to promote a new take on the Irish coffee, called a Highland latte. Apparently it has gone down a storm. Back in Scotland, tourism helps the brand sell as much in August as it does in the months of November and December.

For most liqueurs, however, the need to break out of Santa’s grotto and spread sales more evenly throughout the year remains a burning issue. That said, many brands continue to blow most, if not all, their promotional budgets at Christmas, which is kind of self-defeating if you think about it. “The fact is nobody does very much to alter the seasonality of liqueurs,” says Brian Walsh. His own brand Carolans does promote itself around Mother’s Day and St. Patrick’s Day, but inevitably the period of peak demand and, sadly, peak discounting remains Christmas.

Amarula Cream, which claims to be Baileys biggest global competitor, has been growing strongly in the UK off-trade with listings in most of the grocers and chains like Threshers. According to ACNielsen, sales were up 20% in the 12 months to October, while value increased by 24%. For Andy Corris, the brand manager responsible at First Drinks Brands, Amarula’s success lies in its uniqueness: “It is the spirit of Africa and the fruit of the Marula tree.” This definitely sounds different from all those me-too brands that pursue Baileys with their “oirish creaminess” at a third of the price. Amarula has also been targeting the on-trade as a cocktail ingredient.

This is also true of Disaronno, the Italian amaretto which is also distributed by First Drinks, and, to be honest, of just about every spirit and liqueur in the business. Being a non-cream liqueur, sales of Disaronno are a little less seasonal. To encourage this trend, the brand engaged in some TV sponsorship last Spring, ran a Valentine’s Day promotion, featured in the BBC Good Food Show and, in the summer, held a sampling event in central London aimed at 100,000 women. By October Nielsen’s MAT figures in the off-trade had risen 19% compared to 7% for the total non-cream category whose value rose by 4.4%.

For Christopher Lake at specialist importers, Toorank, the beauty of the category is its diversity of styles, flavours and levels of alcohol. Such drinks can, and are, made of almost anything and this fragmentation makes it easier for niche brands to be heard, compared to cream liqueurs that are forever in the long shadow of Baileys.

Liqueurs are officially defined as being between 15% and 20% abv, but most people would set the boundaries much wider and include syrups like Triple Sec and Blue Curacao. Toorank imports Sambuca Puccini which did well at last year’s IWSC awards. This has helped to extend distribution beyond the ethnic Italian on-trade and into clubland.

Hazelnut cases
Seeding your brand in the on-trade and being seen in all the right places is critical. After three years work, C&C International is reaping the rewards with Italian hazelnut liqueur, Frangelico, which has suddenly appeared in Waitrose and is on trial in Sainsbury’s. Before Christmas MAT sales were at around 3,000 cases but, with this boost in distribution, “Watch this space!” says Brian Walsh.

From France comes Grand Marnier which claims to sell one bottle every two seconds around the world. Being an orange-based liqueur from Cognac with a 175-year history gives it a certain credibility in a crowded market. Distributed by Fior Brands it has worked hard to de-seasonalise sales. While half its volumes are in the last six weeks of the year, all on-trade promotion is now done outside the festive period. The aim here is to promote the brand more as a spirit than a liqueur which can be a base for cocktails rather than simply an ingredient.

As in life, liqueurs need to find the right partner to broaden their appeal as a long drink. Disaronno is trying it on with Diet Coke, while Grand Marnier is making eyes at tonic.
Midori, the melon-based liqueur from Suntory, also distributed by Fior, has long been linked with lemonade. Since being listed in Tesco, Midori has doubled its volume in five years. Last year a sampling programme, aimed at 14,000 consumers, sought to promote a mixer that was less sweet such as cranberry juice or sparkling apple juice. Half the sales are in the on-trade where flairing – or the theatrical tossing of bottles behind the bar à la Tom Cruise – is encouraged. This led to Nicolas Saint Jean, the world flair champion no less, featuring in the first ever TV ads which ran in Scotland last spring under the strap-line Midori – Refreshingly Different. Apparently Scottish sales went through the roof, up 111% in June.

Talk of liqueurs would not be complete without mention of cassis and the other fruit-based drinks that seek to build a presence in leading cocktail bars. Through its UK distributor, Amathus, the niche French producer Joseph Cartron has secured listings in London venues like Nobu, Hakkasan, Roka and the Ritz as well as Harvey Nichols in the off-trade.

Meanwhile, Lejay-Lagout, which claims to have invented crème de cassis in the mid-19th century intends to make waves in 2006 with its brand Sisca. At the time of writing, plans were under wraps, but a major shake-up is expected.  db January 2006