SPIRITS: BOURBON – Bars and stripes

American whiskeys are showing the kind of growth in the UK that blended Scotch can only dream of. Clinton Cawood reports on a diverse, dynamic category where even premium brands are usually downed with cola

While everyone has been distracted by vodka, bourbon has been quietly growing its sales at a massive pace in the UK. The category is a small one as far as volume is concerned, but its popularity among some consumers is not easily dismissed. Bourbon also delivers in value terms when compared to most other spirits categories.

Discussing the bourbon category without including Jack Daniel’s – followed by a technical discussion of the reasons why it cannot be included in the category – is not easy. The definition of bourbon is notoriously exacting. Roy Evans, the UK sales and marketing manager for Buffalo Trace, confirms that bourbon is “probably the most tightly regulated product in the world. The definition is four pages, compared to four lines for whisky.”

But as Evans rightly points out, ”It’s not important to consumers – it has more relevance to the trade, to the buyers.” The sugar maple charcoal used in the production of Jack Daniel’s adds a flavour to it, he explains, which excludes it from the rigorously defined bourbon category.

Euromonitor’s figures for “bourbon/other US whiskey” in the UK report an increase in volume of 107% since 1997. This is the highest increase in any category for the same time period. Vodka, to provide some perspective, increased by nearly 56%. Vodka accounts for over eight times more volume, however. Euromonitor’s value figures are even more striking. Sales of US whiskey rose by 195.9% (compared to 46.8% for vodka) over the same period. Not only are sales increasing, but the bottle price is increasing much faster.

Buffalo Trace launched early in 2002. “There were one or two bourbons in the UK slightly before us, like Maker’s Mark and Woodford Reserve. This all raised awareness and interest in bourbon,” says Evans. Euromonitor’s figures confirm this, with value rising more steeply from 2001 onwards.

Jack Daniel’s has remained the undoubted market leader throughout this time. Phil White, senior trade marketing manager for Jack Daniel’s at Bacardi Brown-Forman Brands, believes that the bourbon/other US whiskey category “has a unique appeal for consumers and this transcends the spirits category and competes against all types of beverage alcohol”. Jack Daniel’s has a particularly strong reputation in the UK, and has even established a brand-call in the on-trade, a rare feat in this market. White explains, “This has really been something that consumers have led themselves.” He believes that much of the success of Jack Daniel’s can be attributed to the fact that it is “virtually unique in being a Tennessee whiskey”. White has also recognised an increase in “UK consumers asking for a brand by name, and this is always beneficial to any premium brand, including bourbon”.

Making a mark
While White considers Jack Daniel’s to be competing with all other alcoholic drinks, other bourbons are often defined primarily in terms of Jack Daniel’s. Jim Beam, according to Drew Munro, the brand’s marketing director, offers an alternative to the category leader, while Maker’s Mark, also in Jim Beam’s portfolio, “offers a trade up from Jack Daniel’s”. Despite marketing a number of brands, including small-batch bourbons such as Knob Creek, Munro believes, “There is no conflict and no crossover. The American whiskey market in the UK has got to a point when it can segment.”

One major difference between Jack Daniel’s and niche bourbon offerings is that the former targets consumers for recruitment between the legal drinking age and 24 years old, aiming to retain consumers between 25  and 44 years old. For niche bourbons, the target age is usually older. Woodford Reserve is typically targeted at consumers over 30 years old. Chris Roser, trade marketing manager for Woodford Reserve, describes the target consumer as “affluent and matured beyond mainstream spirits”.

“People talk about ‘legal drinking age’,” says Munro, “but 60% are over 30 years old.” For Roger Harrison, UK head of marketing for Pernod Ricard’s Wild Turkey, a typical consumer is a “28- to 34-year-old male, who works in a major city and used to be a regular Jack Daniel’s drinker”.

The target age may vary, but the focus on a male audience is more consistent. For Jack Daniel’s, this is estimated to be a 70:30 split. Roser explains that, for Woodford Reserve, “We are looking to attract our ‘premium man’ consumer, a discerning drinker who is influential in society and appreciates finer quality products.”

Consumer campaigns

The way these consumers are targeted, says Roser, is via “advertising campaigns, our new link to premium horse racing in the UK, and sponsorship of quality UK events, such as The Cartier Polo”.

“With Jim Beam we’ve been doing one communication and doing it well,” says Munro. Acknowledging that an association with music is not particularly innovative within drinks marketing, he explains, “There are very few that target emerging artists, supporting emerging talent.” This includes a long-term collaboration with guitar company Gibson, resulting in an invaluable association with The Les Paul guitar, “an iconic brand both within the industry and to those interested in live music”, says Munro.

For Maker’s Mark’s first advertising campaign in the UK, the focus has been on consumer experience. Taxis featuring the brand’s red wax seal and known as “waxies”, have been available to drive consumers to bars stocking the bourbon. As Munro explains, “We have personalised the experience back to the consumers.”

Bacardi Brown-Forman estimates that there are 2.7 million Jack Daniel’s drinkers in the UK. The brand boasts a £9.5m annual marketing budget, which includes £5m worth of advertising. A major focus for the brand is the annual Jack Daniel’s birthday celebrations, an international series of events held throughout September.

Woodford Reserve makes use of its US roots in marketing activity in export markets such as the UK. “We have a strong relationship with The Kentucky Derby in the US, so this has been a feature of this year’s PR campaign,” says Roser. The US origins of various bourbons are used in UK marketing campaigns to varying degrees. Harrison, when marketing Wild Turkey, believes that while “bourbon is very related to America, it is the pioneering spirit of the early European settlers that is most appealing to the UK drinker”.

For Munro, “Most brands come from somewhere, stand for something and have provenance.” When marketing Jim Beam or Maker’s Mark, “the cultural relevance is not overt. This is the United Kingdom, not the United States. Assuming that one can simply transport a cultural reference constitutes lazy marketing,” he explains. The differences between bourbon in the US and the UK in terms of culture and marketing may vary, but in terms of consumption, these differences are far clearer. As Evans points out, “In the US market bourbon is consumed with a beer, or neat.” In the UK, neat spirits consumption is far less prevalent.

In the mix

“New consumers are adopting our brand in the form of cocktails, as well as drinking it straight and on the rocks,” says Evans. “However, there has also been a big take-up of the product with mixers. Fundamentally, these consumers are choosing to drink a premium product.” Roser acknowledges that, “The perfect serve will always be neat or on the rocks, but with a product like Woodford Reserve, it mixes well in premium bourbon cocktails such as a Mint Julep.” There is a traditional association between Mint Juleps and The Kentucky Derby in the US, and Woodford Reserve is the official sponsor for this.

For Harrison, “The emphasis is upon classic American cocktails such as The Whiskey Sour, and about the unique taste of the bourbon.” But according to research from Jack Daniel’s, 80% of its whiskey is consumed with cola. Cocktails, and “perfect serve” concerns are primarily the domain of the on-trade. This is an important arena for niche bourbons, where bartenders play an important role in educating and selling to consumers. Munro, when discussing marketing to on-trade staff, speaks of “influencing the influencer”. Harrison confirms that, “Bourbon is marketed with strong bartender advocacy programmes among prestige and premium on-trade outlets. In these venues, bartenders encourage consumers to trade up.”

In the off-trade, as Harrison explains, “It’s all about gifting, as 60% of sales are for this purpose, rather than for own consumption. As a result, added value is a core driver.”

While the off-trade accounts for a smaller percentage of bourbon sales, there is an increasing focus on this sector. “There is definitely potential to increase sales in the off-trade,” says Evans. “Drinking patterns are changing. For example, consumers may be going out to drink but they’re not travelling as far,” he explains.

He acknowledges, however, that, “Although we will start allocating more resources to the off-trade, the on-trade is the foundation of success for us.” Roser, too, acknowledges the importance of premium retailers in the off-trade. “These provide premium avenues for when our clientele want to buy it when they see it in the on-trade,” he says. In the on-trade, staff “encourage trial, so hopefully our customers will then buy it in the retailers”, Roser explains.

Hidden talent?
Bourbon is undoubtedly here to stay. UK sales continue to grow, driven by spirits drinkers, who are willing to trade up and are more aware of premium offerings. Roser believes that the UK’s “discerning drinkers, who appreciate the quality of premium branded spirits” make this an important market. According to Harrison, “The category is small but growing strongly and projected to show, along with golden rum, the biggest growth percentage increase for spirits among 28- to 34-year-old men.”

The growth of bourbon could only remain quiet and understated for so long. As it increasingly becomes a part of consumers’ repertoires, the importance of this diverse and tightly regulated premium spirit is undeniable, and looks set to continue rising.

© db November 2006