SPIRITS LIQUEURS: New seekers

Spare a thought for the liqueurs marketing people who are constantly having to pull new products out of old hats, says Clinton Cawood

Liqueurs are not the most significant part of the spirits market, and yet new cream liqueurs, new flavours, and new brands are constantly being released to satisfy bored bartenders and curious consumers. In fact, this diversity might be the most promising aspect of the category.

Bacardi Brown-Forman Brands has recently acquired distribution for two liqueur brands that are not new to the market at all – Tuaca and Chambord. Brand manager, Charlotte Ashburner, believes, “The liqueur category, along with the entire spirits category, is in a very vibrant position at the moment, with bartenders and consumers alike consistently looking for high-quality, versatile brands to enjoy.” Chambord was acquired by Bacardi in July 2006, allowing for greater distribution for the distinctive French liqueur. Ashburner believes that it can continue to grow in sales in both the on- and off-trade in the UK as a cocktail ingredient, a mixer or as a sipping liqueur.

This kind of versatility is an obvious strength of the liqueur category. As drinking habits change, with consumers increasingly drinking at home, for example, or as bartenders look for greater variety in ingredients, liqueurs offer a wide array of choice. As Matthew Steeple, MD for Dutch cream liqueur Vermeer, explains, “Versatility can improve opportunities for drinks – in cocktails, or paired with food. The more opportunity there is to use a product, the better.”

Katie Rawll, marketing director for First Drinks Brands, believes that new liqueur launches will succeed if products are “high-quality, premium, and genuinely new. What we are seeing across a lot of drinks categories is a trend towards premium products, particularly considering the tighter margins in the drinks industry.” Jeremy Hill, managing director of Hi-Spirits, says, “Half of our job is to look for, and develop, new products, and the other half is to develop our existing brands. Consumers are always happy to try something new.”

One major source of new product innovation is in adding flavours to existing ranges. Rawll explains that a number of new flavours added to the De Kuyper range “respond to genuine gaps in the market”. According to Catherine Rigby, brand manager for Luxardo at Cellar Trends, “Bartenders are becoming more adventurous in their cocktail creations and are asking liqueur makers to look at different flavoured liqueurs to challenge them.” Hill explains that Hi-Spirits is “continually reviewing our sambucas [Antica] to ensure we have the best range”. The Antica range currently comprises six flavours.
In terms of sambuca, Matt Rimmer, brand manager at Inspirit Brands, is of a very different opinion. “The UK market has recently seen a number of flavoured products launched under the guise of sambucas. I don’t believe that these can be sustained, nor do I feel that these are an innovation that can be helpful to the category. Sambuca is an anise-based liqueur, and this flavour should not be altered.” In addition, Rimmer claims that, “Such products could confuse the consumer and damage the sambuca category.”

Cream decline
New cream liqueurs in particular are launched on a regular basis, despite domination of the category by Diageo’s Baileys, and in the face of declining cream liqueur sales. According to ACNielsen, cream liqueurs have declined 3% in volume and 6% in value in the UK off-trade (MAT Nov 2006).

Baileys’ dominance of the cream liqueur market is undisputed, and well defended. For example, Diageo invested £5 million in promoting the brand during Christmas 2006. This included a television campaign, radio sponsorship, print advertising and sample-targeting 220,000 consumers. Steeples mentions that when consumers sample Vermeer, “They make an immediate comparison to Baileys”. Amarula, according to Rawll, is outperforming the market, showing positive growth, and believes it to be “a challenger brand to Baileys”. She says, “The cream liqueur brands that are suffering are the ones that aren’t good quality and haven’t been supported.” She points out that there are also a number of own-label cream liqueurs on the market which are likely to contribute to the decreasing value in the category. “For the category to succeed, we need to communicate the premium potential.”

Year-round appeal

Phil McLaughlin, marketing operations controller at Maxxium UK, points out that being limited to festive season sales is detrimental to cream liqueurs. “The challenge facing brands is to ensure they reposition themselves as liqueurs to be enjoyed throughout the year,” he says.

“As the market becomes increasingly saturated, the real challenge lies in maintaining loyalty and market share,” McLaughlin continues. “To survive in such a competitive field, brands need to ensure that they are communicating their key messages and unique selling points to the consumer. Education is key to brand prominence and survival.” He is referring specifically to the traditional liqueur sector, and his experience with Maxxium’s Cointreau brand in particular. McLaughlin quotes Mintel figures of a 40% increase in traditional liqueur sales since 2002.

For liqueurs in particular the on- and off-trades provide different opportunities and challenges. The on-trade may be a traditional platform for developing a brand, but the off-trade is an increasing priority for a number of brands. Off-trade liqueur sales have increased by 8.6% in the last year (ACNielsen, MAT Aug 2006).

Rimmer reports good growth for Frangelico in the off-trade, largely via listings in multiples. “A large part of the success,” he says, “is due to Frangelico’s versatility. The brand offers the take-home consumer a wide range of uses.” For Steeples, whose Vermeer brand is primarily off-trade focused, this is also a driver for sales. “For a product like ours, people are more likely to enjoy it at home,” he says.

The Luxardo range is more suited to traditional means of brand building within spirits. Rigby believes that the off-trade is a viable market “after awareness and trial has been encouraged in the on-trade”. Hill says, “All the trends in the on-trade filter down to the off-trade, but the off-trade is a lot more inflexible when it comes to new listings and finding space for products. The on-trade is more open-minded. Not until a product does really well in the on-trade is a supermarket buyer willing to list it,” he argues.

Cellar Trends’ Rigby says, “Off-trade sales are increasing, showing that more people are socialising at home.” From Maxxium’s perspective, McLaughlin notes that, “Consumers are becoming increasingly experimental at home and will look to create long mixed drinks in favour of safe, predictable spirits and mixers. Creativity in the home is also no longer occasion-specific.”

Home entertainment
The natural extension of this, albeit an ambitious one, is to promote cocktail making at home, something which a number of brands are involved in. McLaughlin says, “Bols and Cointreau are committed to both educating and exciting consumers in the art of cocktail creations.” This is also an area of the market being targeted by De Kuyper. “We’re actively encouraging people to make cocktails at home,” says Rawll.

Ashburner believes, “Retailers should link liqueurs with other key cocktail ingredients in store or capitalise on the trend of at-home entertaining, which is becoming increasingly popular as consumers become more diverse in the drinks they are creating at home.”

For Hi-Spirits, there is a sector of the on-trade that presents opportunity for sales of its liqueur range. “We see the opportunity for Volare in the independent free trade,” explains Hill. “The idea is to find 300-500 licensees that are keen
to learn, and provide them with the knowledge, product and equipment. Cocktails increase profit, customer satisfaction and customer interest.”

Meanwhile, in the on-trade in general, cocktails are still undoubtedly driving not only sales of liqueurs, but supporting the launches of new products and flavours.

Liqueurs may be benefiting from sales of cocktails, but many brands remain relevant in a digestif or aperitif role, a more traditional occasion for liqueurs. The limited drinking opportunities for liqueurs may be less of a concern in the off-trade, but it is still relevant in the on-trade. According to Rawll, “Each brand has different challenges depending on the drinking occasion. For example, we’re developing Bénédictine as an after-dinner drink.”

Rimmer notes that, “Opal Nera and Frangelico are two premium liqueurs that are selling well through restaurants, which demonstrates that consumers are favouring liqueurs particularly as a quality digestif.”

This is not a desirable market for all brands. Rigby says, “Luxardo has succeeded in breaking out of the classic digestif and aperitif category.” Ashburner also points out that, “[While] digestif and aperitif sales are assisting the premium liqueur category, the real potential lies in the growth of premium cocktails.”

For McLaughlin, “There is a common misconception that liqueurs are just digestifs and aperitifs and in this respect they are being pigeonholed for various occasions. We should be ensuring that liqueurs are not considered just occasion-specific but something to enjoy and indulge in at any time of the year.”

As companies relentlessly launch new products and flavours, the diversity that is undoubtedly one of the most positive aspects of the liqueur category can only improve. In addition, many consumer trends, such as an interest in increasingly premium products, and rising cocktail culture, can only benefit the category as a whole. 

Shooting in the dark

With the increasing focus on responsible drinking, the notion of promoting a brand as a shot is a controversial business. Is it worth the potential criticism?

Matt Rimmer, Inspirit Brands: “I’m comfortable with people promoting Teichenne as a responsible shot with its mid-strength abv of 20%. Opal Nera is a premium liqueur, stronger at 40%, and in this case I want consumers to focus more on the brand’s taste and heritage.”

Matthew Steeples, Vermeer: “Is it worth it? For us, probably not. But for cheaper brands it’s the best way to sell their product. If we were in nightclubs we would probably be more involved in shooters, but we haven’t pursued that as many nightclubs asked us for a listing fee.”

Katie Rawll, First Drinks Brands: “Promoting as shooters is one way to increase liqueur sales, but it’s not relevant to our portfolio. Our brands are not suited to the shooter occasion, but even if they were … we’re obviously committed to responsible drinking.”

Catherine Rigby, Cellar Trends: “Luxardo and Cellar Trends work within the guidelines of the Portman Group and Drinkaware to ensure all promotional advertising and material is in line with responsible drinking. We train our promotional staff to encourage trial of Luxardo and Jagermeister through the selling of shots and do not encourage drinks to be served free.”

Charlotte Ashburner, Bacardi Brown Forman: “Shots are just one of the many ways that liqueurs can be consumed. Responsible consumers can enjoy a shot without the objective of their consumption being inebriation, and promotion of the responsible drinking of a spirit or liqueur as a shot can form part of a coherent responsible drinking policy. We never use the term ‘shooter’ as this term suggests that a shot should be ‘downed in one’, while many shot drinks, particularly premium liqueurs and spirits, are equally well, or better, enjoyed sip by sip.”

Phil McLaughlin, Maxxium UK: “Shooters themselves are an impulse buy for many consumers on a night out and there are many non-liqueur contenders in the marketplace such as After Shock that have very good distribution in the on-trade and will, in many instances, be the shooter of choice for a generation of consumers. In terms of fruit liqueurs, Sourz can be enjoyed just as much as a shooter as part of a mixed drink.”

© db January 2006