POWER BRANDS 2007

25 May 2007 By db staff writer

“standfirst”>Which brands generate the most value? Find out who makes it into the world’s top 100 –  and why – in our comprehensive, up-to-the-minute guide. Report by Patrick Schmitt

The text of this article appears below, but for a complete 10 page PDF,
which includes numerous additional lists, statistics and charts, <click here>

ONE YEAR on, and we have a new survey rating the most powerful wine and spirits in the world. What's changed? There are as many as 20 new entrants, over 60 drinks have shifted places and there's a new leading country and company. Why? Market demand has altered, consumer tastes evolved and brand owners changed. Only the most powerful brands are firmly anchored to their positions, displacing a sea of lesser drinks in the international market. 

The likes of Smirnoff, Bacardi, Johnnie Walker, Martini, Stolichnaya and Hennessy have held their places as first to sixth most powerful brands respectively. Beneath these, however, there is much movement, highlighting a number of trends, which we shall deal with in detail over the following pages.

In particular, wine has muscled its way up the list, as have Tequila and Champagne, while whisky has significantly increased its lead as the most powerful sector. Tellingly, no RTDs or "small unit drinks" feature this year.

On a brand level, overall, one might ask, where is the evidence of new product development from the big players?

New entrants, such as Yellow Tail, or rising stars, like Grey Goose, were masterminded by independent companies. The multinational corporations appear highly adept at managing existing power brands, but "they have lost the ability to innovate, the flair is coming from the impoverished independent sector," says Stuart Whitwell, joint managing director of Intangible Business, compilers of the final survey.

The top 20 drops
Let's start at the top, where Smirnoff once again holds number-one spot. Here is a brand (see inset box, "Smirnoff, vital statistics") with an unrivalled global presence, a premium status, a range of price and flavour variants and more than 25 million case scale. Its total score is down 2% on last year, a slip attributed to the fact the panelists felt the potential for future growth is not as great as it was last year and the belief that its price positioning in the US, the brand's largest market, has dropped a little. On the other hand, it scored well for the likes of brand perception and relevancy with its roll-out of flavoured vodkas, for instance green apple and orange, and the Raw Teas addition, successfully marketed online with a humourous rap video. Then there's its super premium range extension Penka. Lastly, few can compete with Smirnoff on heritage – founder Piotr Smirnov began distilling the vodka in 1860.

Bacardi runs Smirnoff close in terms of sheer size, relevancy, awareness, price and perception but loses out in terms of future growth and market scope, while Johnnie Walker, Martini, Stolichnaya and Hennessy, all extremely powerful brands, don't have the volume sales to topple the top two spirits.

Absolut is worthy of note, not least because of the speculation surrounding owner Vin & Sprit's sale, but also because it has risen a place compared to last year's survey. Why? Volume is up, and there has been a push behind the brand in terms of range extensions – flavours such as Ruby Red (grapefruit) and top end versions such as Level – and innovation in marketing, for example the gold Absolut "Bling" Christmas special edition or the construction of a London-based Absolut "Ice Bar". In particular, this distinctive brand scored well on "awareness".

This has meant Jack Daniel's has dropped a place, not because it's doing badly (JD's brand score has increased on last year) but simply because it isn't doing as well as Absolut.

Chivas Regal comes after JD, and has swapped places with Ballantine's, pushing the latter down two behind Baileys, stable in tenth place. Chivas Regal's performance Whitwell describes as "not surprising – it has grown volumes in all markets and Pernod Ricard has got hold of it after a transient stage". As for Ballantine's, the fact it has dropped two places could be connected to issues surrounding the integration of the brand into the Pernod stable, post the 2005 acquisition of Allied Domecq, of which Ballantine's was a part. Nevertheless, according to Whitwell, "the brand derives huge value out of its 17 year old, which dominates in Korea and Japan".

Following this, Diageo's Captain Morgan has kept its status in markets around the world and held its place in the chart while the same company's Tequila, Cuervo, is still growing and has displaced blended Scotch Dewars, primarily a Latin American and US success story, but a brand that isn't growing a fast as Cuervo.

Moët's entrance this high up the list is interesting and a result of rising volumes globally, which, crucially, have been achieved without eroding its price point. Scotch J&B has held its position – a great brand, but one the panelists felt could do better. Perhaps if it wasn't in the same stable as limelight stealing Johnnie Walker…

Vinous success
Gallo's entry in 17th place, up three places on last year, is certainly worthy of comment. Here is a name that is becoming a truly international product, reflected in its brand score rise of 10%. Panelists rated it highly on share of market and awareness, if not its price positioning – Gallo does produce expensive offerings, but the market is not significant. This high position for a wine producer proves that there is an increasingly global market for wine and one that is becoming more branded.

Gallo sits above Gordon's, a gin that sees a slight dip in brand score, partly because this particular spirits category is not doing well internationally, but also because the brand "is not getting the focus", according to Whitwell, referring to the lack of high profile marketing for the brand from owners Diageo.

Quirky brand Jägermeister sits perhaps surprisingly high up the charts at 19th place but scores well for growth, image and share of market (the bitters category), shifting over 5m cases globally.  At 20 is Jim Beam, which does seem to be falling behind its peers, three places down in this year's survey. "Maxxium [which distributes Jim Beam] hasn't done any good for the brand apart from in Australia where it does well," comments Whitwell.

Best of the rest
As one goes further down the list, it should be noted that small movements in score can result in large shifts in position, but here is also where one can spot a raft of new entrants as well as some interesting emerging trends. It is still worth considering certain brands in turn. For instance:

• At 21, Hardys is up two places, scoring well for market share and awareness. Volumes for the wine are up significantly and higher priced versions have successfully entered international markets. Like Gallo, this wine label's rise up the charts proves that global wine brands are an emerging force.
• Crown Royal's impressive performance, not far behind Hardys, is a reflection of this Canadian whiskey's strong image and high volumes in the US and Canada in particular. This is set against an overall decline for the Canadian whiskey category, further proving the power of this brand. Canadian Club on the other hand, down seven places at 49, is not doing so well. "It's in every bar, but it gathers dust," says Whitwell.
• Ricard is still holding its own among the big brands, doing well in its category. It does struggle to extend beyond its home market, however.
• Concha y Toro has kept its ranking and increased its score due to increasing volumes and a strong quality perception.
• In Champagne, Veuve Clicquot is up a notch and has settled at 25. Price, heritage, market scope, relevancy – the brand does well on all. Global wealth has grown and this colourful sparkling label has extracted income from it.
• Malibu, just behind Veuve, is an extraordinary brand, up three places despite a change of ownership (from Allied to Pernod Ricard) and has grown almost 300,000 cases globally during a transition year.
• The biggest climber in the list, Grey Goose, is up 19 places to 28th position. It has grown at a very rapid rate, no doubt helped by the spread of Bacardi-Martini's distribution (post acquisition for US$2.7bn in 2004). However, most of the volume is in the US market. In fact, if this country were to run into a significantly deeper economic depression, a lot of the power brands would suffer.
• Havana Club is up eight. This is not surprising considering its long term growth patterns, trendy brand image and Pernod's highly effective marketing.
• Up as much as 18 places, it is clear that Jameson's "power" has rocketed. As the dominant Irish whiskey with strong distri-bution and marketing from Pernod, this brand has become ext-remely valuable.
• In the liqueurs category, Holland's De Kuyper is up four places. Growth for this brand is US led.
• Sauza Tequila's slip is most likely due to transition complications, shifting as it did from Allied to Beam Global. This brand one can expect to bounce back, not only due to new owners taking hold but also because of market trends – this Mexican spirit has become fashionable, and the category competitive.
• Moskowskaya vodka at 34 has dropped four places and is weathering declining sales due to a lack of international focus for the brand from owners SPI.
• Southern Comfort shows some total and brand score increase, possibly due to strong marketing based on the emerging SoCo brand call across the US.
• Beefeater, down eight at 41, has, like Sauza, suffered in transition from Allied (but to Pernod). A recent repackage by Pernod and planned marketing push will ensure this brand's poor performance will be short-lived, however. Gin as a category does appear staid, at least compared to white spirits like Tequila and vodka.
• Last year the Seagram brand did feature but the gin and Canadian whiskey were combined. This year the gin and whiskey feature separately. The Canadian company's name lives on, but the products are in different stables – Seagram's Gin with Pernod, Seagram's Seven Crown with Diageo. Consequently, one could say, they have lost allure.
• Yellow Tail, the Australian wine owned by Casella, has made the chart this year at 43. It has sustained its extraordinary performance in the US, helped by television and print advertising, and panelists scored it well for share of market (it sells over 8m cases) and relevancy.
• Skyy, part of the Campari Group, is up six places to 46. It has been successful in the US, where it shifts over 2m cases.
• Pernod's Jacob's Creek is still in the top 50 and has slipped a touch perhaps because it isn't enjoying the growth it once did. However, the brand has been extended with a range of "reserve" labels and has a broad market scope (for a wine).
• Bombay Sapphire gin, having dropped four places, but shown 1% brand and total score growth, is not growing as quickly as some of its competitor brands. Has it run out of steam?
• Ketel One has managed to create and hold onto a super-premium position in the highly competitive vodka category and has subsequently moved up eight places.
• Bell's, down two, is stuttering somewhat – perhaps a reflection of the UK market's declining demand for blended Scotch.
• Down 10 places to 61, Courvoisier is strong in its 3* age statement in the US and UK but has no proper presence in the aged Cognac category, especially in the all-important Asian markets, according to Whitwell. It has also been affected by changing brand owners from Allied to Beam Global, and in particular, being blocked from distribution through Maxxium (part owned by Beam) as shareholder Remy Martin feared a conflict of interest.
• El Jimador Tequila is a new entrant this year at 63 and next year one can expect the likes of Herradura, recently acquired by Brown-Forman, to feature in the list, as well as high profile and premium Patron.
• Teacher's Scotch, like Courvoisier, is down 10 places and has suffered from the same transition problems as the Cognac. This brand was also denied distribution through Maxxium because one of the group's shareholders is Glasgow's Edrington Group, owner of rival Scotch The Famous Grouse. However, Whitwell believes Teacher's will bounce back and notes that it has grown in Brazil and India where the Scotch is locally bottled.
• Cutty Sark is up five places, and is doing well, primarily in Portugal and Greece.
• The Glenlivet has made its way into the list at 94. Whitwell believes this is because it "has made significant moves in the US."

Concluding comments

So what can one say about the list as a whole? It appears clear that wine is a dynamic category. Gallo and Hardys have worked their way up the list, Foster's Wolf Blass has burst onto the scene, so has Torres, Yellow Tail, Banrock Station and Penfolds, meaning some 15 wine labels feature this year, compared to last year's nine.

Both Tequila and Champagne seem to have increased in the power stakes too.

Cognac and whisky still appear internationally dominant when it comes to power brands and while rum includes some strong brands, not least Bacardi, core sales come from the US – there isn't growth into Europe and Asia (yet).

Similarly, while vodka is still extremely "powerful", it is yet to really penetrate the Asian markets. Why? White spirits don't have a premium image in the likes of China, India, Japan and Korea, and consumers in these countries are also increasingly buying "local" spirits, as part of a return to buying into a nation's heritage.

Then there's gin, where most brands appear to be either suffering or at least slowing in rate of growth. Could Pernod reinvigorate this category with its Beefeater makeover?

There also appears to be a number of large brands that are struggling. Beefeater has been mentioned as a future gin volume driver, but currently isn't faring well. Gordon's, Jim Beam, Ballantine's, The Famous Grouse, Courvoisier and Canadian Club are other high ranking power brands that aren't showing increasing scores. As noted at the outset, where's the innovation? Perhaps these brands need more than just a packaging update?

Finally, what about next year? Any suggestions for new entrants? Brands one suspects should enter the charts are 42 Below vodka, under Bacardi-Martini's stewardship, Svedka Vodka, under Constellation and Herradura tequila, under Brown-Forman. Then there's Don Julio and Patron Tequilas which are both extending into new markets and accelerating a growing interest in premium versions of this once "local" Mexican spirit.

Until next time, or should one say, hasta luego.

Sparkling
Moët, shifting almost 2.5m 9l cases and Veuve, almost 1.5m, with high average prices, a global presence, undisputed heritage, and strong images are certainly "power brands". These two and others in this list prove that Moët-Hennessy are the masters when it comes to super-premium branding. Freixenet does well for different reasons – it moves over 7.5m cases internationally.

Gin
Not a growth category but home to plenty of "power brands". Tanqueray, although smaller in volume sales than Beefeater and Seagram, was rated more powerful due to its growth prospects and high scores on pricing, relevancy and image.

Vodka
The second most powerful sector contains brands with inter-national presence, vast volumes, heritage, relevancy and even premium pricing.

Flavoured spirits
Baileys is leader in this sector by some margin and just squeezes into the top 10. Jagermeister is still storming and Malibu has proved it can survive a change of ownership.

Tequila
A category to watch and one that should expand next year.

Brandy
LVMH's Hennessy rightly dominates this category. Selling almost 4m cases globally this Cognac dwarfs all but the likes of Dreher brandy in scale.

Rum
Another sector headed by an extremely strong brand in Bacardi. Only marginally smaller than Smirnoff, this rum brand is overall number two. Diageo's Captain Morgan is more than half the size but performing well.

Wine
Vinous brands have a much stronger presence this year and are led by the increasingly global Gallo brand. Interestingly, the US and Australia are the dominant source of grapes for power wine brands. 

Whisk(e)y
Johnnie Walker is striding well ahead of its category competitors. At around 12m cases with a range that stretches from entry-level Red to super-premium Blue, and beyond, this brand is third strongest overall. Scotch dominates and Diageo and Pernod prove the leaders when it comes to managing all things liquid, alcoholic and Scottish. As for US whiskey, Jack Daniel's is leader by a long margin and increased its score this year compared to last, despite dropping one place.

Strongest brands
Note that this list is titled "strongest", not "most powerful". This is because the chart ranks the leading brands according to the aggregated scores from the eight measures without multiplying by each brand's weighted volume to give you brand "power". Last year Hennessy came out top but this time round Johnnie Walker just tops the list. Smirnoff drops to third place without factoring in the volume element and Champagne brands find themselves higher up the list.

Awareness
This charts the power brands when ranked according to nothing more than the panelists aggregated and averaged scores for brand awareness. Johnnie Walker with its memorable marketing, massive Diageo-funded media spend, presence in almost 200 countries and near-200-year history, takes top place.

Heritage
"Born in 1820 – Still going strong" appeared on bottles of Johnnie Walker back in 1908. In 2005 the brand launched Johnnie Walker 1805 to mark the 200th anniversary of the birth of its founder. It is factors such as these that ensure the perception of a lengthy and powerful heritage is being kept alive.

Price
Moët's prestige cuvée, Dom Pérignon, with its US$100-plus price tag around the world, heads the list for brands rated on price positioning alone. It's made more impressive if one imagines Dom Pérignon sells almost 100,000 cases globally.

Market scope
Cuervo, with an established and prominent presence in all major international spirit-consuming countries, and distribution in over 135 nations in total, tops this list. It is perhaps ironic that a Tequila should be number one – until relatively recently this was considered more of a "local" spirit (drunk mainly in Mexico).