Jim Beam Global Sales 2013

The IWSR Magazine has exclusive access to the full IWSR database, which
tracks 20,500 brand lines across 125 countries with the annual input of more
than 1,850 companies.
this
Issue
Comment
Spirits news
Rmy Cointreau just reported that sales for the first quarter
Buyers guide Latest

launches and marketing
Growth brands The IWSR

presents its exclusive data on
the worlds top growth brands
13 Producer insight William

Grant points to emerging
opportunities in the UK market
14 Irish whiskey A look at the
continuing revival of the Irish
whiskey category
20 Brazil spirits Why the spirits
sector in Brazil is beginning
to feel the heat
24 Interview: Thierry Billot
Pernod Ricards MD, brands,
explains the firms shift in
focus for its portfolio
26 Wine news
28 French wine industry Sales
fall again, but there is a bright
outlook for French wines
30 Wine packaging Producers
begin to think beyond the
bottle
33 US wine Different factors are
hitting bottled and bulk wine
sales in the market
35 Beer, cider and RTD news
All details contained in this publication

are believed to be correct at time of going
to press.
All rights reserved. Nothing may be reprinted
or reproduced in whole or in part without the
written permission of the publisher.
Published by System Three Communications
(London) Ltd 2014
Printed in the UK by Rapidity.
Alexander
Smith
The IWSR
Magazine
Editor-in-Chief
of the financial year ended 30 June fell -18.5% to 214.8m ($??).

The company continues to struggle as the Chinese Governments
campaign against corruption and the related consumption of luxury
products by officials takes a toll. Rmy and the other Cognac houses
are now in the throes of destocking programmes to varying degrees.
Just as over-exuberance at Chinas prospects reigned a year ago,
and led to the overshipping, now pessimism is setting in. Few
anticipate that there will be any real recovery in Chinese
consumption this year. The reality is that nobody really knows how
long pressure on luxury consumption will last. Some believe that
banqueting and drinking for image is so ingrained in Chinese culture
that the downturn can only possibly be temporary.
Others contend that the campaign will lead to a new norm, and
that China will come to resemble most other markets. While the
campaign has most directly impacted the banqueting and gifting
occasions, there are signs that the campaign is also affecting broader
consumer psychology. Under that scenario, there will be less
emphasis on luxury products and, instead, a focus on standard and
premium products catering to the vast middle classes. The move by
some Cognac houses to launch VS products, targeted at the
important meal occasion, may be a sign of this new normalcy.
The liquor industry has historically been beset by periodic crises
where some economic or government event leads to a dramatic
downturn in consumption. A few that come to mind are the bursting
Few anticipate there will be any real

recovery in Chinese consumption this year
of the Japanese economic bubble in the early 1990s, the Asian
economic crisis of 1997/1998, the Russian rouble crisis, or the current
debt crisis in Southern Europe. People also forget that the Chinese
Government had previously turned off the spigot on conspicuous
consumption by government officials in the mid-1990s. That, coupled
with the Asian economic crisis, led consumption to more than halve.
Cognac consumption in China didnt really start growing until 2004
and it wasnt until 2006 that the market again reached its earlier 1994
high-water mark. In Japan consumption never returned and, in total,
Cognac consumption in that market now stands at just 70,000 cases,
down from a high of 1.2m cases in 1991.
The travel-retail industry is often at the sharp end of these periodic
disruptions. The axiom is that travel retail is the first to be impacted
by a crisis and the first to recover. That was the case with the two
Gulf Wars and the 9/11 attack. Others took longer, such as the
abolition of intra-EU duty free in 1999 and the ongoing LAGs (liquid,
aerosol and gels) ban following the thwarted terrorist attempt to
blow up transatlantic airliners in 2006.
There is no real saying how this latest bump in the road in China
will play out. The only certainty is that there will be other market
disruptions along with way. The next one could be on its way with
the spectre of sanctions on Russia following its alleged role in the
Malaysia Airlines atrocity. If you have been in this industry long
enough, you will recognise that dealing with periodic disruptions,
some temporary and some long-term, is the real norm.
Editor-in-Chief
Alexander T Smith
Email: al@theiwsr.com
Production Editor
Eluned Woollven
Editorial Assistant
Thalia Fourie
Email: thalia@theiwsr.com
Publishers
Val Smith
Alastair Smith
Marketing & PR
Helen Windle
Email: helen@theiwsr.com
Subscriptions
Stefano Giacoia
Email: stefano@theiwsr.com
Advertising
Rina Maiden
Email: rina@@theiwsr.com
Researchers
Agata Andrzejczak
Alastair Smith
Ania Zymelka
Daniel Mettyear
Giles Gough
Helen Windle
Humphrey Serjeantson
Jos Luis Hermoso
Konstanze Kugler
Piotr Poznanski
Sandra Newman
Simon Molony
Sophia Holliday
Tim Simmons
Tommy Keeling
Val Smith
News
Please send us your news,
views, photos and comments
To contact us
The IWSR Magazine
39 Moreland Street,
London EC1V 8BB, UK
Tel
+44 (0)20 7689 6841
Fax
+44 (0)20 7689 6827
Email
magazine@theiwsr.com
ISSN 2046-5769
August 2014 3
spirits/beer news
shorts
a brief round-up of news from across the industry
Mergers & Acquisitions

Kenya Distell Group has
acquired a 26% stake in KWA
Holding East Africa Limited
(KHEAL), Kenyas leading spirits
manufacturer, bottler and
distributor. The purchase price
was KES860m ($9.8m).
KHEAL is Kenya's dominant
spirits player, operating five
distribution centres in the
country and one in Uganda, as
well as a wholly-owned
subsidiary in Rwanda. KHEAL
owns a number of leading local
Kenyan brands, such as
Kingfisher, Kibao, Caprice and
Yatta wines, which have shown
strong growth in recent years.
Distells relationship with the
Nairobi-based KHEAL dates
back to 1998. Since then,
KHEAL has been producing,
bottling and distributing several
Distell spirits brands.
Distell CEO Richard Rushton
said: Our latest investment
comes at a time when the
economic prospects across East
Africa are highly promising.
East Africa Common Markets
combined population of more
than 150 million and an
economy boosted by recent
energy discoveries, present
exciting opportunities.
The acquisition is Distell's
latest in a series of strategic
direct investments on the
African continent. In June the
company unveiled a bottling
plant in Accra, Ghana. It has
also secured land in Nigeria and
Angola for manufacturing
plants, scheduled to come on
stream next year.
China Chinese conglomerate
Fosun has acquired a 20%
stake in Spanish wine and
spirits producer Osborne. The
share sale will bolster the
Jerez-based groups war chest
for acquisitions, as well as
provide funds to boost growth
in Fosuns native China. This is
4 August 2014
the first time Osborne stock will

be held in foreign hands.
Osborne posted net sales of
232m ($314m) in 2013,
growth of 5% on 2012, with an
EBITDA of 35m ($47m).
Mexico Pernod Ricard USA has
completed the acquisition of
what it termed a significant
majority stake in Avin
Spirits, owner of the
ultra-premium tequila brand
Avin, from its joint-venture
partner Tequila Avin.
Pernod Ricard USA CEO
Bryan Fry said: Avin has
delivered excellent results since
the creation of the
joint-venture in 2011. The
ultra-premium brand has
become a bartender and
consumer favourite and today
benefits from very strong brand
equity and momentum.
Financial
France Rmy Cointreaus sales
for the first quarter of the
financial year ended 30 June
fell -18.5% to 214.8m
($289.3m) as the group was hit
by destocking efforts in Asia. It
was also impacted by the end
of the Edrington contract in
the US (27m/$36.4m effect)
and unfavourable currency
movements.
Sales viewed from an organic
basis fell -5.7%. The company
said this confirmed the
sequential improvement noted
since the previous quarter.
Rmy Martin Cognac sales
fell -19.1% to 120.8m
($162.7m) as the Chinese
Governments campaign against
luxury products continued to
take a toll. The company
claimed that the steep drop
also reflected a high
comparative in the US with
sales a year earlier, and tended
to mask the positive
momentum of its superior
qualities there. It also noted
that it still faced a challenging

macro-economic and
competitive environment,
particularly in Western Europe.
Sales at the liqueurs and
spirits division climbed by
11.3% to 62.6m ($84.3m).
UK Scotch whisky producer
Edrington Group reported a 3%
rise in pre-tax profits to 174m
($295.6m) for the fiscal year
ended 31 March 2014. Group
turnover was up 3% to
607.7m ($1bn) as Edrington
increased its presence in both
established and emerging
markets, and made significant
investment in its brands and its
route-to-market.
Edrington CEO Ian Curle said:
The market for premium spirits
worldwide continues to grow
with more and more consumers
gaining an appreciation for our
brands. Last year we made
significant investments in our
route-to-market and now own
the distribution capability in 11
countries which, together with
our joint ventures, collectively
represent 80% of Edringtons
total sales.
The company noted that The
Macallan single malt Scotch
brand grew across a broad range
of territories. To keep up with
anticipated demand Edrington
has announced plans to build a
new 100m ($169.9m) distillery
and visitor centre for The
Macallan, due for completion in
the spring of 2017. The Famous
Grouse performed strongly in the
UK and Sweden, and also
showed continued progress in
emerging markets with a
particular focus on Russia.
France Paris-based LVMH Mot
Hennessy Louis Vuitton
reported revenue of 14bn
($18.8bn) in the first half of
2014, an increase of 3%.
Within that, the wines and
spirits business group reported
a decrease in organic revenue

of 1% in the first half of 2014
as destocking of Hennessy by
distributors in China took a toll.
Profit from recurring operations
stood at 461m ($619.6m) for
the first half of the year.
Cognac and spirits organic
revenue declined 7% and after
a 4% negative currency
impacted, reported revenue
was 954m ($1.3bn) compared
to 1.68bn ($2.26bn) in the
year ago period.
Distribution
Canada Wirtz Beverage
Canada officially launched on 2
July, establishing the countrys
largest brokerage model in the
beverage business. Chicago,
Illinois-based Wirtz Beverage
is one of the largest
wholesalers in the US and one
of the first to extend into
international markets.
Wirtz Beverage will serve as
the exclusive national broker for
the Diageo beer, wine and spirits
portfolio in Canada, in an
agreement announced in March
2014. To support the new
business, the company has hired
more than 100 Canadian
employees and appointed its
leadership team, under the
direction of John Donohue, Wirtz
Beverage Canada SVP and GM.
This is a huge milestone for
us as we expand to an
international footprint and help
to bring a new model to the
Canadian beverage industry,
said Julian Burzynski, EVP Wirtz
Beverage Group.
The new Wirtz Beverage
Canada team includes: Martin
Laverdure, regional director
(Quebec/Eastern region); David
Prodanovic, regional director
(BC/Yukon region); Kim
Arnold, regional director
(Alberta/Midwest region); Patrick
Robertson, regional director
(Ontario); Lorraine Ventresca,
director, trade development.
insights
trends in wine & spirits
exclusive news & views from around the world
Premiumisation trend evident
in Europe
Despite the tough economic environment,
premiumisation continues to feature strongly
across many of the regions largest markets.
In Germany, where consumers are
traditionally very price-conscious,
premiumisation has been a notable aspect of
the market with consumers increasingly willing
to trade up to higher-quality products and
categories if the price is right. Young consumers
in Turkey and Portugal are particularly
conscious of being seen drinking status
products. These consumers are turning to
international categories such as whisk(e)y and
gin and eschewing traditional local spirits.
As a result markets are becoming increasingly
polarised with a widening gap between more
expensive international brands and cheaper
domestic brands. Meanwhile, in the UK
consumers are opting for increasingly higherquality spirits; the small-batch, hand-crafted
spirits awareness seems only to relate to gin.
Premiumisation is similarly playing a stronger
role in other markets, including Sweden,
Denmark and in Switzerlands on-trade.
Furthermore, niche and hand-crafted products
are gaining ground in many of these markets.
Top-end bars in the UK like to differentiate
themselves by having a selection of niche
products such as St Germain or The Kings Ginger
on the back bar while in Switzerland, for example,
interest in boutique spirits brands is increasing.
Although still tiny, mezcal is gaining a following in
the on-trade, while small super-premium US
whiskey brands are also attracting attention.
US control states report brisk

June sales
All the signs remain positive for the US distilled
spirits market. During June, nine-litre case sales
of spirits in the control states grew 3% on the
same period last year. Rolling 12-month volume
growth of 1.8% eclipsed May's 1%.
Control state spirits shelf dollars grew 5.5%
during June, while trending at 4.6% during the
past 12 months.
During June Irish whiskey, with 0.9% share of
the control states spirits market, was the fastestgrowing category, with 9.3% reported and a
12-month trend of 10%. Vodka, with a 33%
share, grew during the same periods at 3.1%
and 1.7%. Canadian whisky, cocktails, cordials,
US whiskey, gin, rum, Scotch and vodka grew at
rates exceeding their 12-month trend.
The nine-litre wine case sales growth rate in
June was 4.3%. Rolling 12-month wine volume
growth was 2%, more than trebling May's 0.6%.
On-premise struggles in Europe

Various factors have led to a decline in on-trade
consumption throughout key European markets
over the year. Bars are continuing to close
across Spain, while the cost of doing business in
the on-trade has been increasing significantly in
Turkey. Extensive political protests in major
cities, especially Istanbul, further disrupted the
market last year. On-trade volumes are also
suffering in France, Italy and the Czech Republic
as consumers switch to at-home consumption.
However, as brand owners and distributors in
the UK look more towards increasing value
rather than shifting volume, the return to
growth of the on-premise sector has been a
welcome tonic for those operating in the major
cities, where this revival is being felt.
The corollary is that the off-trade is growing
in markets such as Portugal and the Czech
Republic as consumers cut back on spending. In
Poland pre-loading with cheaper spirits before
going out is on the rise, while in Italy wine
consumption at-home is increasing as a result
of high restaurant mark-ups.
Consumers are also bringing on-trade
fashions into the home. In Denmark there has
been a strong trend towards making cocktails at
home, with consumers buying cocktail kits and
premium spirits in the off-trade and using online
tutorials to learn how to mix them. In the UK
the trend for creating cocktails at home is
continuing despite the revival of the on-trade.
Alcohol ingredients set to grow

The global alcohol ingredients market, which
covers flavours, colours and other ingredients
for beer, spirits and wine, is expected to see
steady growth, despite the dominance of a few
companies, according to a new report from
Frost & Sullivan entitled Analysis of the Global
Alcohol Ingredients Market.
While flavours remain the biggest segment in
the market, strong growth is projected in the
other ingredients segment due to booming
demand for yeast and enzymes.
Geographically, focus is expected to increase
on developing regions such as Asia-Pacific, where
consumer spending on alcohol is rising.
Understanding the traditional and cultural tastes
and preferences of consumers in these regions
will be crucial to taking full advantage of this
trend. Frost & Sullivan chemicals, materials and
food industry analyst Tosin Jack said: For
companies with a global presence, consolidating
with regional and smaller companies that have
substantial knowledge of the local market will
allow them to tailor alcoholic beverage production
to suit varying regional and local tastes.
As innovation is a key success factor in the

alcohol beverage industry, new product
development is likely to gain pace in the
ingredients space, added Jack.
The report found that the market earned
revenues of $989.2m in 2013 and estimated
this to reach $1.18bn in 2019.
Increasing grey market business

in Eastern Europe
The excise tax increases in Russia, which
squeezed the low end of the market, have led
to an increase in demand for black market
products. Counterfeit whisk(e)y in particular is
growing and is openly sold online. The grey
market in Ukraine is also growing and is likely
to further increase as the economy worsens.
New duty-free border shops along the Polish
and Lithuanian borders with Belarus are
increasing the leakage of duty-free products into
the domestic market. Imported spirits are often
half the price in Belarus neighbouring countries.
Lower-strength trend in Asia

Drinks with a lower alcohol volume have been
performing well in South Korea and Japan.
White spirits mixed with juice have been
growing well in these markets, as opposed to
more traditional neat spirits drinks. In South
Korea soju brands have also been lowering their
alcohol content. The younger generation of
Koreans is becoming more fickle; new products
and fashions are entering and leaving the
market at a much faster pace than before.
Following the success of low-strength brandy in
the Philippines, most other spirits categories have
now introduced lower-abv brand line extensions
which are rapidly growing in popularity.
Lower-priced wines drive growth

in Asia
Inexpensive wine continues to drive growth of
the still light wine category in many of the
larger wine markets in Asia, including China,
India, Taiwan and Japan. Imported wine in
China is becoming more and more price-driven
and the market is highly competitive; more
than 4,500 companies imported wine into
China in 2013. In Japan the loss of value
across the still light wine market continues.
Spanish wines, often the cheapest in the
market continue to grow in China, while many
low-priced banquet wines and locally bottled
wines in Taiwan and South Korea now contain
Spanish wine. Chilean wines perception as
good value for money has helped boost
volumes, with notable market share gains in
China, Japan, Singapore and Vietnam.
August 2014 5
buyers guide: products
Artisanal Roca Patrn range released Patrn Spirits new Roca Patrn
tequila range is produced entirely from the labour-intensive tahona process.
Traditionally handcrafted at a specific proof, higher than the core line of Patrn
tequilas, Roca Patrn Silver, Aejo and Reposado are sweeter than other Patrn
varietals, exhibiting more complexity and slightly less citrus, pepper and fruit.
Single-use American Bourbon barrels were used to age Reposado for five months
and Aejo for 14 months; Silver is unaged.
A tahona is a two-ton stone wheel that slowly crushes the cooked agave to
release the agave juice. Both the juice and fibre are placed together into wooden
fermentation vats for 72 hours, then distilled in small-capacity, handmade copper
pot stills. Patrns core line of tequilas is produced from a combination of tahona
tequila and tequilas produced from the more modern roller-mill process.
Patrn master distiller Francisco Alcaraz said: Its very time-consuming and
expensive to create tequila in this way, but its well worth the effort as the
tahona method creates an incredible and distinctively complex tequila.
Brand: Roca Patrn Range $69.99-$89.99 RRP (75cl)
Three Barrels Honey launched in the UK William Grant &

Sons has released Three Barrels Honey (30% abv), a blend of
VSOP brandy and natural honey flavourings. The brand is best
enjoyed chilled or with a splash of lemonade.
Paul Curry, brand manager for Three Barrels Honey, said:
Experimental flavours are taking hold across most consumer
goods and the spirits category is no stranger to this
burgeoning trend. New product development and brand
flavour extensions are driving market growth and sweeter
profiles are dominating overall. Honey is the flavour thats
captured consumer attention and is growing at over
1,000%. Innovation in brandy has been lacking and
the category still has the second-oldest demographic
profile, so now is the ideal time to launch Three Barrels
Honey and create excitement in this area.
Three Barrels is a brand with strong awareness and a
loyal fan base, so were confident that Three Barrels
Honey will bring new drinkers to the category while
boosting awareness of our original VSOP house brandy.
Brand: Three Barrels Honey 17.99/$30.64
RRP (70cl)
6 August 2014
Mouton Cadet launches

Ryder Cup Selection
Bordeaux AOC wine producer
Mouton Cadet has launched
Mouton Cadet Ryder Cup
Selection, a limited-edition
release created especially for
The 2014 Ryder Cup
competition which will take
place at Gleneagles, Scotland
(23-28 September).
Mouton Cadet is official
supplier to the 2014 and
2018 Ryder Cups. Visitors
and VIP guests at The 2014
Ryder Cup will be able to
enjoy the limited-edition wine
in all catering venues created for the occasion. The Ryder Cup
Selection is also on sale at Harrods department store.
Hugues Lechanoine, managing director of Baron Philippe de
Rothschild SA, said: In the same way that The Ryder Cup
brings together the best American and European players, we
selected 12 of our finest winegrowers and their vine parcels in
Bordeaux to create this unique wine.
Brand: Mouton Cadet Ryder Cup Selection
15/$25.60 RRP (75cl)
Orphan Barrel launches Rhetoric Whiskey The Orphan
Barrel Whiskey Distilling Company, a project owned and run by
Diageo, has launched Rhetoric Whiskey (45%abv), a limitededition craft Bourbon that will be progressively aged and released
over the coming years the 20yo variant will be released this
year, the 21yo in 2015, and so on. This approach will grant
whisk(e)y enthusiasts the chance to collect and compare these
exclusive offerings as they mature.
Rherotic Whiskey stocks were
discovered in warehouses at the StitzelWeller facility in Louisville, Kentucky, and
distilled in both the New and Old Bernheim
distilleries in Louisville.
The Orphan Barrel Whiskey
Distilling Company was created in
early 2014 to locate forgotten
barrels of craft whiskey from
around the world and share them
with discerning adult fans. The firm
is based in Tallahoma, Tennessee,
where the whiskies are aged and
bottled. Its portfolio also includes
the 20yo Barterhouse Whiskey and
26yo Old Blowhard Whiskey, both
launched in the US in March.
Brand: Rhetoric Whiskey $85
RRP (75cl)
& marketing
By Thalia Fourie
Jacobs Creek launches wines

finished in whisk(e)y barrels The
winemakers at Jacobs Creek have
created Jacobs Creek Double Barrel.
Launched in Australia, the Double
Barrel range comprises premium red
wines finished in whisk(e)y barrels.
Following experiments with aged
barrels, it was discovered that the
double-barrel finishing process lent
additional complexity and texture to
wines, and that barrels of certain
whisk(e)y styles were better suited
to certain wines.
For Double Barrel, Jacobs
Creek used well-aged whisk(e)y
barrels so their influence is
subtle adding nuances without
changing the essential
character of the wine. Double
Barrel Barossa Shiraz is finished in Scotch whisky barrels, while
Double Barrel Coonawarra Cabernet Sauvignon is finished in
Irish whiskey barrels.
Brand: Jacobs Creek Double Barrel Barossa Shiraz
2012 and Jacobs Creek Coonawarra Cabernet
Sauvignon 2012 both AU$24.99/$23.43 RRP (75cl)
US roll-out for Silenis The Straits New Zealands
Sileni Estates has released The Straits Reserve
Sauvignon Blanc in the US. Named after Cook Strait,
the stretch of water separating New Zealands
North and South Islands, The Straits is made
from 100% sauvignon blanc and is described as
boasting aromas of tropical fruit leading into
a classic Marlborough style.
Brand: Sileni The Straits Reserve
Sauvignon Blanc $16 RRP (75cl)
Vijay Amritraj and Grover Zampa
launch wine range Internationally
renowned tennis player Vijay
Amritraj and Grover Zampa,
Indias largest premium wine
producer, have together launched
the Grover Vijay Amritraj Reserve Collection. It includes
wine from some of the best vineyards in India the white
wine is a barrel-fermented varietal viognier, while the red
is a blend of shiraz, cabernet sauvignon and viognier.
Grover Zampa CEO Sumedh Mandla said: We are
looking forward to showing the UK market the premium
wine that Indian soils can produce.
Brand: Grover Vijay Amritraj Reserve Collection
ca. 14.99/$25.60 RRP (75cl)
ubrwka Zota launched in Poland ubrwka

Zota, owned by Roust, is a new amber-coloured
vodka with a bittersweet taste and rich flavour.
Zota (meaning gold in Polish) is produced from
natural ingredients which include oak bark and herbs
from the Biaowiea Forest, the home of the
ubrwka brand in eastern Poland. ubrwka Zota
(37.5% abv) can be drunk straight or on ice.
Brand: ubrwka Zota PLN5.99/$1.95
(1L), PLN11.99/$3.91 (2L), PLN24.30/$7.92
(5L) RRP
Glenfiddich campaign
celebrates 126 years of
independence Glenfiddich is
celebrating 126 years of family-owned
independence with a new global
advertising campaign entitled
Family Run Since 1887. The 2m
campaign aims to communicate
the five generations of expertise
that go into Glenfiddichs whiskymaking.
In other news, Glenfiddich
Excellence 26yo single malt whisky (43% abv),
matured exclusively in American oak Bourbon
casks, adds to the distillers collection of rare
whiskies. Glenfiddich Excellence 26yo is the first
single malt from the distiller to use Bourbon
casks throughout the entire maturation process.
Brand: Glenfiddich Excellence 26yo
350/$597.78 RRP (70cl)
Bitter Bastards single-botanical cocktail bitters launched Master of

Malt has launched Bitter Bastards, a new range of single-botanical
cocktail bitters made through a unique process that includes the use of
centrifugal force and rapid maceration extraction. There are 25
different Bitter Bastards, including Juniper, White Truffle, Chipotle, Sour
Cherry, Naga Chilli and Frankincense, among others. Each bitter is
made from a top-quality botanical, gentian for added bitterness,
then a base spirit either high-proof Caribbean rum, high-proof
8yo Bourbon, or grain vodka, depending on which matches the
botanical best. Alcohol volumes (abv) range from 40% to 75%.
Cocktail bitters are traditionally made by soaking the
ingredients in spirit before bottling. However, this process allows
other, less desirable flavours to leach out of the surface of the
botanical, according to the company. To combat this, Bitter
Bastards botanicals are rapidly blended in base spirit to extract
only the fresh-tasting, intense flavours by instantly opening up
surface area.
Brand: Bitter Bastards 9.95-19.95/
$16.99-$34 RRP (5cl)
August 2014 7
spirits review
India dominates growth brands list
The IWSR reveals its exclusive analysis of the worlds top growth brands
In June The IWSR Magazine reported that
global spirits sales had increased by a marginal
0.1% in 2013. In volume terms this amounted to
an increase of 4.2m nine-litre cases, compared
with a 49.3m nine-litre-case increase in 2012.
This reduction in growth was largely due to a
significant slowdown in the growth of local spirits
in China and India; nonetheless, most of those
spirits brands that did show strong growth last
year were from emerging markets.
Single-market brands in India account for 11
of the top 25 growth brands by volume,
including all of the top five highest-growth
brands, stoked by an increasing middle-class
consumer base with higher disposable
incomes. The burgeoning economy continues
to underpin growth in this huge emerging
market, although in 2013 it fell behind the USA
to register the third-highest total volume
growth. China remains the fastest-growing
market for spirits, where baijiu brands, which
are not included here, dominate.
Growth in India has been driven by the
Indian Made Foreign Liquor (IMFL) category,
primarily whisk(e)y brands. While sustaining
strong growth, the IMFL sector has slowed
down: A series of sales tax and excise
Officers Choice was the fastest-growing

brand across all markets and categories
changes in 2011-13 in West Bengal,
Maharashtra and Karnataka (contributing to a
quarter of IMFL consumption in the country),
coupled with general inflation across the
country, led consumers to hold back their

discretionary spends across categories
including beverage alcohol, says Shefali
Kotnala, corporate marketing and brand
communication professional at United
Spirits (USL).
Diageo-controlled USL owns four of the top
25 growth brands in 2013. McDowells whisky
remained the second-highest growth brand;
the prestige/semi-premium McDowells No. 1
brand line added a further 4m cases in India to
become the largest-selling whisk(e)y in the
prestige segment of the market. Continued
investment on McDowells No. 1 and USLs
consistent focus in premiumisation is the key
driver for the brands outstanding growth,
Kotnala tells The IWSR Magazine. Indeed,
prospects for the brand are promising: The
growth will be sustainable in the future as a
result of continued trading-up from popular
segments that constitute two-thirds of the
IMFL industry.
USLs Celebration Rum is another IMFL in
the top 25 for 2013, gaining share from local
competitive brands, and its success follows a
similar pattern: Premiumisation and higher
gross margins are the overriding
Top 25 growth brands*

Brand
Category
Owner
Officers Choice
McDowells
Mens Club
Imperial Blue
Hayward
Hong Tong Liquor
Emperador
Hercules
Men
Celebration
Fireball Cinnamon Shot
Morosha
Khortytsa
New Amsterdam
Plakuchaya Iva
Jack Daniels
Jagatjit Aristocrat
Fernet-Branca
Royal Stag
Khodays
odkowa Gorzka
Captain Morgan
White House
Putinka
Dobrii Medved
Other whisk(e)y
Other whisk(e)y
Other brandy
Other whisk(e)y
Other whisk(e)y
Other spirits
Other brandy
Rum
Vodka
Rum
Liqueurs
Vodka
Vodka
Vodka
Vodka
US whiskey
Other whisk(e)y
Bitters/Spirit aperitifs
Other whisk(e)y
Rum
Vodka
Rum
Rum
Vodka
Vodka
ABD
18,705.3
USL/Diageo
19,273.3
USL/Diageo
250.0
Pernod Ricard
8,840.0
USL/Diageo
7,050.0
Thai Beverage
16,375.0
Alliance Global
30,000.0
Khoday
710.0
Arowines
USL/Diageo
17,657.3
Sazerac
959.3
Global Spirits
2,085.0
Global Spirits
5,195.6
E&J Gallo
1,025.7
Olimp
Brown-Forman
12,284.1
Jagatjit
9,000.0
Branca
4,366.4
Pernod Ricard
13,882.3
Khoday
790.0
Stock
5,681.16,385.1
Diageo
9,905.0
Tilaknagar
400.0
VEDK
1,908.6
Golden Manufacturer
*Excludes Chinese brands. All volumes in 000s of 9-litre cases
8 August 2014
Volume
2012
Volume
% growth
2013 2013 on 12
24,208.5
23,291.3
2,875.0
10,987.3
9,180.0
18,500.0
31,950.0
2,500.0
1,400.0
18,904.0
2,188.0
3,220.1
6,308.3
2,021.1
931.6
13,202.4
9,845.0
5,156.8
14,663.3
1,500.0
704.0
10,595.6
1,025.0
2,508.6
567.4
5,503.3
4,018.0
2,625.0
2,147.3
2,130.0
2,125.0
1,950.0
1,790.0
1,400.0
1,246.8
1,228.7
1,135.1
1,112.8
995.4
931.6
918.2
845.0
790.4
781.0
710.0
Poland
690.6
625.0
600.1
567.4
Leading
market
% volume in
leading market
India
India
India
India
India
Thailand
Philippines
India
Vietnam
India
United States
Ukraine
Ukraine
United States
Ukraine
United States
India
Argentina
India
India
99.6
United States
India
Russia
Russia
95.9
96.7
100.0
99.1
100.0
100.0
100.0
100.0
100.0
100.0
92.6
89.5
48.2
99.9
99.5
44.2
100.0
85.1
96.5
100.0
59.6
100.0
98.5
100.0
Source: The IWSR Database 2014
spirits review
Top 20 growth whisk(e)y brands
Brand
Owner
Officers Choice
McDowells
Hayward
Imperial Blue
Jack Daniels
Jagatjit Aristocrat
Royal Stag
Jim Beam
Crown
Johnnie Walker
Royal Challenge
Jameson
Crown Royal
Grand Royal Burmese
Sekc
Evan Williams
Blenders Pride
White Horse
Passport
Senate
ABD
USL/Diageo
USL/Diageo
Pernod Ricard
Brown-Forman
Jagatjit
Pernod Ricard
Beam Suntory
Radico Khaitan
Diageo
USL/Diageo
Pernod Ricard
Diageo
International Beverages Trading
Jagatjit
Heaven Hill
Pernod Ricard
Diageo
Pernod Ricard
Tilaknagar
Volume
2012
18,705.0
19,273.0
7,050.0
8,840.0
12,284.0
9,000.0
13,882.0
6,434.0
625.0
18,847.0
1,530.0
4,035.0
5,135.0
4,500.0
1,500.0
1,625.0
3,955.0
1,337.0
1,154.0
300.0
Volume Volume growth

2013 2013 on 12
24,164.0
23,291.0
9,180.0
10,960.0
13,187.0
9,845.0
14,661.0
7,121.0
1,120.0
19,288.0
1,930.0
4,426.0
5,456.0
4,810.0
1,800.0
1,888.0
4,210.0
1,558.0
1,342.0
470.0
All volumes in 000s of 9-litre cases
The McDowells No.1 whisky and

No.1 Celebration rum franchise
conform to the same premiumisation
strategy, says USL
considerations for USL to invest behind
brands, build brand equity, and
consolidate volume from lowermargin brands and regional
brands. The McDowells No. 1
whisky and McDowells No. 1
Celebration rum franchise
conform to the same strategy,
Kotnala says.
Officers Choice, owned by
Allied Blenders & Distillers
(ABD), was the fastest-growing
brand across all markets and
categories in 2013, overtaking
McDowells to become the
largest whisk(e)y brand in the
world across all value segments.
The brand has a strong
heritage, which is key to its
continuing success: Officers
Choice whisky has maintained
superior blend quality consistently over its
lifetime and consumers never have a reason to
complain about the blend, explains Ahmed
Rahimtoola, senior vice-president of marketing
at ABD.
Of nearly 5.5m additional cases in total, 2m
cases were of the prestige/semi-premium
Officers Club Blue. This brand line, launched in
5,459.0
4,018.0
2,130.0
2,120.0
903.0
845.0
778.0
686.0
495.0
441.0
400.0
391.0
321.0
310.0
300.0
263.0
254.0
221.0
188.0
170.0
Leading
market
India
India
India
India
USA
India
India
USA
India
Duty Free
India
USA
USA
Burma
India
USA
India
Russia
Mexico
India
% volume in
leading market
96.1
96.7
100.0
99.3
44.3
100.0
96.5
56.8
100.0
11.5
100.0
42.3
85.6
100.0
100.0
99.0
90.4
40.5
31.7
100.0
2011, has benefited from natural tradingup in the market, and a concerted effort by
ABD to push the higher-end product.
A marketing campaign, launched towards
the end of last year, depicted men defending
women from threatening misogynistic
behaviour, with the tagline Raise your
voice, Officers Choice Blue. The
positioning of Officers Choice Blue
is centred on this timeless value
of righteousness and it resonates
even with the core of our young,
increasingly progressive,
highly discerning and
aspiring target audience,
Rahimtoola says.
Pernod Ricards
Imperial Blue, one of the
multinationals key local
spirits brands, is
another semipremium IMFL
whisk(e)y which
continued to
perform strongly
in India, adding
over 2.1m cases.
The brand has
been a huge
success since the
company acquired
Seagrams India
portfolio in 2001,
when volumes of
Imperial Blue were below 1m cases. It blends

Indian grain spirit with malt whisky from
Scotland, and has benefited from innovative
advertising practices in a market where
spirits advertising is officially banned (except
in cinemas). Royal Stag is another Pernod
Ricard-owned Indian whisky brand to feature
in the top 25, adding 781,000 cases in 2013.
Perhaps the most striking growth is the
additional 2.6m cases of Mens Club brandy
consumed in 2013, representing a 1,300%
increase although from a low base of 250,000
cases in the previous year. The success of
Mens Club correlates with a 90% decline in
Golden Grape brandy volumes, another USLowned brand which featured in the top 25
growth brands for 2012.
Emperador brandy topped the list in 2012,
and appears again this year, although having
fallen to eighth place with a more modest
volume increase of just under 2m cases. The
brandy sells exclusively in the Philippines
where it has grown significantly since brand
owner Alliance Global launched the Emperador
Light variant in 2010. Emperador Light is a
lower-strength (55 proof) brandy and is the
first of its kind in the Philippines this gives it
a broader appeal and it has proved popular
with female consumers, while the lower price
point has also helped sales.
Emperador accounts for 16% of the global
brandy market. In a statement last year
Emperador International managing director
Jorge Domecq announced the target of
August 2014
spirits review
Growth brands
Top 10 growth vodka brands
Brand
Owner
Morosha
Men
Khortytsa
New Amsterdam
Plakuchaya Iva
odkowa Gorzka
Putinka
Dobrii Medved
Naliboki Gold
Bulbash
Global Spirits
Arowines
Global Spirits
E&J Gallo
Olimp
Stock
VEDK
Golden Manufacturer
Minsk Zavod
Bulbash
Volume
2012
5,196.0
1,026.0
5,681.0
1,909.0
140.0
1,040.0

2013
2013 on 12
Leading
market
% volume in
leading market
3,220.0
1,400.0
6,308.0
2,021.0
932.0
6,385.0
2,509.0
567.0
600.0
1,486.0
Ukraine
Vietnam
Ukraine
USA
Ukraine
Poland
Russia
Russia
Belarus
Russia
89.5
100.0
48.2
99.9
99.5
99.6
98.5
100.0
100.0
52.3
3,220.0
1,400.0
1,113.0
995.0
932.0
704.0
600.0
567.0
460.0
446.0
capturing 33% of the global market within five

years. The brand looks to have some
way to go if it is to double the current
market share within that time frame, but
Alliance Globals acquisition of the Whyte
& Mackay Scotch whisky business from
USL in May this year indicates serious
intentions to build the brand
globally using the Whyte &
Mackay distribution network.
US and international
brands hold strong
The resilience of the US is
demonstrated by the presence
of four brands in the top 25,
which sell primarily in that
market. The US showed the
second-highest total volume
growth behind China. The
fastest-growing brand was
Sazeracs Fireball Cinnamon
The fastest-growing brand in

the US was Sazeracs Fireball
Cinnamon Shot
Shot liqueur, increasing by over 1.2m cases in

2013 after adding 555,000 in the year
before. The 33% abv cinnamon-flavoured
spirit is the only liqueur in the top 25, and
is the current fashionable shot drink,
especially for younger consumers, in the
US, laying down a serious challenge
to Jgermeister.
Of the established brands in
the US, familiar US whiskey
Jack Daniels showed robust
growth in its leading market,
where the Tennessee Honey
brand line added 145,000
cases, capitalising on
huge demand for
flavoured whisk(e)y.
Outside the US, growth
was supported
by a strong
performance in
Western
Europe, which
accounted for
the majority of
the global
volume increase, with 335,000 additional

cases, while there were notable increases in
Poland, Russia and Japan. Brown-Forman
CEO Paul Vargas singles out the whiskey as a
key driver of the companys organic growth in
fiscal 2014: I believe that our leadership
position in premium US whiskey, led by the
one-and-only Jack Daniels trademark, and
a very balanced geographic contribution,
underpin the companys differentiated
performance.
The company invested nearly $130m in
capital projects in fiscal 2014, including a
new cooperage for the production of
whiskey barrels, which opened in April of
2014, and new distillery in Lynchburg,
which is expected to open at the end of
fiscal 2015. Both of these large capital
projects are expected to support the
companys global growth ambitions for
the Jack Daniels trademark, according
to a Brown-Forman report. Leading
Growth for Captain Morgan was

driven mainly by the launch of its
White brand line extension
Top 10 growth rum brands

Brand
Owner
Hercules
Celebration
Khodays
Captain Morgan
White House
Barcel
Jagatjit Aristocrat
Old Port XXX
Bozkov
Myanmar
Khoday
USL/Diageo
Khoday
Diageo
Tilaknagar
Barcel
Jagatjit
Amrut
Stock
Peace Myanmar Group
10 August 2014
Volume
2012
710.0
17,657.0
790.0
9,905.0
400.0
1,612.0
590.0
1,400.0
744.0
800.0

2013
2013 on 12
2,500.0
18,904.0
1,500.0
10,596.0
1,025.0
2,123.0
975.0
1,680.0
950.0
1,000.0
1,790.0
1,247.0
710.0
691.0
625.0
511.0
385.0
280.0
206.0
200.0
Leading
market
% volume in
leading market
India
India
India
USA
India
Dominican Republic
India
India
Czech Republic
Burma
100.0
100.0
100.0
59.6
100.0
45.9
100.0
100.0
100.0
100.0
spirits review
Bourbon Jim Beam showed solid growth of
508,000 cases, but narrowly missed out on a
position in the top 25.
Captain Morgan is the only international
rum brand in the top 25. Growth in its leading
market, the US, was driven mainly by the
launch of the Captain Morgan White brand
line extension. The role that innovation
continues to play in the US spirits markeet
sets us apart from the competition. Croc
Amaretto, Johnnie Walker Platinum and the
ship of the new Captain Morgan White
drove significant growth, says Ivan Menezes,
chief executive of Diageo, brand owner of
Captain Morgan.
Captain Morgan White has proven a success
to date, with volumes of 150,000 cases in the
first year helping to retain the Captain Morgan
brands position in the top 25. Another brand
line extension, Captain Morgan Parrot Bay,
was an important driver of growth in the US,
while in Germany Captain Morgan Spiced
continued to add significant volumes.
International bitters brand Fernet-Branca
remained in the top 25 in 2013, due to
sustained growth in Argentina, where it has
developed something of a cult following
among the younger demographic. The bitters
and spirit aperitifs category accounts for 58%
of the entire spirits market in Argentina, and
Fernet-Branca dominates the category with

over 70% of volumes. The trend is beginning
to catch on in other Latin American markets
such as Bolivia and Uruguay, although volumes
in Italy and Germany, the second- and thirdlargest markets for Fernet-Branca, respectively,
declined.
Plakuchaya Iva
(right) and
Morosha (below
left) are new
Ukrainian vodkas
in the top 25
New vodka brands

Vodka is well represented again, with eight
brands in the top 25 compared to nine in 2012;
total vodka volumes have grown for a second
consecutive year, despite a loss in volume for
many key brands. The main difference this year
is that only one vodka brand is prominent in
Russia, where increases in the minimum
price of vodka, which took effect on 1 January
2013, and stricter regulations have negatively
impacted the already declining official
vodka sales.
One of four new vodka brands on the 2013
list is Men Vodka, a locally produced brand,
which launched in Vietnam in 2012 and
reached 1.5m cases last year, driving strong
growth in the category. Historical data is
uncertain and volumes need further checking,
but it is apparent that vodka is growing as
consumers shift from Cognac, and premium
and super-premium vodkas have started to
appear in the top bars and hotels.
In the US the volume of
E&J Gallos New
Amsterdam vodka grew
by almost 1m cases in
2013; the vodka brand
was launched as recently
as 2011 and is proving to
be highly successful so
far, exceeding 1m
cases within a year
of launch and
almost doubling
to over 2m in
2013. One
reason for this
strong growth
is the
accessible
pricing,
retailing at
around the
$12.99 mark for
a 75cl bottle,
while New
Amsterdam is
positioned at a
slight premium to
other standard
brands. A marketing push in November last

year saw the launch of a nationwide TV
advertising campaign for the brand.
E&J Gallo has diversified its spirits portfolio
with the addition of tequila, rum, gin and
vodka brands since 2007, to complement its
existing brandy offering. This appears to be an
obvious area of expansion for the wine giant
to capitalise on its position in the US market.
Overall, vodka has shown steady growth in the
US with a compound annual growth rate
(CAGR) of 4.8% between 2009 and 2013, but
the rate is now slowing. New Amsterdam is
one of the most striking recent success stories
in the market, and the brand has now
launched in the UK.
According to James Taylor, associate
marketing manager EMEA at E & J Gallo:
The key to the success of New
Amsterdam vodka is that it gives our target
consumer exactly what they want and
provides a truly exciting option within a
well-established category.
August 2014 11
spirits review
Growth brands
Of the six vodka brands in the top 25, three
are Ukrainian. Khortytsa is a traditionally
strong, well-established brand owned by
Global Spirits, a big player with the ability to
push new brands with good distribution and
good visibility at the point of sale. Having
suffered year-on-year volume declines since
2008, Khortytsa is now showing signs of
recovery, with an increase in volume of 1.1m
cases in 2013. Global Spirits also owns
Morosha, which launched in 2012 and passed
2m cases globally, mostly in the Ukraine,
before adding around 1.2m cases last year.
The eco-brands marketing emphasises the
use of organic ingredients and mineral water
for production, and it is involved in social
projects such as helping to clean up parks in
major cities.
Plakuchaya Iva is another new Ukrainian
vodka in the top 25; its rapid growth over
900,000 cases in 2013 bucked the overall
trend in Ukraine, where increased minimum
pricing is driving down volumes for many
Khortytsa is a
well-established
brand, owned by
Global Spirits
brands. Like Morosha, Plakuchaya Iva has an

innovative marketing strategy its name is a
reference to a popular 1960s TV drama and
the whole ethos of the brand is a retro style.
Brand owner Olimp attributes its success to its
high quality and vibrant marketing campaign,
and Olimps ownership offers the brand a
strong distribution network through which to
access the market.
The potency of emerging markets,
particularly India is apparent, and despite a
recent slowdown in the IMFL sector, it seems
that the success and premiumisation of Indian
whisky brands will continue to drive growth in
the industry. Major international brands remain
well-placed to maintain strong growth through
brand line extensions and flavouring, and the
financial and distributive clout of multinational
owners. Similarly, new vodka brands have
thrived due to effective marketing and the
strength of the companies behind them,
driving growth in the category while many
brands are flat-lining or losing volume.
Other categories: top growth brands

Brand
Owner
Volume
2012
Volume
% growth
2013 2013 on 12
Leading
market
% volume in
leading market
Liqueurs
Fireball Cinnamon Shot
Lubelska LSF
Kinky
Rum Chata
Angelli
Sazerac
Stock
Crosby Lake Spirits
Agave Loco
Henkell
959.0
2,196.0
250.0
360.0
124.0
2,188.0
2,463.0
425.0
460.0
219.0
1,229.0
268.0
175.0
100.0
95.0
USA
Poland
USA
USA
Romania
92.6
99.9
100.0
100.0
94.1
Cognac/Armagnac
Hennessy
Salignac
Renault
Meukow
Favraud
Janneau
LVMH
Beam Suntory
Altia
CDG
Haecky
Giovinetti
5,109.0
90.0
32.0
94.0
17.0
5,179.0
109.0
36.0
99.0
4.0
21.0
70.0
19.0
5.0
5.0
4.0
3.0
USA
USA
Duty Free
Duty Free
Russia
Duty Free
43.8
96.6
64.2
31.3
100.0
35.7
Gin
Bombay
Hendricks
Tanqueray
Savoy Club
Beefeater
Bacardi
Wm Grant & Sons
Diageo
Tilaknagar
Pernod Ricard
2,610.0
369.0
2,075.0
50.0
2,478.0
2,759.0
492.0
2,191.0
105.0
2,533.0
149.0
123.0
117.0
55.0
55.0
USA
USA
USA
India
Spain
37.3
43.6
60.9
100.0
41.9
Tequila
Sauza
1800
Camarena
Patrn
Don Julio
Espolon
Beam Suntory
Proximo Spirits
Camarena
Patrn
Diageo
Campari
2,229.0
959.0
430.0
1,782.0
545.0
94.0
2,474.0
1,144.0
515.0
1,864.0
594.0
132.0
245.0
185.0
85.0
82.0
50.0
38.0
USA
USA
USA
USA
USA
USA
63.1
89.2
100.0
96.3
54.4
75.7
12 August 2014
spirits review
Britains changing tastes
A new study from William Grant & Sons highlights the emerging opportunities in the UK market
The UK market is becoming ever more
polarised, with the value and premium sectors
growing, while the large standard market is
squeezed, according to a new report highlighting
current consumer trends and how shopper
habits are changing as the country emerges
from recession. William Grant & Sons UK
(previously known as First Drinks Brands) latest
Spirits and Champagne Report investigates the
impact this is having on the way the industry
engages with customers, to ensure a strong
connection with brands and their stories.
With new research undertaken by the
company in both the on- and off-trade, this
years report highlights the evolution of
shoppers habits, particularly when it comes to
seeking value in what they spend. New evidence
in this years report suggests the perception of
value is also evolving, benefiting brands that
offer added value. William Grant & Sons UK
marketing director Gary Keogh comments: The
market is more polarised than ever and premium
brands can really take advantage of this trend.
Value can mean many things, from functional
benefits to packaging and personality.
In addition, scarce and desirable products
are growing in popularity as consumers are
being exposed to more and more choice. Other
forms of scarcity are emerging in importance,
such as access to unusual experiences and

knowledge. Seeking out something that is
limited or unique in the way it is crafted is
increasingly common. This remains especially
relevant for premium brands in the drinks
sector, such as limited-edition whiskies.
Immersive experiences remain a key brand
engagement tool. With many higher-end
brands excelling at offering drinkers interesting
serves, personal touches and quality
experiences, it is no coincidence that premium
spirits continue to drive market growth,
particularly in the on-trade where value is up
13.7%. In the off-trade, value has increased by
6.4%, outperforming the growth of nonpremium spirits, which are up 4.5%.
The company also announced the formation
of a Prestige division, targeting the very highend on-premise market. The new Prestige
division is led by Kirsten Grant Meikle. The
company noted that with 620,000 millionaires
in the UK a figure forecast to rise by 30% in
the next eight years the high-end on- and
off-trade channels are becoming increasingly
important for premium spirits. London is the
wealthiest city in the world, with more
billionaires than any other, well ahead of
Moscow in second place.
William Grant & Sons UK managing director
Chris Mason comments: Premium brands are

extremely well placed to benefit from the
trends the market is experiencing. This is why
building premium brands that consumers desire
is core to our business. It is these higher-end
spirits which can offer more in terms of value,
to appeal to the consumer. In the year ahead
we aim to work even more closely with our
customers to deliver premium experiences be
they online, in-store or in outlet.
The report also reveals strong value growth
in the malt whisky and spiced/flavoured rum
categories. With companies like William Grant
& Sons UK investing in educating the
consumer at the point of purchase on whisky
flavour spectrums, more shoppers are being
encouraged to explore the category, further
boosting sales. Rums versatility and use in
cocktails has contributed to its growth,
particularly in the on-trade. Gin is also
performing well; an explosion of new brands
has helped fuel general consumer interest in
the category. With premium gin growing at sixand-a-half times the rate of mainstream gin,
the opportunity remains for further growth.
Mason adds: This is an exciting time for our
business as we take the next positive steps in
our evolution We are in a good position to
drive long-term value.
shelves to validate their decision and

ensure they are getting value for money
Shoppers will pay above expectations
for categories viewed as more
premium, such as malt whisky and
Cognac
While smaller size bottles encourage
trial of products and categories, 48% of
people buying a 35cl bottle will only
purchase this smaller size and not
larger variants
Gifting
73% of people have purchased an
alcohol gift in the past year of these,
51% of shoppers bought spirits as
a gift
40% of spirits gifts are Scotch whisky
29% of total spirits category value
sales are purchased with the intention
of gifting, estimated to be worth over
1bn per annum
When purchasing gifts, shoppers are
willing to trade up by an average of
11% versus their standard purchase
Facts and figures

The on-trade
The on-trade remains in a state of
flux, with research showing that
consumers continue to make less
frequent visits. However when they are
out, 79% of drinkers consider spirits
and its the spirits category which is
driving growth the on-trade spirits
market is worth 5.4bn, up 5.1%
38% of consumers use menus to
confirm their choice of drink rather
than to inspire new drink choice
77% of consumers would welcome
bartender recommendation many
bars need to take advantage of this
through staff training
The off-trade
Two-thirds of off-trade purchases are
made when in-store
Almost 60% of branded spirits are
sold at a promoted price in the off-trade
price promotions play a key role for
shoppers
90% of shoppers will visit the main
spirits aisle after seeing promotion
Online
45% of the population have purchased
their groceries online
Online retailing is one of the fastestgrowing channels in the grocery
market, with 24% growth achieved last
year. However, beer, wine and spirits
online sales still only represent 4% of
UK grocery sales. With heavier items a
key driver for shopping online, it is
important for retailers to embrace this
buying channel with spirits
Shoppers spend on average 9% more
when purchasing online versus in-store
Prestige
Global luxury wine and spirits are
worth 45bn. With 620,000
millionaires in the UK, the high-end
on- and off-trade channels are
becoming increasingly important for
premium spirits
London has set itself apart as a leader
in international drinks trends many
hotels and bars are aiming to be the
most iconic in the capital, creating
unique serves and experiences
August 2014 13
spirits review
Irish whiskey reaches new high
Alexander Smith looks at the revival of Irish whiskey
Irish whiskey remains one of the hottest
categories in the global marketplace, rising by
10% between 2012 and 2013 to reach a new
high of 6.9m cases, according to the IWSR. The
category has more than doubled since 2004.
Much of the credit must go to Irish Distillers
(IRI) which, from 1966, was the sole
remaining supplier and had the task of both
category and brand building. That task seems
less onerous today given the favourable
trends, but some forget that, for many years,
the Irish category was relatively moribund.
Irish Distillers chief executive Anna
Malmhake says: We are now witnessing the
early stages of an Irish whiskey renaissance.
Irish whiskey is the fastest-growing category in
the world. It currently only accounts for 6% of
total global whisk(e)y sales, so is still in its
infancy. It will take decades to reach parity
with US whiskey or Scotch, so the headroom
for growth is enormous.
Indeed, the roots of the recovery stem from
Pernod Ricards acquisition of IRI in 1988.
This provided IRIs flagship Jameson brand
with the investment, focus and long-term
brand building that is now paying dividends.
Jameson has scarcely looked back and has
enjoyed 24 consecutive years of growth.
Malmhake says: Jameson is spreading out
like rings. Market after market is picking up
and it is in double- or triple-digit growth in 50
countries. The one thing I am convinced of is
that there is at least 20 years of strong
growth ahead for Jameson.
The big change in the industry is that it is
no longer controlled by one producer and, in
recent years, Diageo through its acquisition of
Bushmills in 2005, William Grant & Sons with
Tullamore Dew (2010) and, most recently,
Beam Inc with Cooley (2012) have all entered
the category. There have also been some very
interesting and ambitious start-ups, such as
The Teeling Whiskey Company, which was
formed in June 2012. The Teeling family
previously owned Cooley.
Stephen Teeling comments on the decision
to re-enter the Irish whiskey business so soon
after selling off Cooley. There is no other
business that we feel offers the same
potential; thats why we got out of Irish
whiskey but went completely all in again. Irish
whiskey is a small percentage of the overall
whisk(e)y business, but we anticipate that Irish
whiskey will grow by around 60% over the
next four years. It is a really exciting time to
be part of the Irish whiskey industry.
There are a handful of other start-ups that
have reached the same conclusion, such as
14 August 2014
We are now witnessing

the early stages of
an Irish whiskey
renaissance
Anna Malmhake, chief executive,
Irish Distillers (pictured above)
Walsh Whiskey, Dingle, AllTech, Echlinville

Distillery, Carlow, West Cork Distillers, Slane
Castle and Niche Drinks, to name a handful.
Importantly, this is bringing a greater critical
mass of investment and diversity to the industry.
The acquisition of Cooley by Beam has
caused some problems for smaller brands that
had previously sourced their supply from
Cooley, such as Wild Geese and Michael
Collins. These brand owners have been forced
to scramble for alternative supply. Protg
chairman and owner Andre Levy says: It has
become much more difficult to source our
requirements. There are new distilleries
coming on board, but they are not going to be
able to supply whiskey to third parties for a
good five years. Most of them are small
distilleries and they are not going to really fill
the gap that is there.
Jameson is undoubtedly the category
flagship, accounting for some 64% of Irish
whiskey sales. Jamesons registered impressive
9.6% volume growth in 2013, taking it to a new

high-water mark of 4.4m cases. Significantly,
the brands value growth (+17% in fiscal year
2013) is outstripping volume growth. By 2020,
Jameson will be an iconic global brand,
generating sales of 1bn ($1.36bn). This
equates to double the level of sales today, said
CEO-designate Alex Ricard when speaking at a
Capital Markets Day presentation.
Growth is by no means confined to Jameson.
Tullamore Dew, Bushmills, Paddy, Kilbeggan,
Clontarf and 2 Gingers all enjoyed double-digit
growth in 2013 from a smaller base. Tullamore
Dew and Bushmills are both on track to
become the categorys next million-case brands
within the next two to three years.
Moreover, after years of contraction, the
production base is again expanding in
response to the strong demand. Three years
ago there were four distilleries in Ireland. It is
estimated that, in the next three to five years,
that figure will grow to 15 if all the planned
projects come to fruition. IRI also recently
doubled its capacity at its Midleton distillery in
a 100m ($135m) investment. Since its
acquisition of Bushmills in 2008, Diageo has
also invested heavily in warehousing and
distillation facilities.
Whiskey revival in the US

A real cause for optimism is Irish whiskeys
strong performance in the US the largest
individual market. Jameson, as elsewhere, has
led this growth and is undoubtedly one of the
real momentum brands there. Jameson rose by
17.2% last year to just under 1.9m cases. The
brand registered double-digit growth in all 50
US states. The brand is very strong on the East
and West Coast, but it is still underdeveloped
in the Mid-West and important markets in the
south-west, such as Texas. There is still
considerable scope for growth if you consider
that the leading whisk(e)y brands in the US
Jack Daniels (5.6m cases), Crown Royal
(4.7m), Jim Beam (4m) are significantly
larger. The expectation is that Jameson can
eventually rival those powerhouse brands.
The outlook is even better if you consider
the backdrop of the current whisk(e)y revival.
The Millennial consumers are adopting
whisk(e)y to an extent that the Baby Boomers
never did. Pernod Ricard USA CEO Bryan Fry
says: Brown spirits are having a revival in the
US. Although there has been a lot of talk about
US whiskey, Irish whiskey is outstripping that
growth. It isnt all about men; whisk(e)y is
growing very rapidly with women.
Jameson derives 39% of its US sales from
TASTE TEELING WHISKEY RESPONSIBLY
AWARDING WINNING WHISKEYS FROM IRELANDS

LEADING INDEPENDENT IRISH WHISKEY MAKER
WWW.
W
W W.TEELING
GWH
HISKEY.COM
HISKEY.C
OM
spirits review
Irish whiskey
the the on-premise sector, indicating a healthy
channel split, especially when compared to
competitors. Bartender advocacy remains a
key driver behind the brands success.
According to Brand Equity Monitor, not only is
Jameson the second most popular shot brand
(behind Patrn), but it is most popular shot
brand among bartenders. Thirty-nine per cent
of consumers started drinking Jameson due to
bartender recommendation. Fry says: We are
working to make Jameson the number one
passion brand in the US.
Hispanic influence
There are other factors driving Irish whiskeys
growth in the US, such as demographics.
Whisk(e)y is generating the greatest growth in
volume and value in the booming Hispanic
market. Irish whiskey is the second fastestgrowing whisk(e)y in value among Hispanics.
Hispanic buying power is surging, and their
median age is 27% (versus 37 for the US
population). Whisk(e)y is the second-largest
spirits category among African Americans and
Irish whiskey is gaining ground. Fry says: You
cannot ignore the change to the demographic
fabric of the US. The Hispanics, in particular,
are going to become a more important part of
that fabric. The African Americans also index
very highly for premium spirits. You have to
start cutting the country into its demographic
components.
While Jameson dominates the market,
other Irish brands are also performing well in
the US. Third-ranked Tullamore Dew saw
growth rise by 73% in 2013 to 165,000
cases. Beam Suntorys 2 Gingers brand also
witnessed dynamic growth, rising by 73% to
35,000 cases. Beam Suntory had less success
with Kilbeggan, following heavy pipeline
filling the year before. Second-ranked
Bushmills also underperformed the market,
rising by 3.8% to 222,000 cases. This
respectable, but less than dynamic growth is
surprising, given the strength of Diageos
organisation in the US.
One new dynamic in the market is the
explosive growth of flavoured whiskies. The US
whiskey producers have led this development,
but recently Irish brands such as Bushmills and
Paddys have moved into that space with their
own flavoured offerings. IRI is resisting a move
into flavours with Jameson, reasoning that
there is enough easy growth to be had without
resorting to flavours. While purists may bridle
at the move toward flavours, advocates point
out that Ireland has a long tradition of adding
16 August 2014
Irish whiskey: top 10 markets

Market
USA
Duty free
Ireland
Russia
France
UK
Germany
South Africa
Czech Republic
Bulgaria
Others
Total
Volume
2009
Volume
2012
Volume
2013
% CAGR
2008-13
1,155.0
373.1
463.5
132.8
371.5
376.5
159.8
205.5
137.5
121.5
954.4
4,451.0
2,095.0
577.0
530.5
366.0
385.0
306.0
235.8
220.5
142.3
151.3
1,260.1
6,269.2
2,470.0
619.5
521.5
388.0
384.0
308.0
275.0
240.0
162.8
156.8
1,374.5
6,900.0
18.9
8.7
0.1
21.3
-0.4
-4.8
11.3
3.8
6.8
4.2
7.6
9.1
You cannot ignore

the change to the
demographic fabric of
the USA. The Hispanics,
in particular, are going to
become more important
Bryan Fry, CEO, Pernod Ricard USA
Some producers, such as IRI, are

rejuvenating long-forgotten brands
flavours to its whiskies with drinks like the Hot

Toddy and Irish Coffee.
Markets beyond the US

While the US remains the heartland of the Irish
whiskey revival, the signs are very positive
elsewhere. Russia has seen explosive growth,
with a five-year (2008-2013) compound annual
growth rate (CAGR) of 21%. Irish whiskeys
growth moderated to a still-healthy 6% in 2013
over 2012 to reach 388,000 cases, making it
the third-largest market behind the US and
Ireland. There is a theory that the smoother
taste of Irish whiskey makes it the ideal drink
for Eastern European consumers transitioning
from vodka. Rising duty levels has also served
to close the gap between local vodkas and
imports. From that growing standard sector,
some Russians are trading up into premium
whiskies like Jameson.
The recent imposition of advertising
restrictions is making brand-building more
difficult. Pernod Ricard Russia managing
director Philippe Coutin says: The advertising
restrictions will tend to benefit Jameson
because it is already strong. For newcomers it
will be very difficult to become established.
In theory France should be a natural market
for Jameson and the Irish category given the
countrys love of whisk(e)y and the fact that it
is Pernod Ricards home market. Irish whiskey
seems to have stalled in France, however. Last
years anaemic performance can be attributed
to duty increases and the poor economy.
Despite being the fourth-largest market for
Irish whiskey, it is below its 2004 level and
nobody is predicting a sudden resumption of
growth in the current climate.
The UK, another important market, is showing
signs of life, rising by 0.6% in 2013 over 2012.
spirits review
This represents an improvement over the near
-5% CAGR between 2007 and 2012. The
category struggled over that period in line with
the larger spirits category, due mainly to the
imposition of the duty escalator. Whether the
stabilisation of volume in 2013 heralds a return
to growth in coming years remains to be seen.
Jameson returned to growth in 2013 and
Tullamore Dew gained at a double-digit clip.
Bushmills saw a modest decline.
Germany is shaping up to be a significant
market, rising by a CAGR of 11.3% between
2008 and 2013 to 275,000 cases. In 2013 that
growth accelerated, rising by 16%. Unusually,
Tullamore Dew is the leading brand in Germany,
following a 6% rise in 2013, and Jameson is
relatively small but growing rapidly (+40%), as
is Bushmills (+110%). Irish whiskey continues
to face strong competition in Germany from US
whiskey. Both categories are benefiting from the
rising popularity of whisk(e)y in Germany.
In South Africa, Irish whiskey (92%
Jameson) rose by 8% in 2013 to 240,000
cases. The emerging black middle class in
South Africa is driving this growth. Moreover,

whisk(e)y overtook brandy in 2013 to become
the largest category in South Africa and
maintains positive momentum. Within that,
Jameson has benefited from its consistent
Triple distilled, twice as smooth above-the-line
campaign. Jameson also had the second
highest media spend in South Africa of any
spirits brands at ZAR40m ($3.76m).
Travel retail is the other major market for
Irish whiskey, and would rank second behind
the US if aggregated together. Total travelretail sales climbed by 7% in 2013 to hit a new
high of 620,000 cases. Jamesons growth
slowed to just 2.2% to just under 400,000
cases and it is now the 11th-ranked brand in
global travel retail. Bushmills had a very big
year in global travel retail, rising by 47% to hit
the 100,000-case mark for the first time, while
Tullamore Dew was flat and sits just below
that threshold.
Irish whiskey has still barely scratched the
surface in much of Asia and Latin America. These
markets represent big future potential. Pernod
Ricard is beginning to activate Jameson in China.

Ricard explains the opportunity. There is a big
structural shift in China, which is becoming a
more normal emerging market. Previously, the
entry level was 12yo Scotch or VSOP-and-above
Cognac. That was 90% of the imports. With the
emerging middle class we are starting to see the
birth of a premium segment. That is the sweet
spot for Jameson in China. We are beginning to
apply it against that opportunity.
Premiumisation initiatives
As the Irish whiskey category matures, it is
segmenting in a number of ways. Producers are
looking to build value by adding premium-andabove variants. Some producers, such as IRI,
are also rejuvenating long-forgotten brands,
such as Redbreast, The Spot range (Yellow and
Green), Midleton and Powers, among others, as
part of its pot-still whiskey programme, first
announced in 2011. The opening of a new
Garden Stillhouse at its Midleton Distillery in
September 2013 was a big statement of intent
by Irish Distillers (Pernod Ricard) to compete at
For sales enquiries contact: sales@protege-international.com

The Wild Geese, The Wild Geese Rare Irish Whiskey, The Wild Geese Irish Soldiers & Heroes, The Wild Geese Soldiers & Heroes, Untamed and The Exiles are registered trademarks. The Wild Geese Flying Geese device is a trademark. The products comprised in
The Wild Geese Collection of Premium Spirits are sold under The Wild Geese Soldiers & Heroes in North America and worldwide under The Wild Geese. Manufactured under the authority of the trademark proprietor Avalon Group Inc. 2002 - 2014.
spirits review
Irish whiskey
the super-premium-and-above end of the
whisk(e)y market. The Garden Stillhouse is
dedicated to producing expressions of its potstill range. Fry says: Jameson created a
runway for growth in Irish whiskey. In markets
like the US, whisk(e)y is a tapestry and
becoming more diversified. We believe there
are opportunities for other Irish whiskies.
Malt focus
Other producers, such as Cooley, Bushmills
and Teeling, are focusing on their malt
offerings. There are two schools of thought
here. IRI contends that pot still is the
indigenous or authentic style of Irish
production. The producers of malt styles
believe that it is more recognisable to the
consumer, thanks to the prior work done by
Scotch producers. Teeling says: Irish single
malt is a totally under-developed category.
There is enormous potential.
Protg International is also targeting the
top end of the market with its Wild Geese
brand. Levy says: Malt is an easier sell
We are looking to
position ourselves as a
step-up brand
more small-batch
and handcrafted
Stephen Teeling, The Teeling
Whiskey Company
because consumers are more familiar with it,
but it still presents challenges. It is not a given
that the consumer understands that Irish
single malt is a similar product to Scotch single
malt. It takes massive consumer education.
Regardless, it is helping to trade consumers
up and build value. Teeling says: The majority
of people entered the Irish category through
standard blends. The Irish category was quite
LUXURY FROM PROTG
For a full update on our

new product range visit:
www.protege-international.com
For sales enquiries contact:
sales@protege-international.com
The Wild Geese, The Wild Geese Rare Irish Whiskey, The Wild Geese Irish Soldiers & Heroes, The Wild Geese Soldiers & Heroes, Untamed
and The Exiles are registered trademarks. The Wild Geese Flying Geese device is a trademark. The products comprised in The Wild Geese
Collection of Premium Spirits are sold under The Wild Geese Soldiers & Heroes in North America and worldwide under The Wild Geese.
Manufactured under the authority of the trademark proprietor Avalon Group Inc. 2002 - 2014.
narrow until recently in terms of offerings. If

anything, competition at the standard end will
intensify now that there are four big players
Pernod Ricard, William Grant & Sons, Diageo
and Beam all going for volume with their
main brands. Smaller players such as us need
to position ourselves outside that. We are
looking to position ourselves as a step-up
brand more small-batch and handcrafted. We
have taken inspiration from what the US
whiskey producers have done with their smallbatch offerings.
There is also an opportunity to extend
existing Irish brands upwards. Malmhake of
Irish Distillers says: There is still room to
extend the range. It doesnt mean going into
traditional Scotch territory or working in age
statements, which we wouldnt do. We can do
an expanded Jameson range, but in a very
different way than what the market has seen.
We want Jameson to be very premium, but
ultimately keep it affordable. We are not trying
to transform the brand into a luxury offering.
Thats not what we are.
spirits review
Brazil faces tough challenges
Daniel Mettyear looks at why, despite a successful World Cup, Brazils spirits market is beginning to feel the heat
There is apparently renewed gusto for premiumisation in Brazils high-status environment, yet the market is coming under pressure
On the face of it 2013 finished up as yet
another fine year for the burgeoning Brazilian
imported spirits market, with solid growth
behind imported Scotch, whisk(e)y, vodka and
tequila and an apparently renewed gusto for
premiumisation in an already highly statusand image-driven environment. However, in a
similar way that the success of the FIFA World
Cup has helped paper over the cracks of
Brazils growing socio-economic problems, the
eye-catching top-line growth of imported
spirits only tells half the story of a market that
is starting to come under pressure.
For the past five years the rapid expansion
of imported spirits in Brazil has been fed by an
enormous wave of emerging middle-class
consumers, eager to trade up from local
products to better-seen categories and
brands with international appeal. This middleclass demand which has also driven
unprecedented growth across the automobile,
mobile phone and household goods
industries has been dangerously reliant on
credit and as the bills start mounting, what
used to feel like progress is now starting to
feel like a giant step backwards. All this plays
out on a backdrop of rising living costs, a
depreciating real against the dollar (-13% in
2013) and growing civil unrest. Private
consumption in 2013 expanded at its slowest
rate since 2004 and the bottom line is that
disposable incomes are under pressure.
The market was undermined by a number of
other factors:
A rain-stricken Carnaval
20 August 2014
A slowdown in the important border trade
with Paraguay and Uruguay

An on-trade sector hit by the strict
enforcement of Brazils new zero-alcohol drinkdriving policy
A devastating nightclub fire in Santa Maria,
which led to the temporary closure of over
1,000 clubs and bars over safety fears.
Combined, it is little wonder that, despite

seemingly positive results, Brazilian spirits
operators have labelled 2013s campaign as
one of the toughest of the past decade.
Key local categories continued their
downward trajectory of the past few years as
cachaa, rum, local whisk(e)y and brandy all
shed cases by the million, as consumers looked
Brazil: spirits sales by category

Category
Volume
2009
Volume
2012
Volume
2013
% CAGR
2012-13
% CAGR
2009-13
89,219.3
5,705.3
7,785.0
1.5
82,305.8
8,498.0
6,947.0
2.8
80,636.5
8,561.3
6,812.5
2.5
-2.0
0.7
-1.9
-9.1
-2.5
10.7
-3.3
13.6
Scotch whisky
Other whisk(e)y
US whiskey
Irish whiskey
Canadian whisky
Total whisk(e)y
2,953.3
1,352.0
31.0
4.3
0.5
4,341.0
4,581.8
1,339.5
118.3
7.3
0.5
6,047.3
4,879.3
1,090.5
154.8
8.0
0.3
6,132.8
6.5
-18.6
30.9
10.3
-50.0
1.4
13.4
-5.2
49.5
17.1
-15.9
9.0
Gin
Rum
Tequila
80.0
2,557.3
118.8
80.5
2,700.8
217.3
82.0
2,598.3
229.5
1.9
-3.8
5.6
0.6
0.4
17.9
Bitters/Spirit aperitifs 970.0

Liqueurs
394.8
Aniseed
2.3
Fruit eaux-de-vie
0.8
Flavoured spirits total 1,367.8
Total spirits
111,175.8
1,052.5
547.0
5.0
1.0
1,605.5
108,404.8
1,108.5
556.8
5.3
1.0
1,671.5
106,726.8
5.3
1.8
5.0
Nil
4.1
-1.6
3.4
8.9
23.6
7.5
5.1
-1.0
Cane
Vodka
Other brandy
Cognac/Armagnac
spirits review
Brazil spirits
Brazil: spirits sales by quality
towards an imported spirits market.

Nonetheless, that is beginning to change.
Vodka grinds to a halt

Many of these traditional local categories have
been hit by the growth of vodka. Vodka has been
one of the main beneficiaries of aspirational,
trading-up consumers over the past five years
and added over 3m cases between 2008 and
2012, an impressive five-year compound annual
growth rate (CAGR) of 11.5%. Vodkas continued
progress over the next five years was universally
seen as a dead certainty. The category advanced
by just 0.7% in 2013, with the enormous value
vodka segment, in particular, bearing the brunt
of rising living costs, a slowdown in the on-trade
and exposure to a disappointing Carnaval period.
The steady stream of migrating cachaa,
rum and brandy consumers continued and the
low-priced end of the market, packed with
regionally focused vodka brands, swelled to
more than 2.7m cases, a growth rate of almost
7%. However, pressure on disposable incomes
for Brazils new middle-class meant that, for
many consumers, the journey stopped here
and trading-up into the dominant value
segment slowed to a standstill; category
leaders Smirnoff (Diageo), Orloff (Pernod
Ricard) and Natasha (Bacardi-Martini) all fell
back and the segment closed on a -5.7%
decline for the year. Furthermore, the engine
driving the entire category Smirnoff has
come under particular pressure from an
unlikely competitor in Bacardi Big Apple, which
has not only encroached on its space among
young, emerging middle-class Brazilians, but
has sparked a trend behind flavoured vodka,
which continues to snatch share from
Quality
Volume
2009
Volume
2012
Volume
2013
% CAGR
2012-13
% CAGR
2009-13
Low-priced
97,124.3
Value
10,111.3
Standard
3,231.0
Premium
670.4
Super-premium
35.1
Ultra-premium
3.8
Prestige
Nil
Total spirits
111,175.8
89,757.2
11,979.9
5,024.5
1,451.5
182.8
9.0
0.1
108,404.8
87,910.4
11,499.7
5,437.2
1,641.9
227.3
10.2
0.2
106,726.8
-2.1
-4.0
8.2
13.1
24.4
12.8
200.0
-1.6
-2.5
3.3
13.9
25.1
59.6
27.8
16,448.8
-1.0
traditional equivalents.
While many of Brazils middle-class were
feeling the pinch, those towards the upper end
of the scale were reaching deeper into their
pockets, propelling the premium-and-above
segment forwards with renewed enthusiasm.
Premium vodka grew by +12.7% as Pernods
flagship Absolut brand extended its reach in the
on-trade sector and found company in
secondary players, such as Ketel One,
The low-priced end

of the market, packed
with regionally focused
vodka brands, swelled
to more than
2.7m cases
Consumers have migrated away from cachaa to vodka brands

22 August 2014
Stolichnaya and Finlandia, which are now

ramping up investment and growing their
presence. Similar growth of 12.6% in superpremium vodka reflected the thirst for status at
the top end of the market, this time led by an
aggressive campaign behind Croc, which swept
aside the competition to reach over 63,000
cases at a rate of 33%; Croc is fast becoming
one of the hottest brands on So Paulo and
Rios luxury circuit. Essentially there was a
strong polarisation in the vodka market, and
thus brands occupying the large middle
ground the value segment felt the squeeze.
Scotch keeps on keeping on

A similar narrative played out across the
Scotch market although the end results here
were far more positive; an enormous
marketing drive from the categorys key
stakeholders succeeded in turning a sluggish
start to the campaign on its head, achieving
overall category growth of +6.5% by year end.
As in vodka, rising living costs and increased
indebtedness for the new middle-class stunted
recruitment into a value segment that slowed
from 8% in 2012 to just 2% in 2013.
Household name Teachers fell back after
taking a giant leap forward in 2012. Standard
Scotch, however, achieved greater consistency,
advancing by 6.4%, but in a marked change
from previous years, massive promotion and
aggressive discounting were central to
maintaining its momentum.
Scotch consumers in Brazil have
demonstrated a remarkable reluctance to trade
down, particularly from the Johnnie Walker
franchise, which is widely recognised as the
aspirational Brazilians badge of honour.
Instead, Brazilians prefer to scale back
consumption rather than move back down the
scale. But the fact that even the emblematic
Johnnie Walker Red was forced to engage in
heavy promotion in order to inch forward at a
rate of just 1.6% served as barometer for the
spirits review
state of this end of the marketplace.
Competitive pricing, as well as an assault on
beers consumption occasion in the on-trade,
was also a key feature of a hugely successful
campaign behind White Horse, which grew by
nearly 40% in front of Black & White and
Ballantines Finest.
In contrast to an increasingly competitive
value segment, the state of the upper end of
the market proved healthier than ever, as
significant progress was made in the
premium-and-above segments where
expansion in the north-east and a focus on its
Reserve portfolio produced impressive results
for Diageo; Johnnie Walker Double Black,
Gold, Platinum, Blue and Old Parr all surged
with double-digit growth (not to mention the
successful roll-out of the Explorer series),
pushing the entire luxury segment forward and
leaving the competition firmly in their wake.
Furthermore, Jack Daniels bolstered premium
whisk(e)ys proposition in Brazil as it surpassed
the 130,000-case mark; Brazilians are starting
In contrast to an
increasingly competitive
value segment, the
upper end of the
market proved
healthier than ever
to get a real affinity for Jack Daniels superpremium offerings, which have grown by more
than 30%.
While there are clearly no problems
whatsoever at the top end of the market, an
increasing reliance on promotion and
discounting in standard and a slowdown in
recruitment at the value end is indicative of a

market under pressure. A middle class that
once purchased unreservedly is now on the
lookout for deals.
What is unclear is how this will play out
towards 2015. Early signs suggest that, as
expected, the World Cup provided a welcome
boost to vodka, cachaa and beer in particular,
but this is already slowing and, as Brazilians
come to terms with an embarrassing defeat and
elections in October approach, there is a fear
that the national mood could change and the
violent protests seen early in the year may
return. The second obstacle for the drinks
market will likely arrive towards 2015, where
there is a growing fear that any new
government will pursue a currency depreciation
that will put increasing pressure on imported
goods. The feeling is that the top end of the
market is safe for now, but maintaining the
momentum in the value and standard segments
may provide the Brazilian drinks industry with
one if its toughest challenges yet.
spirits review
Pernod Ricard alters brand strategy
Pernod Ricard managing director, brands Thierry Billot discusses the firms shift in focus with Alexander Smith
Pernod Ricard has one of the most powerful
brand portfolios in the industry, built through a
series of acquisitions. This began with Irish
Distillers in 1988 (including the Jameson
brand), Seagram in 2001 (Martell, Chivas Regal
and The Glenlivet), Allied Domecq in 2005
(Ballantines, Malibu) and Vin & Sprit in 2009
(Absolut). These brands were seamlessly
integrated into Pernod Ricards decentralised
structure whereby six specific brand-owning
companies handle the marketing, while the 75
market distribution companies are all whollyowned and managed as profit centres.
The portfolio covers virtually every wine and
spirits category and Pernod Ricard has created
a hierarchy within the brand house, depending
on the strategic and tactical role of each
brand. The house classifies the groups priority
brands into three segments: the Top 14,
which consists of 14 strategic spirits and
Champagne brands; the wine segment, with its
four premium wine brands; and the 18 key
local brands segment. The Top 14 includes:
Two global icons Absolut vodka and
Chivas Regal Scotch whisky;
Seven premium spirits brands Ricard
pastis, Ballantines Scotch whisky, Jameson
Irish whiskey, Havana Club rum, Beefeater
gin, and Malibu and Kahla liqueurs;
Five prestige spirits and Champagne
brands Martell Cognac, The Glenlivet and
Royal Salute Scotch whiskies, and G H Mumm
and Perrier-Jout Champagnes.
Pernod Ricard managing director, brands
Thierry Billot explains that the company is now
looking to take more of a portfolio approach as
opposed to just focusing on a handful of priority
brands in each market. He explains: As it is
now, we take it brand by brand, and there is a
type of internal competition [for the attention of
our distribution company]. We want to go
towards a local portfolio strategy. We are
looking at how we map out the consumer
opportunity for our entire portfolio and where
each brand fits within that map, instead of
markets being run brand by brand. That will
ensure we take the full benefit of our Pernod
Ricard portfolio and that everybody on the brand
company side and the market company side
knows exactly where the priorities are and the
specific occasions we want to target.
Of course, each brand-owning company will
be inclined to fight its corner. Mostly the brand
companies and the market companies are in
agreement on the map of priorities. If there are
instances where there are disagreements, then
it cascades up into the Pernod Ricard [holding
company] and we decide.
24 August 2014
We are looking at how

we map out the consumer
opportunity for our entire
portfolio and where each
brand fits within that
Thierry Billot, managing director, brands,
Pernod Ricard (above)
He adds: Moving from a brand-by-brand

approach to a global portfolio approach will be
a significant improvement. With 14 priority
brands it wasnt always clear to the market
companies which ones to push and what the
priorities were. This will help to clarify the
situation and optimise our sales.
Focus on Absolut
That is not to say that there arent certain
brands, such as Absolut and Chivas Regal
the two designated global icon brands, that
will feature and remain a priority in every
market. Pernod Ricard has been
understandably preoccupied with making
Absolut work since it acquired the brand for a
hefty $8.3bn in 2008. The brand has displayed

solid growth rates in international markets, but
has struggled in the US. Overall Absolut sales
showed a 1% compound annual growth rate
(CAGR) between 2008 and 2013, or a rise of
582,000 cases, and the brand now derives
some 60.8% of total sales from international
markets, up from 56% in 2008.
The US remains a challenge for Absolut,
with sales falling -3.8% in 2013 over 2012.
This represents a deterioration of the 20082013 CAGR of -1.3%. Billot says: The US has
become a tough market for vodka, with a lot of
competition. Last year, there were around 250
new SKUs of vodka introduced into the US.
That is putting a lot of pressure on the
category. We see the position and recent
performance of Absolut as OK, but not great.
We would ideally like to go back to our target
of 2% growth every year for Absolut in the US.
It is also worth remembering that Absolut is a
very large brand in the US market, so a 1%
decline or increase isnt such a big deal. The
brand remains resilient in the US and,
internationally, Absolut is doing very well.
In keeping with its portfolio approach, Pernod
Ricard is now looking to develop its Polish brand
Wyborowa in the US and elsewhere. We want
to internationalise Wyborowa because its a
distinctive proposition as a Polish vodka, and we
are positioning Wyborowa as our standard
vodka. The idea is not to go after Smirnoff, but
we feel there is an opportunity for us to market
a standard vodka in a lot of markets. We have a
few countries where we really want to develop
Wyborowa, such as the US, Mexico, Brazil and
obviously Poland. There are a few other
markets where we want to expand the
distribution of Wyborowa. We also have local
vodka propositions, such as Orloff in Brazil.
Vodka is also under pressure from changing
consumer preferences within the US.
Whisk(e)y is being adopted by Millennial
consumers whereas the Baby Boomers tended
to opt for vodka and, for many, Absolut was
their go-to brand. The growth in whisk(e)y is
also being driven by large-scale immigration
into the US particularly, but not exclusively,
from Latin America.
Billot believes it is too early to say that
vodka has run its course in the US. Vodka is
still growing. It is not dying, but it is maybe a
category where you have too many
propositions and the consumer is getting very
confused.
Fortunately Pernod Ricard owns the latest
go-to brand for this Millennial generation in
Jameson (see related story on Irish whiskey on
spirits review
page 14). Billot says: Now you are seeing
American consumers go back to products with
more substance. Whisk(e)y, by definition, is a
product that offers that substance, because you
have the ageing process and historic brands.
This is bringing more success. At the same
time, you have whiskies tapping into the flavour
trend, notably Jack Daniels. This is helping to
recruit new consumers into whisk(e)y.
It is noteworthy that Pernod Ricard has
resisted the temptation to come out with
flavoured extensions for Jameson. We dont
have any plans to introduced flavoured
versions of Jameson. It is important to
remember that Jameson is a much smaller
brand in the US than Jack Daniels. It is a less
mature brand. We want to keep to what
Jameson is today. We have enough growth
opportunity without resorting to flavours. You
also have to ask what is the long-term effect of
these flavour extensions on the core brand
equity and consumer perceptions. You have to
be careful when you enter the flavoured game,
because consumers will inevitably say What is
next? Each year you have to come up with a
new flavour and you end up totally diluting
your equity.
Pernod Ricard doesnt necessarily have a
philosophical problem with flavoured whisk(e)y
extensions and has brought out flavoured
Ballantines and Paddys variants. With
Ballantines we felt we had more flexibility,
because in many markets Ballantines is not an
overly macho brand. It is also under pressure in
its main market of Spain, which has become a
very difficult market for Scotch whisky.
From a brand perspective, Martell is the
other major stress point. The brand
experienced meteoric growth in recent years
on the back of the Cognac boom in China. But
the well-documented government crackdown
on luxury consumption has hit Martell and
other leading Cognac brands hard.
The reduction in banqueting and gifting, in
particular, has been problematic. Billot
estimates that banqueting accounted for at
least 20% of the business in China. He says:
It is a period of transition in China between
the pre anti-extravagance campaign and what
we are going through today. In China products
with prices above CNY1,000 ($161.50) are
suffering a lot and are down -20-30%. The big
question in China is when are we going to
move away from these difficult times? Nobody
knows the answer, but what we have seen is a
month-by-month improvement of our portfolio
sales. It is too early to say when we will see
the full recovery of the Chinese market.
Reading the market is difficult when visibility

into Chinas multi-tiered distribution system is
opaque at best. Billot adds: We have a good
reading of what is going on in initial and
secondary distributors, but beyond that it is a
bit more difficult. In terms of the decline of
shipments the question is: what is due to
declining consumption and what is due to the
flow-back of inventories? It is quite difficult to
assess what is the share of each of these two.
Change in approach to China

With luxury consumption likely to be under
pressure for the foreseeable future, Pernod
Ricard is reassessing its approach to the
market. China is likely to go back to being a
normal emerging market, which means that we
have to go after the middle-class sector by
making certain we offer those consumers a
product they can have access to. That is where
the centre of gravity of our portfolio has shifted.
Before the anti-extravagance campaign, our
centre of gravity with Martell was Cordon Bleu.
Now it is between Noblige and Cordon Bleu.
It is good in a way because it is forcing us
to go after the middle class in China. The antiextravagance campaign has been targeted at
government officials, but it has also changed
the behaviour of the Chinese consumer. They
are trying to be more discreet in the way that
they are going out.
Luxury purchasing will probably come back

a little bit, but at the same time the
opportunities are still huge in China because
imported brands are only 6m cases out of a
total spirits market of 800m cases. And if you
look at just the premium-plus segment in
China, it is probably 6m out of 80m cases of
consumption. Imports are still a very tiny part
of the market. That is the opportunity, so we
are now preoccupied with how we can attack
the bulk of the Chinese market.
He adds: This crackdown on extravagant
consumption is probably good for the future
because we will probably end up with much
more volume potential than before. We are
going for the middle-class and it is an exercise
that will really set us up well in the future.
For instance, Pernod Ricard is now trying to
establish Martell in the meal occasion through
the introduction of a VS product called Martell
Distinction.
Pernod Ricards leading Scotch brand, Chivas
Regal, was also not immune from the changing
conditions in China, although it was less exposed
to banqueting. Chivas Regal was dependent on
the KTV (karaoke bar) channel, which was also
been hit hard. The anti-extravagance campaign
has also hit the brands sales in travel retail,
particularly the gifting element. However, Billot is
confident that travel-retail sales will rebound
sooner rather than later.
Focus on innovation
Innovation has been a central strategic focus for Pernod Ricard for almost four years.
There are currently more than 350 projects undergoing development, accounting for
almost 25% of organic sales growth.
The company has introduced a number of structures within the group to foster this
innovation. The so-called Breakthrough Innovation Group (BIG) is dedicated to
envisage and invent the future of the industry. An internal investment fund, known
as The Kangaroo Fund, is designed to give group employees the opportunity to
develop their own ideas. Meanwhile, Pernod Ricard Chatter is a corporate social
network focused on innovation. The company has also established a research centre
and a community of innovation leaders.
These structures have succeeded in throwing up a large number of innovations.
According to Billot, the challenge now is less one of generating ideas and more of
identifying the better ones. We decided that we needed to become better at
innovation so we gave people within the organisation the freedom to try and come up
with new ideas. It worked and we have a lot of new ideas and products in the
pipeline. Now we are thinking that we need fewer new products, but those that we
do run with need have to be bolder and better. It is more about quality than quantity.
We need to do a better job of prioritising projects with a better alignment of brand
companies and market companies.
He adds: We have a number of simple rules when it comes to innovation. It has to
expand the reach of our brands and not cannibalise our existing propositions. It has
to create value and bring higher price points. It has to be consistent with the brand
proposition. We also dont want gimmicks. We want something that is here to last.
August 2014 25
wine news
in brief
Court criticises EU wine fund
EU The European Court of Auditors
(ECA) has criticised the European
Unions (EU) wine fund and
argued against its expansion for the
period 2014-2018. Between 2009 and
2013 Europes wine bodies and
companies spent a total 522m
($709.5m) on activities outside the
EU. A further 1bn ($1.4bn) was
invested in grubbing-up subsidies
up to 2011.
The ECA argued that EU wines in
fact lost market share in key countries
targeted by activity, while these
promotions were said to be used for
consolidating key markets, rather
than making inroads in new ones.
Large wine companies also benefited,
the ECA claimed, while the
programme was originally intended
for small and medium-sized
companies only. Given these reasons,
it argued against the proposed 121%
expansion of the wine promotion fund
to 1.2bn ($1.6bn).
Chilean producers in protest

agains tax increase
Chile Chilean winemakers are
protesting against a proposed tax
hike. The new regime, which is
designed to lower alcohol
consumption, could see wine taxation,
currently at 15% per litre wholesale,
increase to 18% plus 0.5% per
degree of alcohol. Many winemakers
argue this will put them out of
business.
UK July was a month of particular interest for

the UK wine trade. Firstly, the UK Government
announced plans to encourage more healthconscious drinking choices. This formed part of
a raft of measures, among them an upper limit
of 12.5% abv on house wines served in pubs
and bars. In addition, bar staff will be trained to
help consumers make more informed decisions,
while in the off-trade super-strength beer will no
longer be allowed to be sold in large cans. All
this forms part of the UK Governments drive to
cut alcohol consumption by 1bn units per year.
Alcohol abuse, the government claims, costs the
UK taxpayer some 21bn ($36bn) annually.
Meanwhile, German hard-discounter Lidl
announced new store openings in more
salubrious parts of London, which will coincide
with its biggest-ever wine push in the country.
Lidl will be launching a range of classic French

wines from 4.99 ($8.54) to 25.99 ($44.48) in
a bid to win over wealthier London consumers
from September 2014. The French wine
promotion, worth some 12m ($20.5m), will
feature wines from French regions such as
Bordeaux and the Loire and Rhne valleys.
The German retailer is reported to have
acquired more than 1m bottles for the purpose
and, should the event prove successful, plans
are afoot to see super-premium bottles hit
selected Lidl shelves in the near future. With this
move the German retailer is entering difficult
territory; last year the IWSR reported UK
consumption of French wines was down -4.1%.
Over the past five years the UK market for
French wine has contracted by an average of 3.4% per year.
France July saw some interesting reports out of

France. Up to 15,000 hectares (ha) of vine in
western parts of Languedoc-Roussillon, Frances
leading exporter of wine, were damaged by hail
on 6 July. Corbires and Minervois were particularly
affected. Although this is unlikely to have a major
impact on the regions capacity to continue to
dominate French wine exports in volume terms, it
rounded off what has so far been a difficult
growing season for many French producers.
Weeks before, the prestigious Burgundy region
suffered a similar downpour, with damage to
3,000ha largely in Pommard and Volnay. Inclement
weather had also blighted a number of Bordeaux
growers. The tricky 2014 growing season has led
to concerns that French stocks will be even further
depleted after mixed results in previous years.
There was no such problem in Champagne,

however, as good weather and healthy shipment
figures in the first half of 2014 prompted
Champagnes regulatory body, the CIVC, to
increase permissible yields for this years crop.
In 2014 growers will be allowed to harvest as
much as 10,500kg per hectare. This represents
a 500kg per hectare increase on 2012 and
reflects the increased confidence in the region.
While, overall, shipments from Champagne were
down 5m bottles in 2013 to 304m, the news is
likely to be welcomed in Asia-Pacific. Last year
Champagne consumption here grew 12.8%,
according to the IWSR.
Find more information on the current state of
the French wine industry in this issue of the
magazine (page 28).
USA Napa Valleys Quixote winery has been

sold to Chinese firm Jinta Vineyards and Winery
in a deal thought to be worth some $29m.
Quixote, located in Stags Leap, represents the
second such move by Asian investors in
Californias prestigious Napa Valley in recent
months, following the acquisition of Michael
Mondavis facility at Carneros by businessman
Kieu Hoang. This is not the first time Jinta has
looked to the US for acquisitions; in 2013 it

purchased Hannah Nicole Vineyards and Winery
in Contra Costa County. However, this is its first
move into Napa itself.
Quixote was founded by Carl Doumani in the
late 1990s following his sale of the Stags Leap
winery. Under Doumanis stewardship, Quixote
has specialised in organic petite syrah and
cabernet sauvignon.
Rioja sales reach 13.1m cases

Spain Rioja sales for the first half of
2014 reached 13.1m cases. The vast
majority of volumes remained in
Spain, which saw a marginal 0.9%
gain on the same period last year, but
exports were down -3.7%. The UK,
Riojas largest export market, was up
6.2% on the year before to reach
1.5m cases. Germany was down 5.8% to 793,000 cases, while
third-largest market, the US, was
down -12.6% to 444,000 cases.
Have a story youd like to share with us? Please send any wine news to al@theiwsr.com
26 August 2014
wine news
in brief
Australia/South Africa According to the latest
figures from Wine Australia reporting a 12month MAT (moving annual total) to end June
2014, Australian wine exports declined -2% last
year. Overall the country exported 684m litres,
totalling AU$1.78bn ($1.67bn). The average
value per litre was down, with this largely due
to the continued shift from shipping bottles to
bulk. While bottled exports were down -10% to
285m litres, bulk was up 4% to 392m litres. The
average value per bottle increased to AU$4.77
($4.48) per litre.
By volume, the UK remained the leading export
market and accounted for over 35% of global
shipments. This represented a marginal decline on
the previous moving annual total. The US was
second with almost a quarter of global shipments,
while exports to Canada surged 19.6%. By value
the US continued to dominate the rankings and
accounted for almost a quarter of global value.
The UK, meanwhile, was some way behind,
reflecting the fact that the UK is predominantly a
bulk market, while the US is predominantly a
bottled destination. China, affected by government
anti-extravagance measures, saw a volume decline
of -9.8%, with value down -15.4%.
Some good news for Australian exporters was
the conclusion of an Economic Partnership
Agreement (EPA) with Japan. It is hoped this
will open the booming Japanese market to
Australian growers. According to IWSR figures,

Japanese consumption of still light wine grew a
further 11.3% last year to reach 34.9m cases in
total. Australia currently has a small share of the
market at just 2.7%.
While Australian exports were down,
shipments out of South Africa were up by over
25%, according to South Africas wine industry
statistics body, SAWIS. Excluding sparkling and
fortified wines, exports reached the equivalent
of 57.5m nine-litre cases. Bulk exports drove
growth with strong development in shipments
to European producer countries. France, Italy
and Spain were key drivers. Exports to
Germany, the largest destination for South
African bulk, grew by 25% as cheaper South
African wines helped to fill the void on the
domestic market left by a poor Italian harvest
in 2012. Germany is also a European hub for
bottling and re-exports.
The UK remained by some distance the
leading export destination for packaged wines
and grew by almost one-third on the year
before. Sweden and Germany were second- and
third-largest respectively, with the former
declining slightly and the latter seeing growth.
Chenin blanc remained the leading single
varietal to be exported, followed by sauvignon
blanc and chardonnay. Shipments of merlot
grew strongly, but remained behind shiraz.
Canada Still light wine sales in in Canada

increased by 1.6% in 2013 over 2012 to 43.9m
cases, a somewhat slower rate than the 3.3%
compound annual growth rate (CAGR) recorded
for the five-year period starting in 2008.
Imported still light wine paced the market,
increasing by 7.2% in 2013 thanks to the
growing popularity of blended wines from the
US. Other New World wines enjoyed positive
trends, particularly New Zealand, as did certain
European countries such as Spain (-4-11%).
Italian and French wines declined due to higher
prices. Average wine pricing is higher than the

global average, making Canada an attractive
market for exporters. Some of the main local
brands showed strong growth, although volumes
fell short of those anticipated for 2013.
Direct-to-consumer wine sales across
provincial borders were decriminalised in 2012,
to allow greater access to local small-lot wines.
This should help expansion of the local wine
market, although only British Columbia and
Manitoba have implemented the legislation and
opened their borders so far.
UK Government progresses on anti-binge drinking commitment: The UK Government

has agreed a deal with the UK drinks industry that will see house wine served in pubs
and bars restricted to a maximum 12.5% abv.
The measure forms part of the UK Governments wider drive to cut alcohol
consumption in the country by 1bn units per year. As part of a raft of measures, the UK
on-trade will promote lower-alcohol products to drinkers. Meanwhile, deep discounting
in retail channels will also be targeted and super-strength beer will no longer be sold in
large cans. The government claims binge-drinking costs the UK taxpayer some 21bn
($36bn) per year.
LVMH Champagne sales hit

by currency in H1
France Paris-based LVMH Mot
Hennessy Louis Vuitton reported that
Champagne and wines organic
revenues grew by 6% in the first half
of the year, but after a negative 6%
currency impact reported revenues
fell slightly to 723m ($972m)
compared to the first half of 2013.
Champagne and wines contributed
152m ($204m) in profit for the
period. Group Champagne volumes
rose by 3% with the pricing mix
being very similar.
For LVMH (non-Champagne) wines,
Chandon sparkling wines momentum
was offset by the negative effect of
the depreciation of the Argentinian
peso and a more limited contribution
of some high-end French wines due
to a different phasing of shipments.
TWE appoints Robert Foye to

lead Asia and EMEA regions
Asia/EMEA Treasury Wine Estates
has appointed Robert Foye as
president and managing director for
the companys Asia and Europe,
Middle East & Africa (EMEA) regions.
Based in TWEs regional office in
Shanghai and reporting directly to
CEO Michael Clarke, Foye will lead all
aspects of TWEs business and
commercial operations across the
companys key Asian and EMEA
markets.
Foye joins TWE with extensive
experience across both Asian and
European geographies, having held
several senior executive positions
with The Coca-Cola Company over
the past 22 years. Most recently, Foye
was VP, Customer & Commercial of
Coca-Colas Asia-Pacific Region.
A US citizen, Foye will commence
in his position of president and
managing director Asia and EMEA
on 1 August 2014.
Dont miss out on news

stories. Check our
new website at
www.theiwsr.com
August 2014 27
wine review
Asia dents Frances mini-revival
Sales fall, but optimism remains for French wine growers, finds Giles Gough
Vineyards in the Ctes de Gascogne (above) and Madiran (below)

Growth in emerging markets failed to offset
declines elsewhere as, last year, consumption of
French still light wine fell by almost 4m cases.
The negative result comes as little surprise;
figures from the IWSR show consumption of
French wine shrinking gradually over the past
two decades, albeit with a few peaks and
troughs along the way. French producers have
found their dominance squeezed by the
emergence in key markets of other producer
countries. Nonetheless, the Made in France
brand still carries much weight and while
traditionally strong markets shrink, emerging
markets such as Asia, the CIS and the Nordic
countries still provide cause for optimism
among lHexagones leading growers.
Global sales of traditional French still light wine,
excluding the emerging flavoured still light wine
category, fell to just short of 400m cases last year,
a decline of -1.0% on 2012. This curtailed a minirevival after a slowdown in decline in home
market France and sharp growth in emerging
markets combined to lift volumes in both 2011
and 2012. It was a reversal of precisely this
dynamic which led to last years lurch downwards.
In France volumes dropped 2.5m cases, whereas
the previous year the market had been flat, while
in China growth slowed considerably from over
1m cases in 2012 to less than 200,000 cases in
2013. Sales of still light wine in France have been
in decline for a number of years as consumer
lifestyles and choices change, compounded by the
Loi vin of the early 1990s and stricter
enforcement of drink-driving measures. Despite
last years contraction the consensus is that, set
against this longer-running backdrop, category
decline is in fact softening. Meanwhile a
government crackdown on extravagant gifting,
along with a tit-for-tat anti-dumping investigation
28 August 2014
into French wine in China, put the brakes on what

has been up to now very strong growth.
Asian growth slows

China is currently the fifth-largest consumer of
French still light wine at 14.3m cases. To put
this into context, since 2009 the market has
grown by almost 10m cases and last years
development represented much slower growth.
Wines from Bordeaux, which benefited so much
during the boom years, were among the worstaffected. Results from the Bordeaux wines
council, the CIVB, show an export decline of
-16% to China with value down even further at
-18%. Despite this, however, exporters remain
upbeat. Approximately half of Bordeaux
ngociant Maison Sichels turnover derives from
crus classs and as export director Charles
Sichel explains, while extravagant spending is
down, there has been a shift in consumer focus:
That has helped them [Chinese consumers] to
discover the middle level, where Bordeaux is
Olympic champion on that value-for-money
level on chteaux priced between 5 and 25
[$6.80 and $34].
Sichel is not alone in recognising this. Jean-
Claude Mas, owner of Languedocs Domaines

Paul Mas, which exports to 58 countries
worldwide, reflects that, if anything, the antiextravagance drive in China has benefited some
French exporters. It means that Chinese
consumers are now discovering real wine. In
other words, the Chinese are increasingly
interested in the wine behind the label, and not
just the status the label brings with it. Given
that real interest in wine is growing, along with
an expanding middle class over the longer term,
as well as wines widening geographic
penetration in the country, exporters remain
optimistic over the long term. Sichel says:
There is still plenty of opportunity for Bordeaux
growers in China. Sales of Bordeaux have grown
so much and in such a short period of time that
[decline] was bound to happen at some stage.
The general trend over the next 30 years is up.
While overshadowed by neighbouring China in
recent years, the Japanese market for French
wine has grown by over 1m cases since 2011.
Last year the market reached 6.7m cases,
making the Japanese the seventh-biggest
consumers of French wine. This forms part of a
wider move towards wine among local
wine review
consumers. Import statistics distort the situation
somewhat as a strong yen has encouraged
stock-building in recent years, particularly in the
wake of the earthquake in 2011, where much
damage was caused to wine stocks in
warehouses and logistics platforms. However,
volume is growing strongly as distribution
channels grow, albeit with most growth coming
at the lowest value end of the scale and in
particular through supermarkets direct imports.
Another boon for French wine consumption,
and perhaps more encouraging to French
players generally, is growth in the worlds
largest market. Says Sichel: Our business in
the US is increasing. Everyone is feeling the
benefit it is not exclusively Bordeaux but we
are enjoying it and taking advantage.
Demand for imported wines in the US has
slowed following two bumper Californian crops.
However, while volumes of bulk imports have
slowed considerably, imports of French wines
were second only to New Zealand last year. Local
consumers are trading up through the price
points, especially in the $7-$15 price bracket, and
French wines in particular are benefiting.
According to Vins de Provence, the US was the
worlds largest importer of ros wines from the
region last year, accounting for over a quarter of
global exports. As Thomas de Lagarde, wine
director at ros producer Les Vignobles de Berne,
explains, Provence wine has been premiumising

over the past 10 to 15 years. While it has lost
traditional consumers, it has gained wine-lovers
and people interested in its characteristics.
The performance of ros is all the more
impressive given that prices have increased by
30% over the last two years. While Provences
recent growth is a cause for optimism, de Lagarde
warns that with success comes increased
competition: Because of our success other
regions are copying the Provence style pale pink
ros. The Languedoc, for example, has huge wine
production capacity. There is a risk that Provence
could lose its edge. While de Lagarde does see
some rivals emerging, interest in the US in French
wines is strong and seems likely to continue.
Languedoc stays top exporter

The Languedoc-Roussillon is well-known for
producing good value-for-money wine. This is
largely due to its size, its mechanised production
processes and little variation in its vintages. In
the words of Jean-Claude Mas, It is a region
blessed by God.
The Languedoc was Frances largest exporter
of wine last year. While the Conseil
Interprofessionnel des Vins du Languedoc (CIVL)
reported a -1.5% decline on 2012 to 37.4m
cases, value increased 2.2%. The increase in
value is notable, given efforts made by the
regions growers to improve the Languedocs

image and thus raise prices. Such efforts include
Sud de Frances Top 100. Sebastien du Boullay,
food and wine promotion manager, explains: It
is a good way to promote the region and show
its diversity. Naturally the larger producers are
present, but it is also a good showcase for
smaller producers.
The present incarnation of Sud de Frances Top
100 is in fact only in its second year, with the
main goal to promote to the UK trade. This years
winner of Best Red was notably a dry Maury, the
appellation known for vin doux naturel. The dry
appellation was established for the 2011 harvest
and forms part of a longer-running restructuring
of the regions wine-producing areas in a bid to
distinguish its diverse terroirs and impose a
quality pyramid. As the 2% value increase shows
and Jean-Claude Mas points out, Were starting
to break the break-even barrier. So while
Languedoc producers are on the right track, it is
acknowledged there is still a long way to go.
As for the French wine industry as a whole,
its strength lies in its diversity. While Bordeaux
may have suffered the Asian slowdown in 2013,
there is plenty of optimism about the future.
The US, meanwhile, presents good
opportunities at many ends of the value
spectrum, while Languedocs growing value also
points to a better outlook.
Growth markets for French wine
Absolute volume change in 000s of 9-litre cases
August 2014 29
wine review
Thinking outside the bottle
While new wine packaging tends towards risk, some companies are taking a stand, as Joe Bates discovers
Wine packaging tends towards the
conservative. Few wine companies want to rock
the boat and move away from the centuries-old
tradition of round glass bottles. Such
conformism is hardly surprising. Wine is the
most traditional of products; it has been around
for centuries and boasts a rich, cultural heritage
and strong ties to the land, the climate and the
people who produce it.
Major advances in wine packaging dont
come around too often. The bag-in-box (BIB)
and the screw-cap have been around for
decades, for instance. However, the growing
need for environmentally friendly and costefficient packaging formats, as well as less
formal wine-drinking occasions, are belatedly
leading to some exciting innovations.
For instance, last year New York-based drinks
design firm Stranger & Stranger partnered with
Californian wine company Truett Hurst to create
Paperboy, a paper wine bottle made out of
compressed, recycled paper and natural printed
inks. Inside there is a recyclable sleeve, just
like youd find in a box of wine, says Stranger
& Stranger founder and creative director Kevin
Shaw. But unlike boxed wines, these bottles
are rigid and strong enough to be plunged into
a bucket of ice for three hours.
The Paperboy bottle requires 15% of the
energy that it takes to make regular glass
bottles and, weighing 65g, a seventh of an
average glass bottle, meaning significant cost
and energy savings can be made on transport.
Bottles need to be shipped twice, says Shaw.
First, empty to the wineries and then full to the
retailers. Trucks are filled by weight, so they
usually travel half full when shipping wine.
Paper bottles can be shipped, stacked like egg
cartons no waste and are light so the trucks
can be filled to capacity.
All square
Stranger & Stranger also partnered with
Truett Hurst for another wine-packaging
innovation last year with the launch of a new
wine brand called California Square in the US
and Canada, which is housed in a squareshaped bottle. Although commonplace in the
spirits sector, square wine bottles are a rarity
despite their advantages. The square bottles
fit closer together and shipping cases for the
bottles are 30% smaller than standard round
bottle cases. The bottles can also be stacked
for storage.
Lee Hodo, spokesperson for Truett Hurst,
says the consumer response to California
Square since its launch last October has been
very strong. When we show consumers a
30 August 2014
case of California Square and ask: How many

bottles fit in this case? They say: six or
maybe eight. They are shocked that there are
12 bottles in the case and really like the
concept when they realise the savings in
shipping materials.
Consumer response has been excellent to
the bottle, she adds. We get more pushback
from retailers, which tend to be more stuck in
the inertia of tradition than the consumers
themselves. We are forecasting very strong
growth in the brand.
True innovation hard to achieve
New York-based firm Stanger & Stanger

partnered with California wine company
Truett Hurst to create innovations such
as paper wine bottle PaperBoy (above)
and California Square (below)
London-based design agency Lewis Moberlys

past roster of wine clients stretch from the
household name of Mateus Ros to high-end
wineries from Rioja (Arnzano) and Croatia
(Saint Hills). Managing director Emma Brock
argues that true innovation in wine packaging is
hard to come by, but does see some interesting
trends emerging. Graphics are becoming more
daring and decorative, she notes. Motif, a
German brand, recently launched a range
without words, where the wines can only be
identified by colour, pattern and form. This
approach feels more limited-edition than
long-term brand-building.
Another innovation to catch Brocks eye is the
steel packaging of Spanish winery Cuatro
Almas. She explains: The bottles are cased in a
stainless steel sleeve, which promises to keep
the perfect bottle temperature for over an
wine review
hour, thus dispensing with wine coolers and
ice buckets.
Although wine brands need to stand out
on-shelf to compete in what is an increasingly
crowded sector, there are dangers in too daring
a packaging makeover. Adrian Collins,
managing director of London-based design
agency Ziggurat Brands, advises caution when
it comes to packaging redesigns. There is
much to be said for consistency and a bottle
design that is recognisable and reassuring. Its
worth bearing in mind that most people are
only able to name four grape varietals, and
wine is a category where people want to make
a safe choice. Shifting bottle shape and design
into the unfamiliar risks alienating consumers.
Treasury Wine Estates-owned Rosemount
Estates approached Ziggurat, after a bold bottle
There is much to be said

for consistency and a bottle
design that is recognisable
and reassuring. Shifting
bottle shape and design
into the unfamiliar risks
alienating customers
Adrian Collins, MD, Ziggurat
redesign featuring a unique diamond footprint

bottle and minimalist diamond label had
contributed to a disastrous 2.5m-case decline in
sales over 18 months. They wanted us to help
them reverse these declining sales, recalls
Collins. We helped them move back to more
familiar bottle formats; added Estate to the
brand name to root its authenticity; introduced a
more mature colour palette, and reinforced the
quality feel through stock, texture, layout and
copy, while retaining the key diamond equity. This
led to an immediate 15% leap in sales in the six
months following roll-out.
Stephen Cronk, a former businessman who
uprooted his family from London to Provence to
set up Mirabeau Wines in 2009, agrees that
innovative packaging can pose a real risk,
especially for smaller companies. Ive been a lot
R&D investment takes glass to a new level

Glass bottles may have been around for centuries,
but the technology used to produce them has not
stood still. For instance, new production techniques
have allowed the weight of a typical glass bottle to
drop by 40% over the past 10-15 years.
Sharon Crayton, group head of marketing at
Ardagh Group, one of Europes leading glass bottle
manufacturers, comments: This [reduction] has
been achieved not only as a result of the demand
from brand owners for more environmentally
friendly packs, but through the glass industrys own
R&D efforts to use cutting-edge design software and
manufacturing precision to distribute weight more
evenly around the containers surface reducing
weight yet retaining the resilience of the container.
Brands are now beginning to recognise that
weight is not the sole factor in determining a
products sustainability credentials, adds Crayton.
Glass is valued just as much as a permanent
resource, a status
now recognised by
the EU. This is
because it is the
only packaging material that can be recycled indefinitely without any loss of quality and can
therefore claim to be at the centre of the circular economy: a concept that is becoming more and
more valued throughout the supply chain.
Embossing, a centuries-old technique in the production of glass bottles, is also developing thanks
to new technology. Ardagh Group has been using a new technique in 3D packaging design called
sculptured embossing, which uses 3D-modelling computer software.
Says Crayton: It takes the quality of any embossed feature on the surface of a bottle or jar to a
completely different and higher level It recreates an almost perfect reproduction of the original
artwork. The product and mould design teams can confidently present a package to their
manufacturing colleagues that will sail smoothly through the production process without the defects
that, in the past, have been associated with complex embossing or engraving.
The result satisfies everyone in the process the concept designer, the brand owner and the
packaging manufacturer.
August 2014 31
wine review
Wine packaging
Rosemount used Ziggurat
to help it reverse declining
sales by reverting to a
more classic design
to the US and Canada and they
are really crazy about their
packaging. I go to wine fairs
and I see that everything that
could be done has been.
Innovating and trying to
stand out by doing something
remotely gimmicky is a big
risk, especially if you are
trying to be in the premium
wine category.
Come up with something
clever or funny and youre in
danger of being sidelined.
The packaging must
contribute and not conflict
with the image of the wine.
Specialising in Provence ros,
I had a dilemma, as I could have opted for
skittle-shaped bottles or the classic Bordeaux
style. I have chosen classic Bordeaux [shape]
because, again, Id rather focus on the quality
of the wines than be clever with bottles.
Bag-in-box (BIB) wines have been around
since the mid-1960s. Offering convenience and
a carbon footprint superior to glass, BIB has
grown to take a 10% share of the global wine
market and has a particularly strong position in
markets such as the US, the UK and Australia.
For years BIB has been widely seen by the wine
industry as a packaging format for value wines,
but this is now changing as producers offer
better-quality varietals and even vintage wines
in BIB at higher price points.
According to German firm Scholle Packaging,
the original inventor of BIB, this trend towards
premiumisation has exposed some weaknesses
in the traditional BIB format. Vice-president
wines and spirits market development Richard
Barrett argues that the BIB industry has
traditionally applied a one size fits all approach
to packaging selection, offering standardised tap
and film technologies. In the case of more
premium wines, he believes these solutions are
inadequate in terms of oxygen protection and
aesthetic appeal for the consumer.
For the premiums, the imperatives are
maximum varietal flavour retention and superior
ergonomics and tactility, he explains. This
means high-performing films that, most
importantly, maintain their barrier characteristics
under supply-chain stress, heat and transport,
32 August 2014
together with high-barrier taps and spouts, which

also provide the premium interface needed to
reinforce the premium brand position.
Scholle has developed a broad range of
films, taps and filling systems to cater to each
individual category level and, in conjunction
with its new partners at IPN, has several new
technologies under development with this new
segmentation specifically in mind, he adds.
Most packaging suppliers do not have the
product range to be able to respond to these
differing requirements.
Thanks to a host of advantages, including
portability, reduced material use and lower
shipping costs, stand-up pouches are gaining
ground in a broad range of packaged consumer
goods in mature markets from washing powder
and cat food to instant coffee and noodles.
The big guys are

not going to be the
leaders in the wine
pouch field. They are so
heavily capitalised
behind BIB
Dave Moynihan, AstraPouch
However, industry acceptance of wine packaged

in pouches is still in its infancy, especially in the
US, the worlds largest wine market.
Founded in 2009 by ex-Constellation executive
Dave Moynihan, AstraPouch is North Americas
largest supplier of soft packaging for the wine
and spirits sectors. The company produces
pouches ranging in size from the single-serve
187ml and 375ml to 1.5-litre and three-litre
versions, as well as purpose-built filling machines.
Moynihan reveals that around 150
predominantly smaller US wineries are now
using the pouches, mostly in the 1.5-litre size.
However, he notes that larger wine groups are
hesitant about adopting the format. The big
guys understandably are not going to be the
leaders in this field, he argues. They are so
heavily capitalised behind BIB; theyve put in
millions and millions of dollars. Are they going
to start recapitalising behind the pouch? Thats
why were starting with the smaller players.
For smaller wine firns, the pouches have
multiple benefits, according to Moynihan, such as
offering a larger, alternative packaging format that
consumers can take to venues such as concerts
and pool parties, where glass wouldnt be
appropriate or allowed. They can also be printed
to a high quality and ordered in comparatively
modest quantities compared to BIB.
I think pouches are here to stay, although
we are in the infancy growth rate, concludes
Moynihan. We are going to be benefiting from
the growth and consumer acceptance of
pouches in other areas such as food.
wine review
Slow growth for US wine market
Different factors are affecting the bottled and bulk still light wine sectors in the US, as Alastair Smith reports
In 2013 the worlds largest wine market grew
by a modest 1.6% well below the growth rate
of the last decade and even the past five years in
the aftermath of 2008. This is now the second
year in a row of slow growth after 20 years of
unbroken increases. The temptation is to view
this as a turning point in the growth of US wine,
but there are good enough reasons to assume
that the current slow growth is transitory.
A drop in the growth rate is probably
inevitable, given that the market in 2013 stood
at more than 312m nine-litre cases. The modest
1.6% growth still translates into over 5m
additional cases more than the total markets
of Hong Kong and Taiwan combined. But that
aside, there were specific reasons, both in 2012
and 2013, as to why the market slowed. In 2012
there was a shortage of juice. This forced many
producers to cut back or remove altogether
high-volume brand lines or raise prices, with
obvious consequences for volume.
Economic uncertainty remains a dampening
factor in the market. Things have generally
improved and consumer confidence has
increased, but conditions are far from buoyant
and uncertainty about the economic outlook
held back higher growth. Spirits continue to
boom in the US and this is inhibiting growth of
beer and wine.
In addition, it appears that many large
producers are de-emphasising their value-end
products to concentrate on higher-margin
brands. This has seen prices of some large
brands rise. In addition, many producers started
cutting back on recession-driven discounts. The
market was further affected by the withdrawal
of the 3m-plus-case Inglenook brand from the
market. This was done as part of the sale
agreement between Coppola Wines and The
Wine Group. Whether this shift away from
Barefoot continues to be a star performer in the USmarket
Many producers are

de-emphasising their
value-end products
to concentrate on
higher-margin brands
economy wines will continue remains to be seen

in the light of the bumper Californian harvests in
2012 and 2013, with 2014 shaping up to be
better than average, although the current
drought is becoming an ever-greater issue.
The main impact of the huge local 2012
harvest was on bulk imports in 2013. In the
past few years many companies have been
importing huge quantities of specific grape
varieties from wherever the quality and price
were best principally from Argentina, Australia
and Chile. This business fell by a massive -25%
USA: still light wine sales by country of origin

Origin
US
Italian
Australian
French
Chilean
Argentinian
Spanish
New Zealand
German
Portuguese
Others
Total
Volume
2004
Volume
2009
Volume
2012
Volume
2013
183,567.0
20,755.0
20,010.0
8,325.0
5,860.0
1,960.0
2,495.0
900.0
2,015.0
665.0
1,850.0
248,402.0
204,725.0
23,410.0
20,955.0
8,810.0
7,260.0
4,855.0
3,400.0
2,240.0
3,255.0
850.0
1,770.0
281,530.0
228,075.0
26,800.0
17,035.0
8,955.0
6,660.0
6,550.0
4,325.0
3,345.0
2,775.0
985.0
1,960.0
307,465.0
232,715.0
26,875.0
16,645.0
9,250.0
6,800.0
6,375.0
4,525.0
3,675.0
2,545.0
1,040.0
2,055.0
312,500.0
% change
2013 on 12
2.0
0.3
-2.3
3.3
2.1
-2.7
4.6
9.9
-8.3
5.6
4.9
1.6
% CAGR
2008-13
% share of
total 2013
3.0
2.5
-4.9
-1.1
1.5
11.2
4.7
11.8
-5.6
5.0
2.0
2.4
74.5
8.6
5.3
3.0
2.2
2.0
1.5
1.2
0.8
0.3
0.7
100.0
August 2014 33
wine review
US wine market
USA: largest growing still light wine brands
Brand
Owner
Franzia Wine
Barefoot
Black Box
Kendall Jackson
Bota Box
Rex Goliath
Robert Mondavi
Columbia Crest
La Crema
14 Hands
Chalone
Others
Total
The Wine Group

E & J Gallo
Constellation
Jackson Family Wines
Delicato
Constellation
Constellation
Ste. Michelle
Jackson Family Wines
Ste. Michelle
Diageo
Volume
2009
Volume
2012
Volume
2013
% change
2013 on 12
% volume change
2013 on 12
23,000.0
6,250.0
1,530.0
2,585.0
650.0
670.0
9,495.0
1,975.0
705.0
250.0
945.0
233,475.0
281,530.0
23,200.0
14,500.0
2,695.0
3,000.0
2,050.0
2,325.0
10,590.0
2,095.0
850.0
1,020.0
140.0
245,000.0
307,465.0
24,850.0
15,500.0
3,410.0
3,550.0
2,575.0
2,800.0
11,050.0
2,390.0
1,110.0
1,275.0
395.0
243,595.0
312,500.0
7.1
6.9
26.5
18.3
25.6
20.4
4.3
14.1
30.6
25.0
182.1
-0.6
1.6
1,650.0
1,000.0
715.0
550.0
525.0
475.0
460.0
295.0
260.0
255.0
255.0
-1,405.0
5,035.0
in 2013, as producers sourced juice locally.

However, it is not just bulk that has been
suffering; bottled imports are having a harder
time as well.
In 2013, they rose by just 0.5% to 79.8m
cases. Italy comfortably still the largest supplier,
had a slow year; the surging demand for moscato
and pinot grigio of recent years has begun to
wane as other grape varieties have grown in
popularity, as more of these varieties are sourced
from cheaper local juice, and as the temptations
of non-wine drinks, such as cider or mixed beer
RTDs, grow in popularity. This seems likely to
continue and, in turn, will probably result in much
slower growth for Italian wine in the future.
Australian wine, which has had a torrid time
in recent times, had a slightly better year than
many recent ones, although overall volumes still
fell heavily in the context of the market,
dropping by 400,000 cases. Nevertheless, the
decision not to discount the price of [yellow tail]
during the recession or indeed raise prices as
the exchange rates moved significantly and
unfavourably seems to be paying off and after
years of very slow growth, volumes have begun
to climb. In 2013 the brand is estimated to have
added around 200,000 cases. The gains are
unlikely to be sufficient to turn around the
longer-term overall decline in sales of Australian
wine, as the category as a whole has deeper
problems which require a whole new approach.
French interest
French wine continues to grow. Areas of the
drinks market that allow consumers to explore
quality and nuances in flavour are doing
exceptionally well at the moment and are the
key driving force for the growing craft movement
in spirits. So it seems natural for experienced
34 August 2014
wine consumers to explore what is widely seen

as the home of fine wine, and France is generally
perceived to produce the best wine. The sense
of exploration and demand for quality that is
driving the craft movement in beer and spirits is
also driving demand for French wine.
Sales of Chilean wine rose for the first time
since 2010, mainly due to more favourable
exchange rates and the healthy and growing
demand for pinot noir in general.
Three other supplier countries really stand out.
The first is the continued and impressive growth
in sales of New Zealand wine. Demand for
sauvignon blanc remains strong, but New
Zealand is also benefiting from the increasing
craze for pinot noir and this looks likely to provide
a second strong strand to its sales. Wines from
Spain also put in a strong performance. This is
being driven by a number of factors not least
by some of the sense of exploration driving the
growing volumes of French wine but this is not
the only reason. Tempranillo is becoming a
popular varietal, as to a lesser extent is albario.
The final country is Portugal where volumes
passed 1m cases for the first time, due to the
popularity of cheap and cheerful vinho verde.
Generally, imports are likely to be in for a
tougher time than in the recent past. Although,
exchange rates are currently favouring imports,
the two huge local harvests and the increasing
local supply of popular varietals is likely to make
the environment much tougher. The one area of
potential growth is what appears to be rapidly
increasing demand for imported ros wine. While
several brands are doing well, the clearest
evidence of this growth is Whispering Angel from
Sacha Lichine where, despite retailing at over
$20, sales volumes have already exceeded
50,000 cases in only three years.
Local strength
If imports had a mixed 2013, locally produced
wine enjoyed a much better year. Volumes rose
by 2%, taking local still light wines to 232.7m
cases. Among the top five volume gainers, three
were box wines. The largest brand gainer was
Franzia box wines, which are estimated to have
increased by around 1.6m cases. The prime
reason is believed to be the introduction of
smaller box sizes, 1.5-litre and 3-litre, in addition
to the mainstream 5-litre box. That demand is
rising for these smaller box sizes can also be
seen in the rise of Constellations Black Box and
Delicatos Bota Box, which gained over 500,000
cases each. Both are seen as premium wine
boxed wines and placed third- and fifth-largest
growth brands by volume respectively.
Separating brands one and three is Barefoot,
which continues to be a star performer in the
market. It is estimated to have gained over 1m
cases, with pink and red moscato doing well.
Barefoot is one of seven brands in the 20 fastest
growth brands that point to an increasingly
important feature of the US wine market and
that is the rise of a new generation of consumers
the Millennial generation, looking for lifestyle
brands with clear identities and which guarantee
quality for money. Other fastest growth brands
reflect either grape-specific trends, such as the
growth of pinot noir, or the widespread tradingup taking place and the trust consumers place in
certain brands rather than risk spending on an
unknown entity.
There is much talk of value increasing at a
faster rate than volume, partly as people
generally drink a little less but better, and there
is no doubt that wines over $10, but especially
over $15 or $20, are growing at much faster
rates than sub-$10 price bands.
beer, spirits and RTD news

in brief
Belgium Speculation continues to mount that
Belgium-based AB InBev (ABI) is preparing a
blockbuster acquisition of London-based
SABMiller, with many industry insiders predicting
a deal either this year or in 2015.
Robert Ottenstein, a senior managing director
at New York-based research firm ISI and head
of its global beverages team, and a former ABI
executive, believes a tie-up could happen this
year or 2015.
In a research note, Ottenstein said: We dont
know of any other company that has signalled
the possibility of a very large acquisition as
clearly as ABI, with the possible exception of
Berkshire Hathaway While ABI has not ruled
out other large deals, it would appear to us that
sticking with beer and thus SABMiller is the
most likely course, especially given comments
around intentions to stay focused on beer for a
long time.
He added: More than at any point in the past
10 years, SABMiller appears ripe for a combination
with ABI. He pointed out that outside of buying
joint venture partners, SABMillers options for
buying additional beer assets appeared limited.

The ABI/SABMiller combination would control 30%
of the global beer market.
IWSR financial analyst Graeme Eadie said:
Mergers have rarely played out as anticipated.
No one expected GrandMet and Guinness to
merge, nor Diageo and Pernod to buy Seagram.
Nor did anyone expect Suntory to acquire Jim
Beam. The same is true in the brewing sector
with the mergers of Inbev/AB and even Ambev
and Interbrew. The more the industry
consolidates, the more likely the combinations
will be, but I wouldnt bet on ABI and SABMiller.
Its too obvious and that has not been the
pattern historically.
Meanwhile, Anheuser-Busch InBev (AB InBev)
received Chinese Government approval on 4 July
to purchase the three companies owned by Big
Boss Beer Yangcheng, Jiangsu and Suzhou. It
follows the acquisition of Ginsber Draft Beer
Company in April. Upon completion of the deals,
AB InBev will be the third-largest brewing group
in China, only behind China Resources Snow
Breweries and Tsingtao Brewery Co.
Pre-mixes go upmarket
in Australia
Australia Mixed drinks or RTDs long
drinks, flavoured alcoholic beverages
(FABs) and pre-mix cocktails are
much entrenched in Australian drinking
culture. This is largely due to
convenience. Recent years have seen a
number of new launches of premium
and super-premium RTDs, particularly
in the long drink segment, renewing
interest in the category.
This premiumisation has seen
better-quality liquids enter the
mixed-drink format, for example
Gentleman Jack & Cola as well as
higher-end Bulleit, Jim Beam and
Wild Turkey launches.
There has also been a raft of
premium strength launches,
essentially drinks with higher alcohol
content. Traditionally RTDs lie between
the 4% abv to 6% abv bracket, but
increasingly premium launches are
exceeding the 6% abv mark.
Cider rises in southern

hemisphere markets
USA The US cider market continues its steady
climb to new heights. Combined data from the US
Department of Commerce (imported cider) and Tax
and Trade Bureau (TTB) wine reports (domestic
cider) show April 2014 volumes up 42% from April
2013. Domestic cider grew 43% for the month, and
imported cider grew 39%. April volumes took a
slight dip landing at 1.96m nine-litre cases, lower
than Marchs all time high of 2.1m. Year-to-date
total volumes for four months show case
equivalents at an all-time high of 7.5m cases,
growing 63% for four months this year. Domestic

volumes are 74% higher and imports fell by -11%.
There are undercurrents in the marketplace
with many new domestic cider brands hitting the
shelves and replacing traditional imported ciders.
May 2014 Commerce Department figures show
year-to-date imported volumes are now slightly
below where they were for the same period in
2012. Imports share of total market volumes
have slipped from a high of 30% in 2005 to less
than 8% year-to-date May 2014.
Poland Overall beer consumption in Poland

continues to decline with the market at 37.2m
hectolitres (hl) in 2013, down by almost -2% on
2012, but there have been some positive
developments.
There are a growing number of family-owned
mini-breweries offering excellent quality craft
beers. New, up-and-coming mini-brewers include
AleBrowar, Pinta, Artezan, Fortuna, Pracownia
Piwa, Doctor Brew, Browar Antidotum,
Gosciszewo, Kormoran and Amber, to name a
few. At the end of 2013 there were 97 breweries
and microbreweries in Poland. Interest in these

beers has been growing, as evidenced by the
increasing number of craft beer bars and a rise in
fan groups on social media sites. It has become
very trendy to be knowledgeable and talk about
beer types and beer-and-food matching.
Three companies Kompania Piwowarska
(SABMiller), Grupa Zywiec (Heineken) and
Carlsberg Polska control 85% of the beer market
in Poland. The best-selling brands are Tyskie and
Zubr both brands belong to Kompania
Piwowarska.
International Since 2009 the cider

category has increased at a
compound annual growth rate
(CAGR) of 7.1% in South Africa, last
year, reaching 3.5m hectolitres (hl).
Growth has been driven by
market-leading Hunters. With an
appealing price and strong uptake
among both men and women, it is
the hot brand of the South African
cider category.
Australia is some way behind on
825,000hl, although is growing faster
posting growth of over 17% in 2013.
Somersby has taken the market by
storm, largely due to price. With such
strong growth in 2013, more players
are entering the market and it is
expected to increase for the near
future at least.
New Zealand is also growing by a
double-digit percentage and last year
reached over 120,000hl, thus
continuing its recent upwards
trajectory. Imported brands are driving
growth. Ciders prosperity is to the
detriment of beer, still and sparkling
wine, however.
August 2014 35

Jim Beam Global Sales 2013

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Jim Beam Global Sales 2013

Uploaded by

Copyright:

Available Formats

The IWSR Magazine has exclusive access to the full IWSR database, which

Buyers guide Latest

Growth brands The IWSR

13 Producer insight William

All details contained in this publication

of the financial year ended 30 June fell -18.5% to 214.8m ($??).

Few anticipate there will be any real

a brief round-up of news from across the industry

Mergers & Acquisitions

the first time Osborne stock will

that it still faced a challenging

a decrease in organic revenue

US control states report brisk

On-premise struggles in Europe

Alcohol ingredients set to grow

As innovation is a key success factor in the

Increasing grey market business

Lower-strength trend in Asia

Lower-priced wines drive growth

buyers guide: products

Three Barrels Honey launched in the UK William Grant &

Mouton Cadet launches

Jacobs Creek launches wines

ubrwka Zota launched in Poland ubrwka

Bitter Bastards single-botanical cocktail bitters launched Master of

Officers Choice was the fastest-growing

country, led consumers to hold back their

Top 25 growth brands*

*Excludes Chinese brands. All volumes in 000s of 9-litre cases

Source: The IWSR Database 2014

Volume Volume growth

All volumes in 000s of 9-litre cases

The McDowells No.1 whisky and

Source: The IWSR Database 2014

Imperial Blue were below 1m cases. It blends

Volume Volume growth

All volumes in 000s of 9-litre cases

Source: The IWSR Database 2014

capturing 33% of the global market within five

The fastest-growing brand in

Shot liqueur, increasing by over 1.2m cases in

volume increase, with 335,000 additional

Growth for Captain Morgan was

Top 10 growth rum brands

All volumes in 000s of 9-litre cases

Volume Volume growth

Source: The IWSR Database 2014

Fernet-Branca dominates the category with

New vodka brands

brands. A marketing push in November last

brands. Like Morosha, Plakuchaya Iva has an

Other categories: top growth brands

All volumes in 000s of 9-litre cases

Source: The IWSR Database 2014

such as access to unusual experiences and

Chris Mason comments: Premium brands are

shelves to validate their decision and

Facts and figures

We are now witnessing

Walsh Whiskey, Dingle, AllTech, Echlinville

9.6% volume growth in 2013, taking it to a new

Whiskey revival in the US

TASTE TEELING WHISKEY RESPONSIBLY

AWARDING WINNING WHISKEYS FROM IRELANDS