Irish Whiskey Enters New Phase in Growth and Popularity

Our latest issue of Beverage Dynamics looks across the spectrum of alcohol imports. In this feature, we explore Irish whiskey:

Irish whiskey enjoyed another strong year — one more in a string of annual double-digit growth.

The category has bulked up, now eclipsing single malt Scotch in volume, if not sales. Irish whiskey is entering a new phase. Companies large and small are investing in liquid stocks and building new distilleries.

No longer is the market monopolized by a single brand and a handful of distilleries. Producers are experimenting with new variants, finishes and expressions, enlarging the range of styles and choices. High-end products are meant to change consumption patterns, turning shooters into sippers. This evolution is reflected in the messaging from the brands, with a shift in emphasis to the liquid in the bottle rather than romantic tales.

Pot of Gold

One thing that’s still true about Irish whiskey is its galloping growth, which has caught the notice of consumers, retailers and global drinks companies.

“Hands down, Irish is the biggest whiskey category in terms of growth,” says Ted Farrell, president of Haskell’s Inc., a wine and spirits retailer based in Minneapolis. “Customers are interested in trying all the new Irish whiskeys that keep on cropping up.”

“The Irish whiskey category is still on fire, and Tullamore D.E.W. is outperforming the category,” says Lisa Pfenning, Category Marketing Director. Parent William Grant & Sons invested more than $15 million building a distillery in the town of Tullamore, which opened in late 2014.

“We wanted to get into that thriving category,” says John Hudson, VP, Director of Innovation for Brown-Forman. Irish whiskey, he says, has been growing double digits over the past five years and now accounts for 10% of the overall whiskey share in the U.S. The Kentucky-based company is building its first distillery outside the U.S.

A great deal of fanfare surrounded the ground-breaking last September on the estate of Slane Castle in Boyne Valley, Ireland. Brown-Forman is pouring $50 million into the construction, involving a restoration of an 18th century stables complex. Slated for completion late this year, the facility will boast a potential output of more than 600,000 cases, as well as a visitor experience center. The first bottles of Slane should appear on shelves by spring 2017, Hudson says. The whiskey will undergo a triple-casking process—in used cooperage stock, Sherry casks and new oak barrels.

Stats bear out the confidence in the Irish arena. Revenues rose 10.7% in 2014 to $550 million, according to the Distilled Spirits Council (DISCUS). Volumes were pegged at 2.8 million 9L cases, which is now bigger in volume (though not sales) than the single malt Scotch category.

Changing Guard

Before now, the impetus for growth came largely from category leader Jameson. The Pernod Ricard brand alone accounted 
for more than 2 million cases in 2014, according to The Beverage Information Group. Now, that dominance is being challenged by brands old and new.

“Irish whiskey has seen huge growth, but most of that has been from Jameson,” notes Broc Smith, owner of Sarasota Liquor Locker in Sarasota, FL. “Jameson is still popular – a big piece of that market – but now everybody wants a piece of that growth.”

“There’s been a large multinational that has done a great job rebranding and recruiting consumers into Irish whiskey,” comments Stephen Teeling, Marketing Director for Teeling Whiskey Company. “They may have been recruited by that market leader, but now their palates are developing and they are looking for variations to try.”

“Beyond Jameson, we are seeing different expressions coming out of Ireland,” says George Ryals, manager at All Star Wine & Spirits in Latham, N.Y. “There are whiskeys people had been clamoring for. Paddy’s wasn’t available for years; now we can hardly keep it on the shelf. And high-end, rare bottlings like Green Spot and Yellow Spot are finally appearing in the U.S. market.”

Segmentation is starting to occur, Teeling says, which is why he and his brother Jack relaunched the family brand with innovative, more upscale liquid. Last summer, the Teelings opened a 10 million distillery, the first in Dublin in over 125 years and the only operating facility in the capital of Ireland. Currently in the U.S. market, Teeling offers a Small Batch, matured in rum barrels; a Single Grain, matured in California red wine barrels; and last fall released a Single Malt, a vatting of five different barrel treatments.

Stepping Up

Many of the producers are keenly aware that, as in other 
whiskey categories, Irish fans are looking for new spirits to try.

“Consumers are interested in learning more about Irish whiskey and experimenting with other variations,” observes Pfenning at Tullamore D.E.W. “They are craving unique offerings to explore.” The brand’s lineup in the U.S. includes Original, 10 Years Old Single Malt, 12 Year Old Special Reserve and Phoenix, an over-proof limited edition. More innovations from aged stocks are planned for 2016, Pfenning promises. “Consumers are interested in whiskeys with higher age statements; they see it as an assurance of quality.”

“In the Irish category, we are seeing more ‘single grain’ expressions, as well as ‘small batch’ and experimental casks,” says Erin Robertie, Liquor Department Manager at Hazel’s Beverage World in Boulder, Colorado. Jameson and Bushmills dominate Irish whiskey sales in that market, but more unique offerings are appearing. Robertie cites Teeling’s Single Grain aged in California wine barrels, as an example. “The Irish are jumping on the craft whiskey band-wagon,” she says.

“In the next two to four years, we’ll see a lot more Irish whiskey brands pop up, with more than two dozen new or proposed distilleries in Ireland,” says Malini Patel, Beam Suntory’s VP of World Whiskies and Innovation. Beam Suntory’s Irish whiskeys include two blends, Kilbeggan and 2 Gingers; Tyrconnell, a single malt offering different finishes; Connemara, a peated single malt; and Greenore, a single-grain expression. “Our portfolio truly offers a great range of flavors and prices to accommodate novices to whiskey aficionados,” Patel says.

Not to be outdone, Jameson has been releasing some interesting and upscale expressions, such as Black Barrel Select Reserve. And most recently, it released Caskmates, which is whiskey aged in stout-seasoned casks. Parent Pernod Ricard sees a trend of “continued very strong premiumization and experimentation by consumers,” comments Wayne Hartunian, VP, Scotch & Cognac. “This bodes very well for Scotch and ultra-premium 
Irish whiskey.”