Why American Whiskey Continues To Boom
Whatever the reasons – and they are as varied as the styles, proofs and types of whiskeys emanating from this country’s distilleries – American whiskey continues to boom.
Last year the entire broad category grew more than five percent, according to figures from the Beverage Information and Insights Group, but those figures also include the flailing blended whiskey brands. Recent Nielsen scan data suggests the numbers for straight whiskey this year so far are closer to eight percent.
Significantly, it’s the high-end premium and super-premium Bourbons and Tennessee whiskeys that are growing faster, although off a smaller base. Super-premium volumes rose 25.2 percent in 2015 and revenues were up 26.5 percent for the sub-category that includes such brands as Woodford Reserve, Knob Creek and Jack Daniel’s Single Barrel, according to industry trade group, Distilled Spirits Council. One notch down, premium brands including Jack Daniel’s, Maker’s Mark, Wild Turkey and Jim Beam Black rose 6.8 percent and revenues were up 7.7 percent.
And the international boom has become increasingly important, with Bourbon and Tennessee whiskey exports topping $1 billion for the third straight year.
Market Pressures
The relatively sudden change in fortunes has shifted the conversation from, ‘how do American distillers sell more whiskey?’ to ‘how can they keep up with the demand?’ The ultimate question, of course, is how far and long can this go on, given the steady expansion of American whiskey both here and abroad.
Still aware of the long, slow decline of Bourbon and the near-disappearance of rye in the late 20th century, many distillers looked overseas for new markets at the same time as the resurgence here, and have found that international growth in some cases has forced allocation of brands in the U.S. Most of the major distillers have in the past five years expanded their production and aging facilities, but whiskey-making is often a long-term project and making reliable projections is like shooting arrows from a moving train. Whiskeys labeled “straight Bourbon” must be aged at least two years and “bottled in bond” Bourbons must be aged at least four.
Mostly, distillers are optimistic that the luxury problem provided by simply keeping up with filling orders will be around for some time. Flavored whiskeys have offered different drinking options for established whiskey consumers and attracted more women, Hispanics and African-Americans – groups not traditionally a significant part of the American whiskey consumer base. With the return of classic cocktails – a major driver for rye as well as Bourbon, the growth of whiskey bars, and the growing interest in authenticity and heritage when it comes to spirits – American straight whiskey is poised for continued growth. Lately, even bonded whiskeys have returned to numerous portfolios, a style that had been reduced to only a handful of brands. A recent twist is one-offs based on pre-Prohibition whiskey styles – Old Forester’s latest expression in its Whiskey Row Series is the 115-proof 1920 Prohibition Style. The third release in the series, it marks the brand’s continued distillation during Prohibition.
Meanwhile, major brands keep growing: Jack Daniel’s, the longtime category leader now offering numerous flavored and higher end iterations, broke the five million case barrier for the first time last year, up 2.9 percent. Almost every other tracked major straight American whiskey surged as well, led in volume by Heaven Hill’s Evan Williams (up 15.3 percent to reach two million cases) and Bulleit Bourbon (up more than 39 percent).
And while moonshine and corn liquor may not have the allure that they did a few years ago, when the novelty and array of new flavors made a big splash, some regional strength has kept a couple of brands, notably Midnight Moon and Ole Smoky, chugging along, though the churn of suppliers and brands has continued.
“Interest in the whiskey category has never been greater, led by the flavored and craft whiskey segments,” says John Higgins, VP, Jack Daniel’s brand director North America. “Based on that interest, there is a desire for more new offerings from their favorite whiskey brands. As the world’s global whiskey leader, Jack Daniel’s will always listen to what our friends want and will continue to deliver them product of the highest quality.”
New On The Shelf
Meanwhile, something new is always on the launching pad, it seems.
For example, Brown-Forman is extending Jack Daniel’s Single Barrel with a new Personal Collection program, under which consumers can purchase their own customized barrel of whiskey. Buyers can have the barrel selected for them by the master distiller, receive samples based on flavor profiles or travel to the distillery in Lynchburg, Tennessee and select their barrel. Barrels destined for the Personal Collection have been exposed to the most extreme temperatures, which creates bolder flavor and variance from barrel to barrel, Brown-Forman says. Prices start at around $10,000 a barrel.
And with this year the 150th anniversary of the Jack Daniel Distillery, the company has released a limited edition commemorative whiskey to mark the occasion with a suggested retail price of $99.99 for a 1L bottle.
“We continue to see consumers looking towards authenticity and heritage in American whiskey,” Higgins says. “Just looking at the amount of new entrants to the category and proliferation of whiskey bars and whiskey blogs are examples of the thirst for American whiskey. The trends continue to show American whiskey growing over the coming years and we’re hopeful that Jack Daniel’s will be at the forefront of that growth. We’re seeing growth across the Jack Daniel’s family of brands, in particular in our craft and premium expressions, along with our Jack Daniel’s Tennessee Honey and Tennessee Fire.”
To meet the demand, production capabilities in Lynchburg have been expanded over the past several years and so far, none of the brand offerings are on allocation.
Nor has the boom caught Beam Suntory’s Jim Beam short, after many expansions of both facilities and brands, says Dan Cohen, public relations director at Beam Suntory.
“Only the limited editions and some smaller batches are on allocation, and they are that way by design,” he says. “We’ve seen an explosion across all types and styles and find the whiskey consumer is very promiscuous these days. They love to discover and try new products. We know that with this much action and growth there is the risk of saturation, but we don’t see that yet – consumers are still looking for new flavor profiles and processes, which allows for a wide range of offerings.”
The Beam line was recently given a full packaging redesign to align the look of the various iterations, and the distillery launched in the U.S. in August yet another whiskey, Jim Beam Double Oak, finished in a new charred oak barrel after the standard four-year aging process. The second barreling allows the liquid to develop a deeper level of spiced oakiness and caramel, the company says, with a price point of $22.99 (the same as Jim Beam Black, Rye and Devil’s Cut).
“Innovations like that one have played an extremely important role in our growth in the last few years, across price point and within sub-categories, and that has driven a lot of our growth,” Cohen says. Beam had its most successful product launch last year with Jim Beam Apple, and limited editions like Knob Creek 2001 and Booker’s Rye disappeared swiftly.
Cohen points out Nielsen data that says Beam brands are slightly outpacing the Bourbon category with some dramatic expansion over a recent 52-week period – small batch Basil Hayden skyrocketed more than 30 percent, as did the range of flavors – Kentucky Fire, Honey, Red Stag, Maple and Apple.
For some distillers, being able to meet demand is still a goal, however. Numerous brands, especially those from smaller distillers such as Buffalo Trace, have been allocated for some time.
“We didn’t get the memo eight or ten years ago that there was going to be such a surge,” says Kris Comstock, Bourbon marketing director at Buffalo Trace. “Our premium brands like Buffalo Trace, Eagle Rare and Blanton’s are and have been on allocation, so I don’t know what the true demand is. We carefully allocate them out monthly to established customers around the country, but based on the phone calls and emails we get, it’s not enough. But we don’t know how much would be enough. We are making quite a bit more each year, but when we make a barrel of Eagle Rare today, it won’t be ready till 2026, so we just keep filling barrels and we’ll see.”
Buffalo Trace brands like Sazerac rye and others are also in limited supply compared to the upsurge in demand, and there’s no point in even discussing Pappy Van Winkle, as the cult surrounding the brand means bottles frequently don’t even make it onto store shelves.
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