AUTHENTIC AMERICA FEATURE

AUSTRALIA AND THE UNITED STATES OF AMERICA HAVE LONG BEEN FRIENDS AND, AS ANDY YOUNG DISCOVERED, REGARDLESS OF WHAT MAY BE HAPPENING IN THE POLITICAL WORLD, IN LIQUOR RETAILING RELATIONS ARE AS STRONG AS EVER.

The influence of the American liquor industry on the drinking habits of legalage Australians is nothing new. Australia is a well-established and mature Bourbon market, making it hugely important to producers and, as more and more craft beer is consumed in Australia, the influence of the US craft beer market is also apparent.

A taste of Tennessee with Jack Daniel’s and southern smoked ribs

But this is not a bad thing, far from it. Being such an important market to so many producers across different categories means there are massive opportunities for growth in Australia and that means there are massive opportunities for Australia’s liquor retailers.

In an industry that is seeing strong growth in many aspects of ‘craft’ whether that be beer or spirits, it could almost be considered a burden to be a major global brand, but that is not always the case. In the 2018 Australian Liquor Stores Association (ALSA) and IRI State of the Industry Report, it was highlighted that four of the top five spirits brands saw value declines. But the one top five brand to see growth was Jack Daniel’s, and it’s important to recognise the significance of American whiskey to Australia’s packaged liquor industry and where the opportunities for growth are coming, as Marisa Murray, Brown-Forman’s Marketing Manager of the Jack Daniel’s Family of Brands, explains.

A Mint Julep made from Jack Daniel’s Gentleman Jack

“North American whiskey has historically always been one of Australia’s favourite drinks and it’s the number one spirits category in Australia. There is still strong growth in the category and we see that coming from two key trends which are firstly premiumisation – which is a trend across multiple categories and is not unique to our category. The other key trend is innovation and different ways to enjoy American whiskey.

“Traditionally ‘with cola’ has been the most common way to enjoy American whiskies, but people are now looking for different ways to drink it, so we’re really looking at what we can do to make that easier.”

Murray adds: “A lot of that is what we can do to help consumers discover different products and then inspire them in different ways to enjoy their favourite spirits.

“Specifically in American whiskey the trade-up story - or the premiumisation story - isn’t as clear as it is in a category like Scotch where you’ve got age statements that make it very clear to a consumer what the trade-up is. This means that there is a little bit more education needed in terms of what a premium American whiskey is and why you would pay more for it.”

TRADING UP

The importance of the premiumisation trends to the American whiskey category is also a factor for Russell Hole, Marketing Manager with Think Spirits, which has the award-winning Elijah Craig Small Batch Bourbon in its portfolio.

“The American whiskey market is pretty stable overall, but when you look beneath the surface there are some exciting things happening and some great higher margin opportunities for retailers, because we are seeing super-premium American whiskies growing at more than 12 per cent.”

Elijah Craig has been well recognised, recently picking up a Double Gold medal and Best Small Batch Bourbon award at the San Francisco Spirits Competition as well as a Platinum medal at the SIP Awards, and Hole adds that this kind of recognition reflects the quality of the brand and also resonates with consumers.

“We are seeing the explosion of hand crafted, high-quality, high-end American whiskey, with drinkers happily paying more for great products and brands, driving strong retail margins,” adds Hole. “In particular we are seeing growth in our Elijah Craig Small Batch Bourbon and the trend to quality and hand crafted has brought a change in the way consumers are drinking their American whiskey, with a rise in drinking it straight and just with ice.”

So with higher margin, super premium American whiskey becoming more popular, how can retailers make the most of the growing trend?

New Belgium beers

Murray says that one option can be to get the premium spirits out from behind the counter. “We do understand that there can be an issue with high levels of theft, but it really is an amazing way to educate consumers on premium products, and it really helps to inspire and educate in-store”.

She adds: “We’ve got a range of premium products and what we’ve tried to do recently from a retail point of view is have a display cabinet that houses all the products in it, but in a theft-proof way, while still educating on why Gentleman Jack is different to Old No. 7 and why Single Barrel is different again, and that messaging helps educate a consumer on why they are paying $100 versus $50 for their bottle of whiskey.

“Retailers can help with reasons why to trade-up, offering small tastings especially on products that are over $100 a bottle, as consumers may be a little reluctant to buy that if they have not tasted it before. A number of retailers do this very well with in-store tastings for their premium wines, and it would be great to carry that across into the spirits space as well.”

Goose Island gets mobile with its brews

Hole offers this advice to retailers: “Don’t forget about the potential to trade American whiskey drinkers up from $45 brands to super premium options. Every Bourbon drinker is a potential super premium whiskey drinker, and there are lots of Bourbon drinkers around, all of whom would be interested in a $70-plus American whiskey.”

He adds: “Also retailers should think about how much high-value Scotch whisky they have in their store and then consider whether they can find more space for super premium American whiskey. Ideally they should be allocating as much space for high-value American whiskey as they do for Scotch.”

New Belgium‘s Stage Rock

CRAFT BEER

Another area experiencing strong momentum from the US into Australia is the craft beer market. The US market has led the way in the development of craft beer and while Australia is definitely no sheep, it has followed many of the trends that have been seen in the US. As a result there are also many US craft beers that are enjoying success here, or that are now seriously looking at the Australian market.

One of those brands is New Belgium, which has been available in Australia for approximately 12 months through distributor Square Keg. Square Keg’s Managing Partner, Garry Hastings, says that as craft beer grows in popularity in Australia, many consumers are likely to try their local brew first, but as they understand the category and the history of craft beer they are drawn to beers from the US and, just as with spirits, it is the high quality of the American beers that hooks them in and keeps them coming back for more.

An Elijah Craig cocktail kit

“New Belgium and Square Keg really pride ourselves on the quality, so you will always get the best quality, fresh beer and we will always be bringing out the interesting limited editions. But with the core range, we are really, really confident that consumers and the trade will respond really well to those beers and hence we are introducing the Fat Tire Wheat Beer as a way of staying abreast of trends, we’ll never let it date.

“Cold storage is absolutely critical, the key to craft beer is quality. Any time we place an order for New Belgium, the beer is made specifically for us, so we get their export stuff made fresh. It’s in refrigerated containers from the moment it leaves the brewery to when it gets on the ship, in refrigerated containers on the sea and then to the warehouses and then it is cold stored in Australia as well. So quality is absolutely paramount for us and we want to give consumers the best experience we can and give them the freshest beer we can.”

A selection of Abita beers

Tiffany Waldron, Beer Ambassador for Goose Island, agrees that quality is key, saying: “The history and reputation are important, but the quality of the products is the most important thing. Goose IPA has been brewed for more than 25 years, so the reason the ‘trend’ keeps rolling is that the product is consistent and always brewed to the highest standards”.

And for Michael Lonard, Sales Manager at BidBeer, which brings and distributes Abita Beer in Australia, understanding key American craft beer brands, their stories and how to make them available to consumers is a way retailers can make the most of the push for authentic American brands.

“Tastings, promos and in-store visibility will help. In the case of the brand Bid represents, Abita, it is a craft beer from a hot climate (like here), so there is a great crossover and makes for an ideal food pairing.

“Abita is the largest brewery in Louisiana and one of the earliest of the American craft brewers, (having been) founded in 1986. It is a beer that offers refreshing easy-drinking takes on both traditional styles like their amber lager, and modern session IPAs like the Big Easy, also Purple Haze a lager brewed with barley and wheat then infused with raspberries. Abita is a great introduction to American craft brews as they are a great place to start your journey and continually come back to.”

POINT OF DIFFERENCE

Waldron agrees that for retailers, education and experimentation will make a huge difference, saying: “The more education and information a retailer can offer their customers, the more the customers will be interested in experimentation.

“Spending one’s hard-earned money on the unknown is daunting for the consumer, so the more education they’re offered, the easier it is to try something new.

“As we launch Goose Island’s vintaged barrel-aged farmhouse ales into the Australian range, we hope to add new flavours and interest into the market by offering consistently well-made IPAs and limited releases of other styles to provoke tasting and trying new things.”

People enjoying some Goose Island beers

Hastings adds, “For retailers I would say, stay abreast of the trends and the styles that consumers are looking for and then also look for a point of difference as well. We do the New Belgium limited release range and from a retailer’s point of view they can charge a good price and make revenue and a really good margin because they are so sought after.”

The theme of being able to offer tastings or enhancing the shopping experience is a constant one. Murray says that while it may be difficult for some retailers, especially in terms of space, “the return is that those high-value SKUs do drive a lot more margin and growth for the retailer”.

Authentic American products are still massively popular in Australia, and with the focus of many suppliers and distributors on expanding and developing their ranges, the trend and push for what the US can offer is only going to increase and that can mean strong growth and margin for retailers, it is also something that can help you to have a point of difference over your competitors.

Jack Daniel’s RTDs