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Cordially Yours: The Original Spirits Hustle to Keep Pace

Posted on  | August 1, 2012   Bookmark and Share
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Cointreau Beverly Hills Hotel Margarita

Who is the cordial drinker? It’s a trick question, of course, since, unlike nearly all other spirit categories, there’s something for every drinker among the many flavored products offered today. And different subsets of consumers continue to find something that sparks interest.

Experimental early adopters rapidly took on such recent innovations as St.-Germain and Domaine de Canton. Young legal-age drinkers continue to make Jägermeister their shot of choice. Cocktail enthusiasts have welcomed the revival of bittered Italian brands Campari, Averna and Aperol. Holiday entertainers still stock up on Baileys, Kahlúa and Drambuie. And whatever the demographic, age, sex or situation, chances are there’s a cordial or liqueur that hits the sweet spot.

Despite (or perhaps because of) this “something for everyone” state of the business, the category and all its myriad off-shoots—creams, coffees, herbals, sours, schnapps, puckers—are coming under increased market pressure: from flavored vodkas and rums; from honey- and cherry-flavored whiskies; from beverages like Skinnygirl that blur the line between ready-to-drink, liqueur and spirit; from high-quality syrups; and from on-premise trends that eschew overly sweet or artificially flavored brands.

“While there is plenty of innovation throughout the industry, liqueurs are on the cutting edge of product development,” says Heaven Hill’s corporate communications manager Josh Hafer. “But it’s important to note the vast makeup of this segment. From amaros to aperitifs to fusion liqueurs, it is often the case that products within a similar sub-segment are not competing against each other. That said, producing products that are meaningful to their audience is the paramount issue for all liqueurs.”

Overall, the broad category of cordials and liqueurs rose 2.6% in volume in 2011 to 21.5 million 9-liter cases. Domestics grew 4.5%, while imports just ticked up slightly by 1%, according to Chicago-based Technomic’s Adult Beverage Resource Group.

Of the four price categories, premium ($15-$26.99) and value ($14.99 and under) retained the majority of volume in 2011, with the premium tier expanding 4.5%. High-end ($27-$39.99) and super-premium ($40+) products grew slightly.

Full lines of cordials and liqueurs accounted for the largest share of the business, although it’s a slowly decreasing share, as consumers opt for lower-proof flavored spirits instead. As restaurant beverage consultant David Commer says, “The growth of flavored, especially lower-proof spirits, shows that for all the talk of craft  cocktails, consumers like to have things solved for them.” Being able to pour a lightly flavored but slightly sweet spirit directly into an iced glass in many cases removes the demand for some traditional liqueurs.

Getting Competitive

Increasing customer interest in flavored spirits has become a challenge for liqueurs at retail, according to Michael Bradley, buyer for the two Crazy Bruce Discount Liquors in Connecticut. “A lot of the decrease in sales of cordials is going to the flavored vodka sales—especially those cookie and cake and other new ones,” says Bradley. “Those vodka trend drinkers used to be the flavored cordial drinkers, who bought peach and sour apple and all those flavors in cordials  and schnapps.”

Whiskey specialties achieved the largest volume gain last year, a new classification that takes into account American and Canadian flavored brands which have exploded. In fact, without those being included, cordials and liqueurs might have dipped badly last year.

Still, the industry keeps churning out new, unusual flavor combinations and iterations hoping to catch lightning in a bottle. Case in point: OR-G, introduced last summer, is blend of French vodka and natural persimmon, papaya, mango and lime juices. Its appeal extends beyond the exotic ingredients; it is being marketed as a “sensual experience.” Like most recent launches, the flavor profile is designed for versatility, as in on its own or mixed  in cocktails.

They are also bringing old favorites back. In June, Marnier-Lapostelle announced the limited release of what’s now called Grand Marnier Cherry, a modern version of the long disappeared Cherry Marnier. (For a sampling of the latest new brands, see sidebar.)

Southern Comfort has returned as well with a new flavor, following up last year’s release of the “love it or hate it” Tabasco-infused Fiery Pepper with Bold Black Cherry, designed to be consumed in long drinks rather than as shots, says U.S. Brand Director Jason Kempf.

Southern Comfort has an advantage in the current market in that it’s seen by consumers as a primary ingredient in drinks, needing only ice or a mixer. Perhaps that’s why the various line extensions have been able to find placement in chain restaurant accounts, which has been much more difficult post-recession. For instance, Chevy’s Fresh Mex, a national chain of Mexican casual dining restaurants, features Fiery Pepper in their “Bloody Maria” cocktail. Sweet heat, it seems, may be a new area of exploration; Beam Global’s DeKuyper is readying a chocolate-chile flavored entrant in its Crave line.

Commer says major restaurant chains are being pickier about taking on new flavors: “They are more likely to decide to feature a specific drink before taking on a cordial. If they’re not featuring it in a drink, they’re not bringing it in—it has to have a reason to be there.”

They also are shedding full lines of liqueurs that were once essential bar ingredients, rather than keep such an extensive and non-performing inventory, he notes.

But there are openings; the giant Applebee’s chain recently listed Margarita and Sangria specialties employing DeKuyper’s Razzmatazz. As well as on-premise placements, getting consumers to understand how to use cordials at home is essential, says Gary Ross, director of cordials and rums for DeKuyper supplier Beam Global. “The biggest challenge for us and the category is reminding consumers that a cordial is a key ingredient in a quality cocktail—one they can make at home themselves,” he says.

 

On-Premise Plays Key Role

As Rob Cooper of St.-Germain points out, suppliers routinely count on customers learning about new brands on-premise before they’re willing to buy at retail, but that few people are actually making elaborate cocktails at home.

Kempf echoes this: “On-premise is still where recruitment happens, and a lot of cordials and liqueurs aim to become the bartender’s best friend in their quest to make a drink more interesting. Now there’s much more competition around that then ever before.”

Cream liqueurs have taken on new life lately through the energy of new entrants patterned after industry leader Baileys, even though on-premise their consumption has plummeted.

Molly’s—a blend of fresh Irish dairy cream (comprising a third of each bottle), aged Irish whiskey and a touch of chocolate—has seen significant growth since arriving in America, largely on the power of samplings. Also noteworthy are two rum-based achievers: Tres Leches and RumChata. Tres Leches is a Caribbean triple cream modeled after the Latin dessert of the same name. RumChata, which has surged to approximately 60,000 case sales in a few years, is also rum-based, but with a flavor reminiscent of the Mexican almond drink called horchata (as well as rice pudding and Cinnamon Toast Crunch cereal).

Extensions Galore

Michael Bradley of Crazy Bruce points out that most line extensions are tools to keep consumers from straying to other brands. Kahlúa, for example, is now sold in mocha, hazelnut, French vanilla, peppermint mocha and higher-proof Especial, as well as a line of ready-to-drink products and, most recently, iced coffee with alcohol. The Godiva line of rich chocolate liqueurs also now includes five iterations: original dark chocolate, white chocolate, mocha, milk chocolate and caramel milk chocolate.

Trying to revive brands with line extensions is also seen as a way to return buzz to a product that’s already made its mark. With Harmonie—a blend of French vodka, infused natural fruits, flowers and Cognac—–Hpnotiq adds a vibrant violet sister to the iconic blue original. “It follows Hpnotiq very closely from a marketing standpoint,” says Heaven Hill’s Hafer. “But the introduction was four times larger than our expectations. This clear success raised the tide for the franchise. Hpnotiq Original benefited greatly.”

Other subcategories have become more competitive; for many years among orange liqueurs the choice was between value-brand triple secs and high-end icons like Cointreau and Grand Marnier. But the growth of the alternate brands like Gran Gala showed the way for DeKuyper’s Brazilian orange O3 and the return of the Belgian, Cognac-based Mandarine Napoléon.

Many brands have targeted bartenders and the cocktail culture as older consumers and occasions disappear. Drambuie is a good example; at the recent Tales of the Cockail, the brand offered $10,000 for the best cocktail recipes designed to be served on tap. The whisky-based cordial has slowly seen its share shrink, as have other formerly popular after-dinner drinks. Yet as Bradley of Crazy Bruce points out, “There still are the staples—Kahlúa, Baileys, Amaretto di Saronno—those sales are fine, though probably 60 percent of those sales for us are in the November-December holiday season.”

Jägermeister is a consistent seller year ’round: now the #1 selling imported liqueur in the United States and eighth largest premium spirit in the world, the brand recently unveiled its first-ever television advertising campaign in the U.S., featuring varied sporting legends that speak to the 21-29 year-old male demographic.

But as Kate Laufer, director of public relations at Sidney Frank Importing Company points out, there’s also major growth in honey-flavored spirit volume, up 137% by the end of 2011 according to Nielsen. Even though this new category is driven by whiskey flavors,  “the honey category is on fire, which is great for the original honey, Bärenjäger Honey Liqueur,” says Laufer. Bärenjäger’s first-ever line extension, Bärenjäger Honey & Bourbon, hit the market nationally in the spring of 2012. “Feedback to date has
been exceptional,” she notes.

Regional trends have often driven new products onto the scene. In Georgia and South Carolina, where he operates four stores, Lock Reddic, CEO of Green’s Discount Beverage, has been seeing an uptick in cordials and shooters, with brands like Dr. McGillicuddy’s Fireball growing fast enough to challenge Jägermeister. That category is showing great customer curiosity and robust sales in his stores.

And then there’s pumpkin. Like seasonal beers brewed with the gourd, some retailers witness a boomlet each fall when pumpkin cordials and, recently, pumpkin creams like Fulton’s Harvest Pumpkin Cream Liqueur become available.

It’s a sign that current drink technology and trends have combined to create a range of products for every palate and wallet. The days of the behemoth cordial brands may be on the way out, but an endless range of presentations, flavor combinations and styles is only beginning.

What Will Be The Next Breakout Liqueur?

Before St.-Germain, Canton and RumChata, three recent success stories, there was PAMA, Alizé and Hpnotiq—all brands that burst onto the spirits scene, enjoying rapid growth, and staying relevant with a significant fan base. Current consumer demand for more and more flavors means at the very least that new brands and extensions will continue for the foreseeable future. Here are a few of the most recent releases entering the wild, wild west of cordials and liqueurs:

Bärenjäger Honey Liqueur has introduced the brand’s first line extension, Bärenjäger Honey & Bourbon, a blend of premium honey liqueur and Kentucky bourbon. Both Bärenjäger Honey & Bourbon and Bärenjäger Honey Liqueur differentiate themselves from the growing competition by being made with pure, natural honey and no artificial flavors, handcrafted by one of Germany’s oldest family owned companies, Schwarze & Schlichte.

Two recent success stories from the Patrón Spirits Company—Patrón XO Café and Citronage Orange—have shown steady growth at the high end for the past five years. Now the company offers the premium-priced Patrón XO Café Dark Cocoa, a blend of silver tequila with coffee and chocolate flavors bottled at 60 proof.

The success of other creams has spurred the creation of Forbidden Secret American Cream Liqueur, a blend of pure American dairy cream, Jailers Premium Tennessee Whiskey, dark chocolate and robust espresso.

Then there are brands like Le Sutra, a quartet of sparkling, fruit-flavored liqueurs (blueberry, strawberry, peach and grape) “infused with vodka,” further blurring the spirit/liqueur lines. The flavors can be sipped over ice or mixed with sparkling wine, vodka, Cognac, tequila or rum.

Industry pioneer Hiram Walker continues to mine flavor opportunities both traditional and modern; recent introductions include Watermelon Sour Schnapps and Whipped Cream  Liqueur. The latter is perfect for delicious dessert-like cocktails; both are tasty chilled and straight up as well.

Heaven Hill recently launched Mariposa Agave Nectar Liqueur in select markets, looking to capitalize on the growing bartender preference for agave syrup as a drink sweetener. It’s a mixture of agave nectar, tequila and vodka, with hints of rose oil and gardenia.

Sweet Revenge is a 77 proof liqueur called “the Original Wild Strawberry Sour Mash.” According to the makers, it’s “a show-stopping shade of pink, but don’t be fooled by her rosy appearance—though she’s sweet and juicy upfront, she’s got a raw, rockin’, high-proof finish.” Sweet Revenge is meant to be served as a shot or on the rocks.

Killepitsch is a recent entry into the herbal bitters category, an 84 proof German liqueur made with more than 90 herbs, spices and fruits, created in the 1950s and borne of a pledge made in a bomb shelter during WWII by the creator to have a special drink (locally, a ‘pitsch’) with a friend afterwards if they both survived.

From the heart of Italy’s Veneto region comes Antica Sambuca, originated in 1868, and made by distilling the infusion of anise stars with sweet orange, Turkish rose, iris, coriander and cardamom. To produce Antica Black, Calabrian licorice is infused into 60% ABV alcohol at room temperature for three weeks before added to the basic Antica Classic.

Also from Italy, Pisa, a nut liqueur made from hazelnuts, almonds and pistachios, is now sold in seven states and expanding, according to importer Vision Wine & Spirits.


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