Posted on | October 25, 2013
Written by | Jack Robertiello
Stop me if you’ve heard this one before. A representative appears, enthusiastically promoting a clear South American spirit as poised to break out in the U.S. Soon more reps arrive, each with a different colorful brand in hand, filled with enthusiasm and stories about the history, culture and authenticity of their spirit, and how enormous the category is back home. Is it cachaça, or is it pisco?
These days, those reps are likely to be hawking brands of the grape-based brandies known as pisco emerging from Peru and Chile. But the enthusiasm of the companies behind the spirits is quite similar to that accompanying the push in the early 21st century for cachaça, the sugar cane-based national
spirit of Brazil.
While the tide of cachaça brands has receded somewhat in the past few years, it’s at full flow for pisco. Just this summer, major Chilean distiller Control marked its launch in the U.S. with a three-city tour of media and buyers by Chilean sommelier and pisco authority Claudia Olmedo. Pisco Portón, set to hit 15,000 cases this year, has been splashing plenty of money in the U.S. both on- and off-premise, and other pisco producers are using the new-found attention to move into more markets. Macchu Pisco soon will be available in 20 states, while San Francisco-based Encanto has just tied up with Sazerac-owned Gemini Wine and Spirits; and the Marnier Lapostolle family is throwing weight behind their upscale Kappa Pisco from Chile’s Elqui Valley.
Cachaça sales to the United States have stayed pretty small—about $2 million last year, according to the Brazilian Cachaça Institute. The sugarcane-based spirit still sells less than 100,000 9L cases in this country, not a lot considering Brazil has some 5,000 different brands, producing around 1.5 billion liters annually. Since it’s made from sugar cane, like rhum agricole, cachaça is tropical and fruity but with much less sweetness, similar to white rum, with a touch of smokiness.
Pisco sales may be even smaller—while Peruvian exports grew 24% in the first part of 2013 (the United States accounts for more than half of that), that’s still probably less than $1 million annually. Chilean pisco producer Capel dominates the market here, but that’s due to the brand’s long presence and rock-bottom pricing.
Yet Chileans, recently, are seeing the wisdom of competing in the U.S. with superpremium pisco. In 2011, Marnier-Lapostolle launched Kappa in the U.S.; according to Charles de Bournet of Marnier-Lapostolle, “Pisco has been embraced by our trade partners as a great alternative to vodka and gin. Overall, we feel prospects are high, given the depth, complexity and mixability of pisco vs. other white spirits. Kappa offers the heart of a Cognac, the complexity of a gin and the versatility of a vodka.”
Meanwhile, a few large players dominate the cachaça market here, notably Leblon, probably the leading brand with more than 30,000 cases sold in 2012. Leblon CEO Steve Luttmann says the brand is slowly increasing attention to off-premise, now responsible for 40% of their volume, even though about 70% of their volume is due to the Caipirinha cocktail. Luttmann says they are especially looking to leverage the attention that will be focused on 2014’s soccer World Cup to be played in Brazil.
“The opportunity for growth now is focusing on at-home consumption,” says Luttmann. “We’ve done a good job getting on menus, about 12,000 across the country, and now we’ve got to focus on getting people to do more at home. I’d prefer it if there were more brands actively promoting in the U.S.—we need to build a category.”
That means doubling down on the Brazilian connection; he sees a golden opportunity with both next year’s World Cup and the Olympics to be held there in 2016 and has planned more off-premise support in terms of displays and promotions.
Kathleen Lewis, brand manager, rum portfolio at Campari America, which owns the cachaça brand Sagatiba, says the early brand champions overshot the limitations of the market: “Regardless of the enthusiasm for the category, it was and still is relatively unknown to the consumer. Therefore, there is only room for a few players. Simply put, even a forward-thinking bar does not need more then one or two cachaça offerings. As such, many players fell out of the game.”
It’s a problem pisco producers are experiencing as well and trying to resolve. “The frustrating thing is that even some of the smartest accounts only want one pisco. The understanding of what pisco can offer hasn’t yet matured,” says Duggan McDonnell, partner in the Encanto Pisco brand.
Points of differentiation are needed to make the case that there are a range of aromas and flavors in different sorts of piscos, says Diego Loret de Mola, founder of BarSol Pisco, imported to the U.S. by Anchor Distilling. His brand is now available in four expressions: single-varietal Quebranta and Italia grape bottlings, as well as the blended acholado and a version made in the mosto verde style. (In the case of Chileans, there’s also the possibility of introducing aged versions outlawed in Peru; see sidebar next page).
Melanie Asher, who has been selling her Macchu Pisco and La Diablada brands of Peruvian pisco here since 2006, like other pisco entrepreneurs has been focusing her efforts on mixologists. A recent competition, “Become Shaman,” brought 10 U.S. bartenders to Peru for a quinoa and pisco cocktail competition. She welcomes more entrants to the category: “When I started, a liquor store might possibly take two brands, but now I’m seeing that change. Of course, there’s concern when a big player comes into the market but we haven’t been hit as a result.”
That big player, Portón, has spent lavishly, but the brand’s reps believe that slow and steady wins the race. “We understand that it is a journey that will take time, because we have a brand and a category to build,” says COO Jean-Francois Bonnete. “But the reception we have received from both the consumer and the trade—on and off—has been exciting and proving the potential of our brand and category.”
Portón owners are in the midst of hiring four “brand masters” to visit key accounts and educate about pisco in markets across the country. They are also considering introducing mono-varietal piscos to expand the category and continue the brand’s success. Portón has already captured more than half the Peruvian pisco market here, and nearly 20% of the full pisco market, Bonnete says.
That broaden-the-category strategy hasn’t been exploited by many cachaça producers here. While many brands offer aged expressions in Brazil, most of what has been promoted here has been the unaged type, although Sagatiba and now Leblon both offer an aged variant. Ypioca, which has been quiet in the U.S. lately, is said to have plans to develop a larger presence here as the sporting world’s focus turns toward Brazil for the next few years.
David King, president of Anchor Distilling, whose portfolio includes two piscos (BarSol and Don César) and Ypioca, says producers of both spirits need to understand the time and commitment required to break into the U.S. market. Further, he warns that depending simply on either spirit’s mixability is a dead end street. “Why is it that everybody wants to be vodka? I speak to a number of manufacturers who think they will be the new so-called white spirit and I disagree with that approach, because we have one and it’s called vodka,” says King. “Cachaça and pisco have their place and should be celebrated for what they are. The fact that there are huge local markets back home doesn’t mean anything to the U.S. consumer who has such an enormous range of choice.”
King believes the challenge for Peruvian pisco producers is to get beyond the locally-popular Quebranta-based versions, just as with cachaça the challenge is getting beyond the Caipirinha.
Loret de Mola agrees: “There are different qualities in piscos, between Quebranta, which is more structured and elegant, as opposed to Italia, which is more aromatic, and acholado, which is a blend of the two. Being willing to make the category more complex invites people to become more curious.”