Brown-Forman to hone its premium edge

26 February, 2019 by Deborah Jackson

Brown-Forman enjoyed a strong year in 2018 led by its biggest and most iconic brand, Jack Daniel’s, which maintained its position as the number one most valuable spirits trademark in Australia (IRI Value Sales MAT 11/11/18).

The continuation of the premiumisation trend has been one that the Brown-Forman business has been able to capitalise on with significant growth across its premium portfolio, as consumers continue to drink less, but drink better.

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Gentleman Jack saw growth of +17 per cent year on year, while Woodford Reserve had a phenomenal year recording growth of +34 per cent.

As you branch outside of whiskey and move to tequila, El Jimador was the number one growth driver, growing at 17 per cent and Herradura saw growth of 13 per cent.

Marc Satterthwaite, Brown-Forman’s Managing Director, says “both tequila brands are positioned perfectly with over 50 per cent of consumer spend apportioned to our messaging around 100 per cent agave. And, of course, the new additions to our portfolio, GlenDronach, BenRiach, and Glenglassaugh single malt Scotches as well as Slane Irish Whiskey have quickly doubled in size over the past 12 months with what, we believe, is a very long runway.

“It really is a wonderful time in our industry to see these brands continue to grow, whether small or large, and further reinforce Brown-Forman’s position as whiskey experts.”

Another key category is the dark spirit RTD segment, which thrived in 2018, leading to some successful new launches.

“With the category returning to growth last year (+ eight per cent), we see two clear trends driving the growth: bold full flavoured whiskey at one end, and lighter more refreshing options at the other end of the scale.

“Double Jack is the number one growth driver for Bourbon RTD (measured in incremental dollars). The success of this brand saw us launch our first flavour extension Double Jack and Dry in August last year, and initial results are positive. The second big launch for us was Jack Daniel’s and Ginger Beer, our new favourite bar call that is a refreshing twist for the brand.”

After its acquisition of BenRiach two years ago, Brown-Forman has taken a “grass roots approach” to marketing, which has resulted in significant growth for the three brands within the distillery.

“The new additions to our portfolio, GlenDronach, BenRiach, and Glenglassaugh single malt Scotches, as well as Slane Irish Whiskey have quickly doubled in size over the past 12 months. All signs are that these brands have tremendous potential and we are excited by the potential that they have in the Australian market.”

As he looks ahead to 2019, Satterthwaite admits that a decline in alcohol consumption, tariffs and regulatory changes, as well as increased competition are all significant challenges that lie ahead. He is alert to questions that need to be answered moving forward and recognises opportunities in super premium North American whiskey.

“It challenges us to think about our things differently: how do we compete for a bigger piece of a smaller pie? How do we structure and diversify into making our brands more viable through new channels of opportunity such as e-commerce?

“When compared to Scotch the super-premium segments of North American whiskey significantly under-index. We have a portfolio of brands with Gentleman Jack and Woodford Reserve both ready to capitalise and drive this growth and deliver on consumers’ ongoing interest in discovery and better quality whiskey. A similar trend will continue in the ready to drink segment with continued growth in premium full flavoured RTDs.

“Consumer interest in discovery of Scotch and Irish whisk(e)y portfolio is important. Single malts continue to grow in popularity among Scotch drinkers, so we will push to accelerate the distribution of our Scotch portfolio to capitalise on this trend.”

As well as capitalising on emerging and growing trends, Satterthwaite also intends to accelerate collaboration within Brown-Forman’s trade partnerships in order to develop “longer term planning horizons” and ensure future success.

“The retail shopper landscape is constantly changing in terms of how people shop, consume and share our brands. This means we need to work with our retail partners to help create experiences in-store that give consumers more than just a transaction and move towards creating a positive shopping experience.”

On top of that, there are legislative challenges to overcome, whether it’s the “ongoing six month CPI rise” or restrictions on advertising from local councils.

“Through our continued work with Spirits and Cocktails Australia, Brown-Forman supports a CPI tax freeze that would at least slow the ever-increasing prices that Aussies endure on whether they purchase a bottle or a drink.”

Flavoured whiskey returns to growth

  • “The flavoured whiskey category is seeing 8.6 per cent growth, Cinnamon whiskey is leading the charge, growing at +37 per cent while honey continues to see steady +2 per cent growth. Jack Daniel’s Tennessee Honey is the leading growth brand up +34 per cent.”
  • “Last year we saw a return to growth for Jack Daniel’s Honey and Jack Daniel’s Fire as consumers are beginning to better understand how to drink these products. Plus, the accessible taste profile they have is an easy entry point for people exploring and coming into the category. We have put more emphasis on additional activity in-store on these brands which has certainly contributed to their growth as well.”
  • “These brands play an important part of our mix, they help to support our core products and appeal to different consumers. The plan is to continue to build the brands, particularly Jack Daniel’s Fire through focused activities in the on-premise driving the key drink serve in relevant occasions and getting as much visibility for these brands in-store so consumers pick them up. We are also exploring smaller format spirit options to better capture consumers and shoppers who are looking to experience and discover new flavours.”