BEYOND PREMIUM

"The bourbon category is showing some slight growth and I think it's the superpremium level that's really driving a lot of the excitement," said Wayne Rose, brand director for Brown-Forman's Woodford Reserve. "There's not a lot of volume yet, but certainly these brands are adding excitement and visibility to the category.

Rose explained that Brown-Forman is very pleased with Woodford Reserve's current volume of approximately 50,000 cases nationally (about 80% of sales are in the U.S.) and is more committed than ever to seeing this brand succeed.

Maker's Mark, from Allied Domecq, gained an impressive 14.9% nationally in case sales last year.

"We believe Woodford Reserve is poised for bigger things," he continued. "We've done some analysis of the high-end segments of other categories, which I define as being above $20 a bottle. Single malts represent about 8% of all Scotch volume. For high-end tequilas, it's about 11%. Only about 2% of the bourbon category is at the higher end. So it's our position that the category is not just maturing but evolving. We think there's a tremendous potential for growth for high-end bourbons and Woodford Reserve in particular."

But Woodford Reserve is not the only upper level entry from Brown-Forman. "We've been pretty active in line extensions," stated Hayes of Jack Daniel's. "We began with Gentleman Jack, which is a superpremium whiskey from the Jack Daniel's distillery. It has a bit of a lighter taste profile, and it's for people that like to trade up from time to time. It's positioned to compete with Crown Royal on taste profile.

"The Jack Daniel's Single Barrel is also doing extremely well for us. It sells for about $40 a bottle and has shown significant growth every year since we introduced it. It's a brand for alternative, ultra-premium usage occasions for the Jack Daniel's consumer. It offers the full-bodied flavor of Jack Daniel's and we see it as a competitor to single malt whiskies and cognacs."

But drinking a fine, aged, small-batch bourbon doesn't always have to be about spending a lot of money according to the folks at Heaven Hill. They've recently initiated an ad campaign for 12-year-old Elijah Craig that stresses the accolades the brand has received at prestigious spirits competitions. "We've started to tell the story to retailers because the brand has just been building on its own," explained Kass. "Frankly, we probably priced it too low initially, certainly when compared to similarly aged products, but it's been difficult to bring the price up. A 12-year-old, small batch bourbon, bottled at 94 proof and selling for about $17 on the shelf has got to be one of the great buys of the spirits world."

The Wild Turkey family of bourbons has also had notable success with super- and ultra-premium brands recently, particularly Rare Breed, Russell's Reserve and Kentucky Spirit, which have all seen double-digit percentage growth for the past few years, according to Joe Uranga, global group director for Wild Turkey, Pernod Ricard USA. "There's definitely been a move to superpremiums," Uranga said, "that we see continuing into the future."

Wild Turkey has become an official sponsor of the Pro Bowler's Association.

Among bourbons, Uranga also sees the traditional well-established brands continuing to do well if they stay true to their heritage and reputation. "We're not trendy," he said. "You won't see a Wild Turkey Cosmopolitan, though we're not against it. It's not who we are. Wild Turkey stands for genuineness. We're real bourbon for consumers who do the things they really like to do with good friends." While depletions for the brand edged up slightly last year, Uranga believes there is plenty of room for growth. "Under Pernod Ricard, there are many more resources available to promote and sell the brand than we had with Austin, Nichols," he said.

Jason Nussbaum, Wild Turkey global marketing manager, noted that the brand has become an official sponsor of the Pro Bowler's Association, a connection that gives Wild Turkey potential exposure among the country's 53 million bowlers. In addition, he said there will be several fall/holiday promotions: pole toppers and neon signage, Wild Turkey 101 gift sets and gift cartons and a Rare Breed gift set including a 750 ml and two glasses.

A GROWING FAMILY

After several years of flat performance, Jim Beam has managed to realize modest increases in volume in recent years, which garnered the brand an Established Growth Brand Award from Adams Beverage Group this year. The brand was also the biggest spender in the category on advertising last year. The total outlay was $22.5 million (a $5 million increase over the previous year) with most of the dollars being spent on a magazine campaign.

In addition, Jim Beam Bourbon is launching an exciting new off-premise campaign in Pennsylvania this fall. The campaign, which runs August 15 through October 15, offers consumers the opportunity to win four tickets and transportation (from/to their home) to the 2004 Indy 500 race. Across the state, 550 stores are scheduled to display anywhere from three to 96 cases of Jim Beam Bourbon in conjunction with this promotion. Besides this statewide sweepstakes, a replica Jim Beam branded Indy Car appeared at the Easton, PA, Wine & Liquor Outlet Store to coincide with the Indy Racing League (IRL) race in Nazareth, PA, on August 24. The Michael Andretti/Jim Beam Racing "Andretti Green Team" participated in the Nazareth race, featuring Dan Weldon behind the wheel of the Jim Beam Car.

LEADING BRANDS OF STRAIGHT WHISKEY IN THE CONTROL STATES

(Mixed cases)

Brand	Supplier	2001	2002	% Change
Jack Daniel's	Brown-Forman Beverages	886,307	903,313	1.9%
Jim Beam	Jim Beam Brands	888,866	867,020	-2.5%
Evan Williams	Heaven Hill Distilleries	244,500	244,137	-0.1%
Early Times	Brown-Forman Beverages	168,680	160,933	-4.6%
Old Crow	Jim Beam Brands	153,078	154,385	0.9%
Wild Turkey	Pernod Ricard USA	137,684	139,578	1.4%
Ancient Age	Sazerac Co.	127,545	129,006	1.1%
Ten High	Barton Brands	117,856	117,787	-0.1%
George Dickel	Diageo	97,168	98,039	0.9%
Maker's Mark	Allied Domecq Spirits USA	73,516	88,422	20.3%
Total Leading Brands		2,895,200	2,902,620	0.3%
Others		622,587	632,379	1.6%
Total Straight Whiskey "in the Control States		3,517,787	3,534,999	0.5%

Source: Adams Beverage Group Database from NABCA data

The company's Small Batch Bourbon Collection (including Knob Creek, Basil Hayden's, Booker's and Baker's) has tapped into the high-end whiskey trend for several years now. Jim Beam Brands continues to promote the Collection with a tasting tour, led by Fred Noe, Jim Beam's great-grandson and the Knob Creek Bourbon Ambassador. At the events, each consumer is provided with a tasting mat and guide, which includes tasting notes and information on how to register for the Kentucky Bourbon Circle, the world's largest forum of bourbon connoisseurs. In addition, to support the sales of The Small Batch Bourbon Collection off-premise, the company has developed some permanent wood displays -- four-tiered, self-standing shelves that feature all four Small Batch brands. There are also full-sized Fred Noe stand-ups to draw attention and family ties to Knob Creek and Small Batch displays. And, for the upcoming holidays, the company is offering the Knob Creek Ultimate Manhattan gift package, which includes a bottle of Knob Creek, maraschino cherry mix and Manhattan-style crystal glasses.

The Beam family franchise was also recently extended with the launch of Beam and Cola. Unlike many of the recently launched malternative beverages bearing spirits brand names, this product actually contains Jim Beam Bourbon. "Beam and Cola is not a new-fangled or flash-in-the-pan product," explained Tom Maas, vice president, global brand management, Jim Beam. "We created Beam and Cola to provide a quality, convenient and great tasting beverage for consumers to enjoy the taste of real Jim Beam bourbon. Beam and Cola doesn't compromise the fabric of our flagship brand and company namesake, Jim Beam." Although initially available in only seven states, the company is exploring additional distribution opportunities for 2004.

BUILDING ON TRADITION

The traditionalism and heritage behind the bourbon category can sometimes be as much a hindrance as a help. And although some brands have obviously been successful in this regard, it's hard to be both historic and hip, traditional and trendsetting. That's certainly the challenge facing marketers like Mike Haering, brand director for Brown-Forman's Early Times and Old Forester brands.

"Admittedly both brand have declined since their heyday," Haering said. "Old Forester is in the process of stabilizing. It's declined since its peak in 1972 of over 1 million cases, but lately it's been getting great accolades from third parties. We've found that the consumer loves it and so we want to put a focus behind it."

One of the problems that the brand -- the original Brown-Forman bottled whiskey -- has had was that the packaging did not resonate with consumers. That's about to change however as the brand moves to a new diamond-shaped, pressure sensitive label. "We've also taken George Garvin Brown's handwritten guarantee off the label and put it right on the glass," Haering continued. "So now when the consumer reads that guarantee it's against the background of the bourbon itself."

Old Forester has also joined the ranks of the many bourbons who have attempted to build awareness and excitement by adding a line extension. "We released a "birthday bourbon" last year and we're in the process of bottling two vintages for this year's release. They're both from 1990, but one was distilled on a specific day in the spring of that year and the other from the fall," Haering explained.

For Early Times, the approach is to target the interests of the brand's core consumers. That includes horse racing (the Early Times Mint Julep is the official drink of the Kentucky Derby) and bass fishing. "We've also found that the Early Times consumer is somewhat price sensitive," Haering said. "So what we're offering them is a great whiskey at a reasonable price."

WHAT'S AHEAD

For the next few years, analysts don't predict much better news for bourbon producers. Adams Beverage Group research projects a slight decrease for the overall category through at least 2007. That news, however, is for the category and not for individual brands. Continued marketing support for the most dynamic bourbon brands, particularly for those at the upper end of the category, is likely to help them perform counter to the overall trend. Expanded usage in cocktails, both traditional and modern, and a wide array of sponsorship activities, including rock and country music, rodeo sports and the Western lifestyle, motorcycles and bass fishing, are likely to keep a number of whiskey brands born in the U.S.A. a vital part of the American adult lifestyle for decades to come.

THE AMERICAN SPIRIT

According to a 1964 act of Congress, bourbon is America's native spirit. By Federal law, it must be made using between 51% and 79% corn in its mash. If more than 79% corn is used in the mash, the product must then be designated as corn whiskey. Bourbon is a straight whiskey and, according to the law, must be distilled at 160 proof or less and must be aged a minimum of two years in new charred oak barrels. As a practical matter, though, most bourbon is aged at least four years or more. Since it is a straight whiskey, no blending is permitted and there are no additives, with the exception of water to reduce the proof. Most bourbons are marketed as 80-proof products, but some of them do go beyond 100 proof.

Often associated with bourbon, the sour mash method is simply a technique of fermentation that uses part of the previous distillation in the new batch of fermenting mash. The sweet mash yeasting method uses only fresh yeast for fermentation. The sour mash method provides a dimension of consistency from one batch of whiskey to another.

By law, bourbon can be distilled anywhere in the U.S., but the vast majority of it is produced in Kentucky, where it must be distilled and warehoused for at least one year in order to carry the "Kentucky Bourbon" designation on the label.

Another bourbon designation, "Bottled in Bond," simply means that distillers can withhold paying the excise tax until the product is shipped to retailers. Only straight whiskey can be bottled in bond and must be aged in "bonded" warehouses for at least four years and bottled at 100 proof. The designation has no relation to quality.

Tennessee Whiskey

The obvious difference between this straight whiskey and bourbon is that it is produced in Tennessee. Made in a similar manner to sour mash bourbon, Tennessee whiskey includes an extra step in its production process -- the distilled spirit is filtered through maple charcoal in large, wooden vats before aging in order to remove impurities. The most prominent Tennessee whiskeys are Jack Daniel's and George Dickel.

FTRACING THE HERITAGE OF
SPECIALTY AMERICAN WHISKIES

As you discover bourbon whiskey, you will come across several different designations within the category. Here are some definitions that will hopefully help clarify them for you.

Small Batch

Traditional Definition: A bourbon that is produced/ distilled in small quantities of approximately 1,000 gallons or less (20 barrels) from a mash bill of around 200 bushels of grain.

Handmade

The same as the traditional definition of small-batch bourbon in that the quantity of bourbon produced determines the batch size and is an indicator of whether production is hand-guided or mechanized. A small distillation has the advantage of allowing the distiller to be very selective in the ingredients he uses while also allowing him to employ a more hands-on approach in nurturing each batch through the various phases of production.

Barrel Proof

Bourbon that is bottled at the proof it comes out of the barrel after aging for a minimum of four years.

Single Barrel

Each bottle contains bourbon whiskey from just one barrel. No blending or balancing. No American distillery produces whisky a single barrel at a time.

Source: www.makersmark.com