AMERICAN WHISKEY BUYERS GUIDE

American Whiskey leads the way

With its broad appeal, diverse range of products, and ongoing innovation, the American whiskey category continues to play a significant role in the Australian spirit market.

The American whiskey category presents a number of opportunities for growth in the Australian retail and hospitality space.

According to recent data from IWSR, classic and premium Bourbon plus specific Tennessee whiskeys are experiencing good growth year-on-year in the Australian market. Significantly, Australia ranks as the third-largest global Bourbon market by value, with adults consuming more Bourbon per capita than any other country.

Managing Director at Proof Drinks Australia, Drew Doty, said while the local market is well established it is also welcoming of new products and innovation.

“The Australian market is embracing a diverse range of American whiskeys, with a notable interest in flavoured variants like Ole Smoky. Educational initiatives by the Distilled Spirits Council of the United States (DISCUS) are instrumental in fostering a deeper understanding and appreciation of these products among Australian consumers.”

Driving category growth

Premiumisation in the whisk(e)y category – which has historically been spearheaded by Scotch – has been taken over by American varieties in recent years and is leading growth in the category.

According to IWSR, between 2017 and 2022 in the United States, super-premium-plus American whiskey volumes grew at a CAGR of 18 per cent compared with a CAGR of six per cent for super-premium-plus Scotch.

Although this growth is forecast to slow as volume of the product grows larger, American whiskey volumes in the same price tiers are expected to expand at a CAGR of eight per cent between 2022 and 2027, ahead of Scotch at a CAGR of three per cent.

However, in the short-term, consumers are showing signs of trading down to find their personal quality-to-price ratio as a response to the higher cost of living. However, IWSR’s expectation remains that trading up will rebound with the economy as disposable income levels increase.

American whiskey has boomed in recent years helping brands scale in the US. This has led to more availability for markets like Australia.”

-Dean Terranova, Managing Director, ICONIC Beverages

As a result, Managing Director, ICONIC Beverages, Dean Terranova, notes this is already the case.

“Consumers have become much wiser in recent years and while consumption growth is slower, demand for premium whiskey has soared,” he said.

“Craft American whiskey has boomed in recent years helping brands scale in the US. This has led to more availability for markets like Australia, and we are seeing high quality brands such as Green River Whiskey, and Bardstown Bourbon Company enter new markets with amazing liquid.”

Doty also noted that flavour innovation is being driven by the ability to turn the product into cocktails.

“Brands like Ole Smoky and Sheep Dog offer unique flavours such as salty caramel, cold brew coffee and peanut butter, which is appealing to consumers seeking novel taste experiences and simple cocktail ideas. These also tend to be price competitive.”

Simon Hopkins, owner of Sydney’s American whiskey bar Jolene’s, said that every whiskey serves its own purpose behind the bar, which is something he keeps in mind when filling the shelves.

“A great mixing whiskey isn’t always great for sipping; a great cocktail whiskey is sometimes too much for mixing or sipping,” he said.

“I always try to get a few bottles from each category while keeping the end use in mind, e.g. you need some Bourbon for mixing, sipping and cocktails.”

In terms of which of these styles of whiskeys are leading category growth, Doty said consumers are showing up not just for craft products and innovation but also the classics.

“Classic Bourbon is highly popular due to its rich, sweet flavour profile. Mainly with Jim Beam as the lead but new and upcoming brands are also entering this segment. While in terms of Tennessee and Kentucky whiskey, Jack Daniel’s is still widely distributed and consumed,” he said.

Education is key

Education for American whiskey as a category has emerged as both a strategic marketing tool and genuine way for bartenders and retailers to connect with consumers and with products.

Assistant Brand Manager at Constellation Brands, Rose Pennington said; “It is undoubtable that marketing and education are synonymous, and it is very hard to have one without the other.

“Consumers are more inclined to resonate with a product they have information and access to. For each of our brands, like High West and Nelson’s Green Brier Distillery, that have a rich proposition and interesting story – that education is a key pillar in the marketing strategy.”

Consumers are more inclined to resonate with a product they have information and access to.

-Rose Pennington, Assistant Brand Manager, Constellation Brands

With the help of organisations such as DISCUS, Doty said promoting American whiskeys in Australia has become accessible and achievable.

“DISCUS plays a crucial role in raising awareness and understanding of US whiskey in Australia by working closely with distributors and media to organise trade tours and educational events. They have also ensured an ongoing collaboration with local distributors and retailers to enhance the product offering and provide a stronger knowledge base of all the opportunities American whiskey has to offer.”

As a result, Doty said campaigns like DISCUS’ ‘Cheers! Spirits from the USA’ along with resources and support have enhanced brands and helped to expand the premium side of the category.

“This initiative includes trade tours and events to enhance awareness of the heritage, flavour profiles, and quality of US distilled spirits. We have also seen an increase in American whiskey’s showcased at local events such as The Whisky List and Whisky Live events nationally,” he said

“Sampling and liquid on lips plays a big role in growing the category as well as in-person educational sessions.”

Face-to-face education from bartenders and retailers is also an important part of the everyday experience.

Hopkins noted that there is a balance between educating staff and customers and making the category unapproachable with jargon. He says there are a few tricks he uses to keep things fun.

“Something that I do a lot is explaining the oak barrels like teabags in cups of tea, the more you use the teabag the less flavour you will get out of it, and oak barrels are the same.

“Similar to the teabag analogy, I talk to the guests and find out what their interests are, then find a topic that I can explain the difference in the grains to them and how the grains impact flavour. If I can’t find something fun, I usually talk about different kinds of bread,” he said.

Hopkins added that this is especially important for products that are often labelled as misunderstood such as “American single malt, and then the other American whiskeys like wheat whiskey and rye whiskey”.

However, Founder of Whiskey Hunt Australia, Brock Tregellas said for those who are curious but are completely new to the category, he recommends experimenting with mixed drinks first.

“Most single barrel picks are barrel strength – big, bold and full of flavour – but can often be a bit overwhelming for people new to whiskey. I generally suggest trying some Bourbon cocktails or lower proof expressions to get people interested in learning more about American whiskey,” he said.

As a result of the ongoing commitment to education, premium quality and flavour innovation, the category growth of American whiskey in the Australian spirit market remains strong. As consumers are turning to the classics and are curious to experiment with craft products, there is potential to appeal to a broad range of consumers on the shelf and behind the bar.

Sources: https://www.theiwsr.com/insight/why-are-agave-and-whisky-winning-the-us-premiumisationrace/ https://www.theiwsr.com/insight/key-us-states-for-american-whiskey-are-softening-why/ https://www.theiwsr.com/insight/premiumisation-is-slowing-but-theres-a-counter-trend/