NORTH AMERICAN DRINKS: A TOAST TO AMERICA

Australia is blessed with one of the world's finest drinks industries. Beer, wine and spirits are now all produced in this country in higher quality and quantity than perhaps they have ever been.

Nevertheless, there remains an enduring popularity amongst drinkers for imported beverages from North America in Australia. For retailers, the North American drinks sector is one that demands attention –offering a route into a lucrative niche with a dedicated audience.

Uniquely American spirits, such as bourbon, continue to resonate with Australians. An IRI report released in late 2021 revealed that bourbon remains the number three ranked glass spirits category in Australia, a position it has maintained for the preceding three years.

Nevertheless, there does appear to be a shift in the bourbon drinking habits of Australians that will pique the attention of retailers, as South Trade International Brand Manager, Andy Milne, reveals.

“Australians are definitely upgrading their drinking choices and enjoying a premium product,” Milne says.

“The total market for glass bourbon is in decline by -5.0 per cent in 9L moving annual total (IRI Data Mar-22), with value and mainstream driving this decline, however super premium is continuing to grow, performing +8.0 per cent in 9L.”

With this change in habits has come a shift in demographics too.

In particular, Milne sees a market for bourbon amongst the over-25-year-old age cohort, noting: “In the 25-45-year-old sector, consumers are upgrading their bourbon choices from the value or mainstream choices of their youth and seeking a higher quality option that doesn’t break the bank.”

Here, Milne believes there is a clear opportunity for some of SouthTrade’s imported American spirits.

“This is where we have significant growth for Buffalo Trace and Eagle Rare 10-year-old,” he said.

The last two decades in the Australian spirits business have been defined by domestic distilling scene that is stronger than ever. It might be suspected that this would eat into the market of American spirits, but Milne believes the opposite is true.

“I think it is helping the category rather than hindering it. With more consumers exploring the super premium category of Australian whisky, we are seeing these same consumers learning and discovering more about the same American whiskey category as they look to expand their drinks knowledge,” he said.

“Having so many great Australian whiskies available to consumers, they are able to learn and engage more with these products. That provides them the confidence to make new discoveries when purchasing in-store.”

Milne also describes a growing trend among younger drinkers for flavoured whiskey liqueurs.

“Younger Australians are definitely looking for something fun and enjoyable to share with their friends,” Milne explains.

“They are particularly engaged with brands that have character and don’t take themselves too seriously, such as Fireball and Sheepdog [both USA-made liqueurs]. Flavoured American whiskies are taking Australia by storm.

“Fireball whiskey continues to take share from mainstream whiskey brands, growing +35 per cent in 9L, and the recently launched Sheepdog Peanut Butter Whiskey is creating a huge noise across Australia.”

Another category that offers a similar playful and easy proposition is whiskey RTD.

“If you count RTDs, Australia was once the biggest consumer of North American whiskey per capita,” Milne says.

“American whiskey is the second biggest category in Australia, sitting just behind Scotch whisky. However, once you factor in RTDs, Canadian whiskey and American spirits, it’s likely that [the category] would come out on top.”

One intriguing brand that plays in this space is Woodstock Bourbon, which presents an attractive offering for retailers and drinkers alike.

Produced at the illustrious Heaven Hill bourbon distillery in Kentucky, Woodstockcertainly has strong USA credentials, but key point of difference is that the brand is effectively produced especially for the ANZ market.

Rob Marsh, Senior Brand Manager RTDand Spirits at Carlton United Breweries(which distributes Woodstock) explained the production process to National Liquor News.

“Woodstock’s Bourbon is sourced from Heaven Hill, Kentucky and is imported into Australia to then be mixed with a signature cola made for the Australian palate,” he said.

Indeed, this focus on the particular Australian taste for American whiskey is something that Woodstock highlights in its marketing efforts.

“Unlike other Bourbons who highlight their American heritage, Woodstock celebrates Australian mateship,” Marsh says.

“Woodstock Bourbon is seeing steady growth in the Australian market due to its unique positioning and value proposition.”

Like Milne, Marsh believes that international whisk(e)y has retained its attraction for Australian drinkers, partly due to the variety the category offers.

“From Scottish whisky, American whiskey, Irish whiskey and even recently the growth of Japanese whisky, international credibility is viewed strongly by Australian consumers,” Marsh says.

“On top of this, the different climates of these areas allow for a different barrel and aging process which produces unique flavours.”

There can be no doubt that North America has produced some of the most iconic beer brands in the world, that are celebrated around the globe.

Yet a strong domestic brewing scene again might leave some retailers wondering if there is still value in the North American beer sector.

Kym Bonollo, CUB’s Head of international Beer, tackles this issue head-on, saying: “Within the Australian craft beer market, more than 97 per cent of it is domestic, and about one per cent is North American.”

Where North American beers tend to shine, according to Bonollo, is with larger,big-brand offerings that continue to appeal to Australian drinkers.

“When we think North American beer, itis usually the more mainstream imports like Corona and Budweiser that come to mind and are popular in-store,” Bonollo said.

“Budweiser is a top 10 international brand in Australia, worth over $20m in retail sales value annually.

This popularity could be part of a wider trend towards more approachable beers, as Bonollo continued: “Australiandrinkers have over time migrated towards easier drinking brews that are lower in bitterness, to the point where we now see two-thirds of the Australian beer market value sitting below 20 InternationalBitterness Units (IBU).

“The top 10 North American beers in Australia average just 10 IBU, and itis this alignment in easy-drinking, low bitterness styles that is at the core of why North American beers resonate with Australia drinkers.”

Besides the science of bitterness, Bonollo says the irrepressible cultural heft of the United States also benefits the stature of North American beers in Australia.

“We believe that Australia’s long-term cultural interest in America also crosses over into beer,” Bonollo said.

“The big and popular American beer brands we see in movies, TV shows and sport embed ‘Americana equity’ into those beers we see when walking into an Australian bottle shop.”

Another of these beer brands is Pabst Blue Ribbon (or PBR) which is now produced in Australia by Tribe Breweries. Tribe’s Marketing Director, Cameron MacFarlane described PBR as “an iconic North American brand for many decades” and “a counterpoint to mainstream Australian lager.”

Within its home nation, PBR has one of the more interesting brand journeys, recovering from a two decade decline to become a favourite of the counter-cultural ‘hipster’ demographic of the 21st century.

“PBR has always attracted countercultural demographics globally, particularly within the arts, music and sport scenes,” MacFarlane says.

“PBR is highly sessionable and provides an exciting, no-nonsense beer experience that really is designed for inspiring moments of celebration and fun amongst these communities.”

Despite the dominance of more ‘mainstream’, big brand lagers in the North American beer category, Lion is backing Voodoo Ranger, a craft-style IPA, to buck the trend. Jonny Day, Lion’s Brand Ambassador for Voodoo Ranger, believes that the position of the US at the cutting edge of the global craft industry leaves the beer well positioned.

“The US is a very mature craft market renowned for flavourful IPAs and trends are seen there well before they hit Australia,” Day said.

And while Budweiser and PBR are tapping into the preference for sessionable, easy drinking beers, Voodoo Ranger is targeting the other end of the flavour spectrum.

“Voodoo is in the big flavourful space – when craft drinkers pick up a Voodoo IPA they know it’s going to be packed full of flavour and make an impact, something we know they love to then go and share with their mates,” Day said.

All the brands in this story agreed that North American drinks require a dedicated and different approach to standard Australian products. In particular, the strength of American culture was identified as something that retailers can translate into sales.

“Our key advice to retailers would be definitely to maximise opportunities where PBR is well regarded or has ties – such as American inspired events or national days,” MacFarlane says.

“Fourth of July and Superbowl are obvious occasions for North American beers and should be part of retailers’ promotional calendars.”

This perspective is shared by Bonollo, who said: “We recommend taking full advantage of key North American sporting events, specifically around the NFL Superbowl and NBA playoffs.

“Budweiser will also continue as the official beer sponsor for the FIFA World Cup in 2022. The key North American holiday occasion of scale for Australian activation is Halloween.”

Another commonality amongst brands was the recommendation for a wide North American range.

“It is crucial that retailers continue to offer a diverse range of international brands to cover a broad range of shopper preferences and occasions that people are looking for,” Bonollo says.

MacFarlane concurs, saying: “It’s really important to not neglect the value in some of these North American alcohol brands, particularly those with long histories.”

While Milne concluded: “I think having range to offer is key. Consumers are clearly seeing a more premium offering, so if you are only stocking mainstream brands then you are missing out on a higher average basket weight and more frequent purchasing.”

Australia’s wine industry is one of the world’s best, and as such, it can be difficult for wines from other nations to break in. Yet, there are some particularly strong brand narratives out there that retailers should not overlook completely, and none are as strong as Robert Mondavi Private Selection, as Constellation Brand’s Brand and Activation Manager, Andrew Theodosi, explains.

“Long before California’s Central Coast became synonymous with exceptional wine, legendary winemaker Robert Mondavi pioneered the region,” Theodosi says.

“He inherently recognised the Central Coast’s potential to produce phenomenal grapes—and, ultimately, wines of the utmost quality—at a more accessible price.”

Theodosi also believes that Californian conditions offer a crucial point of difference to Australian wines.

“The California growing region has a perfect blend of fog, wind, chill, and warm sunshine, almost every day,” he said.

“These conditions cause the grapes to ripen slowly, producing intense, pure fruit flavour. The warm days and cool nights of California provide ideal ripening conditions for the grapes to develop complex flavours and deep, concentrated colour.”