Competition hots up in Irish whiskey
By just-drinks.com editorial team | 12 July 2006
Pernod Ricard's Irish whiskey brand Jameson has reached the 2m-case mark but the landscape of the Irish whiskey sector has been transformed by the French company's decision to sell the Bushmills brand to Diageo last year. Ben Cooper reports.
Pernod Ricard has rightly revelled in the achievement last month of its Jameson Irish whiskey brand reaching sales of 2m cases. It's a notable milestone and demonstrates just how far Pernod Ricard has taken Jameson since acquiring the brand as part of Irish Distillers in 1988, when sales were just over 400,000 cases.
But in spite of Jameson's sustained strong growth and status as the leading Irish whiskey, the view of the rest of the category from its lofty perch has changed substantially since Pernod Ricard sold the Bushmills brand to Diageo last year in return for the latter not involving itself in a rival bid for Allied Domecq.
However, in spite of the fact that Irish Distillers previously had the Irish whiskey sector all to itself, with the exception of Cantrell & Cochrane-owned Tullamore Dew, the company does not seem unduly concerned that there is now another major spirits force at large in the sector.
"We sold Bushmills for very strong strategic reasons," said Kieran Tobin, corporate affairs director at Irish Distillers. "It gave us the opportunity to redouble our efforts and refocus on Jameson. The focus is now entirely on Jameson and the brand is benefiting from that extra focus."
The emphasis on brand is significant. Pernod Ricard sees Jameson as competing with other spirits brands internationally, and not other Irish whiskies. "We benchmark ourselves against other international brands of spirits," Tobin told just-drinks. "We grow the brand and the context for the brand is the international spirits market."
Moreover, the company has serious plans for accelerating Jameson's growth, targeting sales of 3.5m cases by 2009. Jameson's dominant share of the 4m-case Irish whiskey market is just "a sum, a bit of mathematics", Tobin says. And the numbers which are of more interest are the growth figures for the brand across a range of markets.
The brand recorded growth of more than 20% in the US last year, while sales in travel retail rose by 16%. South Africa grew by almost 40%, while sales in Russia doubled. Tobin said some 26 of Jameson's markets recorded double-digit growth last year. The principal markets for the brand are Ireland, the US, the UK, France, Spain and Travel Retail.
Last year, the company put EUR40m (US$50.8m) behind Jameson, launching the ongoing Beyond the Obvious campaign. "We are targeting premium brand consumers, who are open to whisky," says Tobin. "We are not just after whisky drinkers. It's not firmly anchored in its Irishness. It is a very international approach. Jameson is strong on heritage but we don't look for generic markers for Irish whiskey."
This may be where Pernod Ricard and new arrival Diageo see things differently.
While Pernod Ricard prefers to position Jameson as an international spirit brand, it is quite clear that Diageo sees Bushmills in a clearly identifiable Irish whiskey category, one which not only has a lot of growth potential but which offers the possibility for share growth too.
"The integration of Bushmills into the Diageo portfolio is fantastic news for the Irish whiskey category," Charles Allen, global director of Diageo's Whisk(e)y Portfolio Brands, told just-drinks. "Now that it has real investment and focus behind it, the fascinating facts about Bushmills will bring interest and substance to the category as a whole."
Moreover, while Pernod points to the advantages of being able to focus on Jameson, Diageo sees Bushmills benefiting from being the sole Irish whiskey in a portfolio. "Bushmills is now the only Irish whiskey brand in a portfolio whereas previously it had to compete for attention," Allen said. "Its integration into the Diageo family is now complete and the brand is fully embedded in our marketing and sales teams. Bushmills is already benefiting from Diageo's expertise within whisky, and its reach and focus within the premium drinks sector."
Pernod Ricard may choose not to play the Irish card all that strongly with Jameson, but Diageo clearly takes a different view. In Baileys and Guinness, Diageo already has two leading Irish brands in its portfolio, and the company has been more than happy to use these brands' Irish provenance as a selling-point and tap into the popularity of Irish culture internationally.
"Promotions like our St Patrick's Day association with Guinness and Baileys show the benefit for Bushmills of being the only Irish whiskey in a drinks portfolio that includes other exceptionally popular Irish brands," Allen said. Couple this with the fact that Diageo has been a master of using generic Scottish imagery and heritage to market its Scotch whiskies, with concepts such as the Classic Malts, and it is clear where it is going with Bushmills.
Allen's enthusiasm in describing the marketing potential of Bushmills is clear. "The Old Bushmills Distillery is the world's oldest licensed distillery - an enormous, rich history of almost 400 years," he continued. "The fact that Bushmills is an actual place with a beautiful distillery that receives hundreds of thousands of visitors a year is an important aspect in opening up the Irish whiskey category to consumers. Add to this mix the legends about its heritage and its fabulous taste and we have a brand that can be the flag bearer for the category. We would be delighted if an increasingly popular Bushmills brand can benefit Ireland in the same way that brands like Johnnie Walker and Talisker benefit Scotland."
Diageo would not disclose how much it is investing behind Bushmills but did say that it was an "important" brand for the company. At the risk of raining on Pernod Ricard's parade, it is clear that Diageo scents the potential to gain ground on its rival.
And the contrasting approaches make for a fascinating contest. Indeed, it may suit Diageo that Pernod Ricard views Jameson primarily as an international spirits brand rather than an Irish whiskey. Diageo may be happy to see Jameson competing with the likes of J&B, Jack Daniel's and Bacardi while it builds on Bushmills' Irish credentials.
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