BROWN-FORMAN TAKES FIGHT TO MARKET LEADER FIREBALL
Cinnamon toast: Jack Daniel’s takes Tennessee Fire whiskey to further five US states
CEO Paul Varga was speaking as Brown-Forman reported its Q1 2015 results last Wednesday; net sales grew 3% to $921m while reported operating income was up 1% to $221m.
Brown-Forman is keen to gatecrash the cinnamon success of Sazerac’s Fireball Whisky (see photo below) although it might which sold 1.9m cases in 2013; the New Orleans-based brand is well entrenched in bars among younger drinkers nationwide.
Chatting with analysts about trials for Tennessee Fire (cinnamon liqueur blended with Jack Daniel's whiskey), CFO Jane Morreau said flavored whiskeys accounted for around 45% of US whiskey volume growth sales in 2013.
Demographic factors played a key role in their success, she added, noting increased interest from women and minorities with changing taste profiles – which millennials also bring to the market.
'Just a case of getting our ducks in a row'
33% ABV spirit Jack Daniel’s Tennessee Fire had seen success Oregon, Pennsylvania and Tennessee since its April launch, Morreau said, with “minimal cannibalization” of either the core Jack Daniel’s brand or Tennessee Honey, and Brown-Forman plans to launch it in a further five states this October.
“We’ve got some work still to do in observing a little bit of the performance in those original three states and we want to keep looking at how best to sell and market the brand when we go to a broader geographic platform,” Varga said.
“But all the signs are really encouraging that we’re going to be well accepted with it. It’s just getting our ducks in the row.”
Varga said it was hard to predict how many flavored varieties the Jack Daniel’s brand could carry long term, although Brown-Forman wants to build Fire along similar lines to Tennessee Honey (albeit apparently with a more rugged, masculine edge) i.e. develop it as a proper brand extension rather than (in Morreau’s words) take a “flavor of the week” approach.
The latter is a wildly popular line extension that continues to grow three years after its launch – the global roll-out continues in markets including France – and became a 1m case/year brand in January.
Innovating...but protecting the Jack Daniel's trademark
“It’s harder for a trademark like this – you want to be innovative but we are simultaneously quite protective,” Varga said of the broader brand Jack Daniel’s.
Until now, he added, no whiskey flavors aside from honey and cinnamon had really achieved significant volume sales in North America – Varga said Fire tastes “real different” to its stable mates.
“It doesn’t mean there won’t be broad acceptance of other forms because there is no way six or seven years ago I would have been forecasting two pretty significant, very scaled volumetric markets associated with honey-flavored whiskey and cinnamon-flavored whiskey,” he said.
Brown-Forman’s boss also said the firm had seen success selling limited quantities of rye whiskey in the US over the last couple of years into “very limited distribution”.
“So that’s a different flavored whiskey if not necessarily what I would call the liqueur type of flavored whiskey that you are referring to.
“That kind of innovation could be important as well.”
Selective, ultra-premium products
A third area of innovation for the Jack Daniel’s brand is the “higher rung of the ultra-premium ladder”, Varga said – citing Jack Daniel’s Gold No.27 and Sinatra as limited edition products.
Such products also satisfied the consumer desire for discovery, Morreau said of such products, which Brown-Forman plans to release selectively in future.
“What’s really important is not only the marketing but if in fact we get these two any sort of size they could become important to particular markets…because they’re very efficient in their production and profit,” he added.
*Fireball image: m01229/Flickr