I love whiskey. As it turns out, so does a huge (and rapidly growing) pool of people. Global whiskey consumption has been on the rise in recent years, and shows no signs of slowing down. In fact, the world collectively consumed 3 billion liters of the stuff in 2013! And as that appetite to imbibe has grown, few types of whiskey are hotter than Bourbon.
Bourbon, an all-American tradition dating to the late 1700s, is a slightly sweeter variant of whiskey, and the primary style produced in the United States. In addition to its rebirth in mainstream culture and soaring popularity of late, bourbon has reached another milestone: as of 2013 it’s officially a multi-billion-dollar business. The thirst for Bourbon and other American whiskies extends well beyond borders as well. Over the past decade, demand in many emerging markets has increased by 20-50 fold. Savvy foreign investors have caught a whiff of the liquid gold opportunity too, eager for a taste of the profit. A landmark example is the pending $16B acquisition of Beam, Inc. by Suntory, Japan’s preeminent producer and distributor or alcoholic beverages.
In their February issue, Fortune magazine chronicles the lucrative revival of the American whiskey industry. Following its golden era in the 50s and 60s, domestic whiskey fell on hard times as the industry death spiraled and many labels were (pardon the pun) on the rocks, focusing on value over quality in a race to the bottom. Consequently, consumers fled, disassociating themselves from a beverage perceived to be out-dated, unrefined and down-market. But as is so often the case, the turning point for the industry came in the form of a disruptive model. In the late 80s, a couple of astute distilleries (most notably the aforementioned Beam) boldly decided to turn the prevailing wisdom at the time on its head and invest in producing a truly premium product. Cue the return of small batches, craft process, artisanal ingredients, and longer aging, and what we’ve got is a recipe for consumer success.
The bet on a premium move has paid off, but as the article also rightly points out, there’s more to the story. Beyond product differentiation (smart as it was), a harmony of factors is responsible for the turnaround. A refocus on quality and craftsmanship over quantity or value plays perfectly to a modern consumer base eager for an experience, not merely a forgettable product. The reemergence of genuine mixology and cocktailian culture dovetails with powerful pop-culture phenomena and hit “period-piece” TV series (Mad Men or Boardwalk Empire, anyone?). The trend also parallels the craft beer movement and emergence of gastro-pubs over the past decade. In a broader sense the popularity of whiskey, and Bourbon in particular, echoes a deeply seated desire for authenticity. The groundswell that began in the mid 90s with the first release of those premium products has grown into a tsunami as this desire for simplicity and tradition proliferated into the mainstream consumption of premium goods.
At Kelton, we’re no novices when it comes whiskey, or the broader alcoholic beverages category. We’ve lead numerous branding and positioning engagements with labels like Jägermeister, Mike’s, and MillerCoors, and have studied in depth industry trends and related consumer behavior. But it’s not all work and no play – we also recently held a full–fledged whiskey tasting event in our LA office, complete with an infotainment–filled trip around the wide world of whiskey. We’re eager to see how the industry continues to evolve, and in the meantime as it does…cheers!