The brand also sells more than 100,000 cases in an additional 14 countries.
Bacardi also has as a similarly enviable global spread, selling more than 1m
cases ...
spirits review The Top 50 International brands Alexander Smith casts doubt on the idea that the big are always getting bigger in the IWSR’s latest analysis It has become almost axiomatic that the big international brands are getting bigger, generally at the expense of national and local brands. The latest IWSR Top 50 International Brands report casts some doubt upon that conventional wisdom. On an aggregate basis, the top 50 international brands reached 253.1m nine-litre cases in 2011, a rise of 3.5% over 2010. Yet, those brands outside the top 50, many of which are national or local brands, increased by 6.4% to 2.73bn cases. It doesn’t seem to be a one-year aberration either. The overall share of the global spirits market accounted for by the top 50 international brands has fallen by two points over the last five years – from 10.4% to 8.4%. It is fair to conclude that local and national brands are now outpacing the growth of international brands. Of course, in value terms the share accounted for by the top 50 is much higher. The top-rated Smirnoff brand sells more than 1m cases in five different countries spanning four different regions. India is likely to be Smirnoff’s next 1m-case market – and the first in Asia. The brand also sells more than 100,000 cases in an additional 14 countries. Bacardi also has as a similarly enviable global spread, selling more than 1m cases in four countries, and
more than 100,000 in an additional 15 markets. Johnnie Walker sells more than 1m cases in three countries and more than 100,000 cases in an incredible 29 countries. Johnnie Walker also sells more than 1m cases in travel retail. Jack Daniel’s has two million-case markets and 11 over 100,000, while Absolut sells more than 1m cases in one market (two if you include travel retail) and has an additional 15 over 100,000. Another common feature of many of the most successful brands in the top 50 list is that they draw a large, but declining proportion of sales from the dynamic US market. That doesn’t necessarily mean that the US has become less important, but rather that these brands have used success in the US as a springboard for international success. Between 2007 and 2011, the share of Smirnoff’s sales accounted for by the US market fell from 39.2% to 37.4%. Other brands displayed a similar pattern: Bacardi from 45.8% to
Between 2007 and 2011, the share of Smirnoff’s sales accounted for by the US fell from 39.2% to 37.4% 43.6%, Absolut from 52% to 45.4%, Jack Daniel’s from 54.8% to 48.2%, Captain Morgan from 78.4% to 66.3%, Jägermeister from 45.8% to 38.3%, Cuervo from 67.5% to 59.6%, and Hennessy from 54.4% to 48.5%, to name just a few. If you want to establish an international brand, it is probably a good strategy to establish it in the US and then drive it beyond that market. The top five brands – Smirnoff, Bacardi, Johnnie Walker, Absolut and Jack Daniel’s – all posted solid gains in 2011. The global nature of these brands almost serves as a hedge against the economic and regulatory vagaries of specific regional and country markets. Smirnoff overtook Bacardi in 2004 to become the leading international brand and has never looked back. During the decade between 2002 and 2011, Smirnoff’s sales have
Top 50 International Spirits Brands (domestic and duty free/travel retail): 1-25 Rank/Brand
Category
Owner
1. Smirnoff 2. Bacardi 3. Johnnie Walker 4. Absolut 5. Jack Daniel’s 6. Captain Morgan 7. Nemiroff 8. Jägermeister 9. Khlibniy Dar 10. Baileys 11. Khortytsa 12. Ballantine’s 13. Jim Beam 14. Cuervo 15 Ricard 16. Chivas Regal 17. Grant’s 18. Hennessy 19. J&B 20. Gordon’s 21. Brugal 22. Havana Club 23. Grey Goose 24. Fernet-Branca 25. Jameson
Vodka Rum Scotch whisky Vodka US whiskey Rum Vodka Bitters/Spirit aperitifs Vodka Liqueurs Vodka Scotch whisky US whiskey Tequila Aniseed Scotch whisky Scotch whisky Cognac/Armagnac Scotch whisky Gin Rum Rum Vodka Bitters/Spirit aperitifs Irish whiskey
Diageo Bacardi-Martini Diageo Pernod Ricard Brown-Forman Diageo Nemiroff Mast-Jägermeister Bayadera Diageo Image Pernod Ricard Beam Cuervo Pernod Ricard Pernod Ricard Wm Grant & Sons LVMH Diageo Diageo Edrington Group Pernod Ricard Bacardi-Martini Fratelli Branca Pernod Ricard
All volumes in ’000s of 9-litre cases
14 August 2012
Volume 2006
Volume 2010
Volume 2011
% change 2010-’11
% CAGR 2006-’11
21,732.8 18,833.3 13,482.7 9,878.7 9,093.7 7,139.5 7,812.8 5,873.2 1,514.8 6,711.0 6,911.3 5,792.0 5,072.8 5,514.3 5,665.0 4,132.4 4,164.1 4,138.0 5,414.7 4,501.2 4,115.7 2,688.7 2,851.7 1,869.2 2,106.2
24,413.8 18,138.0 15,497.9 10,880.2 10,329.5 8,898.1 9,186.0 6,540.2 7,864.4 6,574.4 6,534.6 6,069.3 5,469.9 5,596.0 5,388.0 4,592.3 4,871.3 4,419.0 4,558.6 4,377.1 4,252.0 3,725.0 3,620.5 3,053.3 3,105.0
25,197.0 18,411.4 16,680.6 11,184.6 10,949.0 9,290.7 7,445.8 6,757.0 6,728.2 6,538.2 6,192.5 6,174.0 5,935.1 5,502.0 5,266.3 4,875.2 4,819.8 4,708.7 4,368.1 4,308.8 3,986.8 3,839.4 3,768.7 3,712.8 3,590.4
3.2 1.5 7.6 2.8 6.0 4.4 -18.9 3.3 -14.5 -0.6 -5.2 1.7 8.5 -1.7 -2.3 6.2 -1.1 6.6 -4.2 -1.6 -6.2 3.1 4.1 21.6 15.6
3.0 -0.5 4.4 2.5 3.8 5.4 -1.0 2.8 34.7 -0.5 -2.2 1.3 3.2 Min -1.4 3.4 3.0 2.6 -4.2 -0.9 -0.6 7.4 5.7 14.7 11.3
Source: The IWSR Database 2012 ©
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spirits review Top 50 international brands cont’d grown from 17.14m cases to 25.19m cases. Meanwhile, Bacardi has actually lost ground, falling from 19m to 18.4m. Bacardi returned to growth in 2011, rising by 1.5% over 2010, but that was still around half the growth rate of Smirnoff. Worryingly, the brand continues to decline in its two largest markets – the US and Mexico. Twelve vodkas made this year’s list. Within this group, a handful tend to share a similar premium positioning and compete head-tohead around the world, particularly in the critical US market. Absolut can lay claim to having pioneered the premium vodka sector in the US back in the 1980s and continues to be in the driving seat. Absolut’s volume sales increased by 2.8% to 11.18m cases in 2011. The brand struggled in the US, falling by 1.1% to 4.57m cases. It also declined in Mexico, Spain and the UK. That was more than compensated by big gains in Brazil (+25% to 427,000 cases) and Germany (+7.1% to 392,800 cases). From a lower base, Finlandia saw volume growth (+6.3%), as did Ketel One (+6.4%),
Russian Standard (+10.8%) and Skyy (+3.5%). Finlandia exceeded 3m cases for the first time, despite falling in the US. Russian Standard is a good example of a brand that has transitioned from being chiefly sold in one market to becoming fully international. The brand’s progress has been astounding, rising from 1.04m cases in 2007 to 2.25m cases in 2011. Moreover, the share of sales derived from Russia has fallen over that period, from 72.2% to around 39%. Russian Standard has enjoyed particular success in the UK, rising by around 20% to 372,500 cases. Speaking to the IWSR Magazine last year, Russian Standard owner and president Roustam Tariko said: “Our goal is very simple. We want to be a top three global vodka brand, along with Smirnoff and Absolut, by the end of this year. That means we have to be present in different markets. We have to continue to be the dominant premium player in Russia, which we are. We are also doing very well in many markets. Two years ago, 70% of Russian Standard was sold in Russia and 30% exported. Now it is the reverse.” The advance of Russian Standard over the past
Russian Standard has moved to becoming fully international
Top 50 International Spirits Brands (domestic and duty free/travel retail):26-50 Rank/Brand
Category
Owner
26. Stolichnaya 27. Malibu 28. Skyy 29. Blender’s Pride 30. Dewar’s 31. Finlandia 32. Famous Grouse 33. De Kuyper 34. Campari 35. Sobieski 36. Russian Standard 37. Beefeater 38. Bell’s 39. Label 5 40. Bombay 41. Ketel One 42. Teacher’s 43. Sauza 44. Tanqueray 45. Wm Lawson’s 46. Southern Comfort 47. Canadian Club 48. Eristoff 49. Rémy Martin 50. Kahlúa Top 50 brands total Others Total
Vodka Liqueurs Vodka Other whisk(e)y Scotch whisky Vodka Scotch whisky Liqueurs Bitters/Spirit aperitifs Vodka Vodka Gin Scotch whisky Scotch whisky Gin Vodka Scotch whisky Tequila Gin Scotch whisky Liqueurs Canadian whisky Vodka Cognac/Armagnac Liqueurs
SPI Pernod Ricard Campari Pernod Ricard Bacardi-Martini Brown-Forman Edrington Group De Kuyper Campari Belvédère Roust Pernod Ricard Diageo La Martiniquaise Bacardi-Martini Nolet Beam Beam Diageo Bacardi-Martini Brown-Forman Beam Bacardi-Martini Rémy Cointreau Pernod Ricard
All volumes in ’000s of 9-litre cases
16 August 2012
Volume 2006
Volume 2010
Volume 2011
% change 2010-’11
% CAGR 2006-’11
5,154.4 3,178.3 2,583.2 1,097.8 3,389.5 2,398.2 3,045.4 3,343.0 2,620.5 2,189.2 1,095.7 2,257.1 1,983.7 1,537.8 1,881.4 1,771.6 1,778.4 1,885.1 2,040.1 1,250.8 2,388.5 2,066.0 1,234.1 1,648.8 2,122.4 222,950.5 2,000,724.6 2,223,675.1
3,345.5 3,356.8 3,357.3 2,865.8 3,331.1 2,933.1 2,986.4 2,883.9 2,590.7 2,884.1 2,194.7 2,317.9 2,463.6 2,094.6 2,113.5 2,039.4 1,941.3 2,083.6 1,905.5 1,555.6 2,122.8 1,945.7 1,700.8 1,622.0 1,757.7 248,347.8 2,565,479.7 2,813,827.5
3,537.9 3,482.9 3,475.7 3,461.0 3,283.7 3,117.3 2,909.3 2,832.6 2,627.2 2,577.9 2,431.6 2,379.7 2,371.3 2,335.7 2,292.3 2,170.7 2,138.0 2,124.7 2,055.8 2,048.6 1,973.5 1,895.5 1,829.4 1,777.1 1,747.7 253,107.8 2,730,859.0 2,983,966.8
5.8 3.8 3.5 20.8 -1.4 6.3 -2.6 -1.8 1.4 -10.6 10.8 2.7 -3.8 11.5 8.5 6.4 10.1 2.0 7.9 31.7 -7.0 -2.6 7.6 10.0 -0.6 1.9 6.4 6.0
-7.3 1.9 6.1 25.8 -0.6 5.4 -0.9 -3.3 0.1 3.3 17.3 1.1 3.6 8.7 4.0 4.2 3.8 2.4 0.2 10.4 -3.8 -1.7 8.2 1.5 -3.8 2.6 6.4 6.1
Source: The IWSR Database 2012 ©
spirits review several years has possibly been at the expense of Stolichnaya. 2011 was a significant year for Stolichnaya in that it finally returned to growth (+5.7% to 3.5m cases) after years of declining sales. It posted gains in nine of its top 10 markets, with Greece being the only exception. Stolichnaya’s sales in the US increased by 0.8% to 1.82m cases, the first sign that the distribution arrangement with William Grant is helping to restore the brand in that most important market.
Scotch rivals Johnnie Walker and Chivas Regal compete head to head in many markets, particularly in Asia, the Middle East and travel retail. Although both Johnnie Walker and Chivas Regal operate across different qualities, perhaps the key battleground is the 12yo reference. Both references had similar performances last year. Johnnie Walker Black rose by 4% to 5.5m cases, while Chivas 12yo increased by 4.7% to 4.49m cases. Johnnie Walker obviously has an enormous standard franchise in Johnnie Walker Red, at 9.3m cases, that Chivas Regal lacks. At the super-premium end, Chivas Regal 18yo (+25.5% to 204,510 cases) and Johnnie Walker Gold (+17.4% to 264,000 cases) both exhibited a strong performance in 2011.
Non-Scotch whiskies rise US and Irish whiskies are enjoying a renaissance and these leading brands are all exhibiting strong growth. Diageo’s Crown Royal would certainly have made the list, but failed on the regionality test. The brand still sells chiefly in the US and Canada. Jameson has enjoyed real broad-based international success, but it is in the US where it has really exploded. The brand surpassed 1m cases in the US last year and volumes increased by double-digit rates in 47 out of 50 states. Another dynamic in the US has been the growth of flavoured whiskey. Jim Beam pioneered the area with its Red Stag variant, launched at the end of 2009. In 2011, Red Stag reached 287,000 cases, a rise of some
Jameson has enjoyed real broad-based international success, but it is in the US where the brand has really seen sales explode
August 2012 17
spirits review Top 50 international brands cont’d In 2011, Red Stag’s sales rose by some 41% over 2010 41% over 2010. Other Beam lines also performed well, with the flagship Jim Beam White rising by 4% to just under 5m cases, and the premium Jim Beam Black up 13% to around 300,000 cases. Jack Daniel’s subsequently entered the flavoured market to good effect. Overall, Jack Daniel’s sales increased by 0.5% in 2011 to 4.95m cases. The Gentleman Jack and Single Barrel variants also displayed strong growth, rising by 16% each to 372,170 and 108,780 cases respectively. Also, on a global basis, Jack Daniel’s had a very successful year, rising by 5% to 10.28m cases. Significantly, Jack Daniel’s surpassed 1m cases in the UK in 2011, its second 1mcase market. Germany and France were also in double-digit growth.
China drives leading Cognac brands The leading Cognac houses were big winners in 2011, all posting strong volume and value growth. The Chinese market, and its growing appetite for higher qualities, remains the locomotive for that growth and also the main battleground. In fact, Rémy Cointreau’s decision to withdraw from the Maxxium distribution alliance in March 2009 and create its own distribution was motivated by a need to become more competitive in China. It has worked to that end. Rémy Martin’s sales in China increased by 10.1% in 2011 to 413,800 cases. Nevertheless, Rémy was outpaced in China by Hennessy (+23.6% to 897,900 cases). The Chinese economy now seems to be slowing, although there is no evidence of a fall-off in Cognac sales in 2012. The main limitation may be supply. Hennessy has been withholding supply from VS markets with a view to saving the eaux-de-vie for the higher-value Asian markets. The big houses also view development in
18 August 2011
Asia as an opportunity to take price increases. This is reflected in total retail value, which for all the major brands has outpaced volume growth. Hennessy (with an average per case value of $684) saw retail value climb from $2.89bn to $3.12bn and Rémy Martin ($845 per case) from $1.40bn to $1.49bn.
Gin premiumisation Premium and superpremium gin is in growth. Consequently, Beefeater, Tanqueray and Bombay all witnessed healthy growth and each had similar volume, just north of 2m cases. Bombay (+8.5% to 2.1m cases) and Tanqueray (+7.9% to 2.05m cases) set the pace, while Beefeater increased by a slightly more modest 2.7% to 2.37m cases. In the tequila category, although Cuervo remains far and away the leading tequila brand at 5.5m cases, there is little doubt that the brand has struggled in recent years. In 2011, global sales dipped by 1.7% and now stand at roughly the same level as they did in 2006. Meanwhile, Sauza saw sales increase by around 2% to 2.1m cases. Both Cuervo and Sauza face firm competition in the US from ultra-premium Patrón, which failed to make the list this year because of the regional requirement, but will almost certainly be a feature in coming years. Cuervo has undoubtedly been hit by the consumer trade-up to brands like Patrón, and a related consumer switch in the US from gold to silver tequila. It is difficult to say how much the
Methodology The criteria for being considered for the IWSR’s Top 50 International Spirits Brands List requires at least 20,000 cases to be sold in at least three different regions (due to its international nature, duty free counts as a region). Brands are then ranked on their global sales volumes in nine-litre cases.
uncertainty over Cuervo’s future distribution is impacting its current performance. The distribution arrangement between the brand owners, the Beckmann family, and Diageo expires in 2013. Diageo denies that it has reduced its focus on the brand, and attributes the slowdown to inventory adjustments. Eighteen brands within the list actually saw volumes decline in 2011. For those top 50 brands that did struggle, it was down to a variety of reasons. Some brands, such as J&B, Brugal and Gordon’s, with heavy exposure to economically distressed southern Europe, saw volumes hit. Pernod Ricard’s Ballantine’s also has heavy exposure to Spain, and the brand declined by 11% there, but growth in other markets, such as Poland and Japan, has helped offset that fall. Some brands, such as Grant’s, were adversely impacted by price increases in core markets, such as France. It should be remembered that volume is only part of the equation. Grant’s net retail value increased in 2011 by some $237,000 over 2010 to reach $1.14bn. Other brands were hit by legislative and regulatory changes. Ukrainian brand Khlibniy Dar was affected by the Ukrainian Government’s decision to increase the minimum retail price. Another Ukrainian brand, Nemiroff, is in the throes of a shareholder dispute and its production plant stood idle for a few months last summer. These are just a few of the sub-trends engendered within the IWSR’s top 50 list. To some extent, any brand making the list is a winner. Supported by economies of scale, massive A&P spending power and backed by highly effective organisations, there is a good chance that many of these brands will go on winning. Some will drop out and future lists may be populated with brands that are today relatively unknown or don’t yet exist. ■
Far left: Rémy Martin’s sales in China increased by 10.1% in 2011. Left: Cuervo faces firm competition in the US
