Bourbon Boom Overseas Fuels Record Spirits Sales
Bourbon is nicknamed "America's native spirit" for a reason. By law it must be made here. And for most of its history, it has only been enjoyed here.
But this domestic bar staple is gaining momentum internationally, thanks to favorable trading conditions, aggressive marketing and a growing appetite among foreigners for U.S. liquor. Spirits exports grew 16.5% last year, reaching a record $1.34 billion -- outpacing wine's $1.14 billion and dwarfing beer's $334 million, according to new data from the Distilled Spirits Council of the United States, a liquor trade group. Whiskey, including bourbon, accounts for 69% of spirits exports.
The growth is fueled by lower tariffs, a weaker dollar that makes exports less expensive and growing middle classes in developing markets, according to the trade group. "They have more money to spend on more expensive internationally traded foods and spirits and wines then they did before," said Christine LoCascio, the spirits council's senior VP-international trade.
But why U.S. booze? "Maybe American policies aren't necessarily the favorite in the world, but everybody loves American products and American culture," said Charles Cowdery, author of "Bourbon, Straight: The Uncut and Unfiltered Story of American Whiskey." "So it's Levi's and it's American pop music and it's American movies and it's American whiskey. So that 's how it's sold in the rest of the world. It's sold as America."
Even with the growth, U.S. whiskey remains a small player overall, accounting for about 1% of global spirits volume and only about 10% of total whiskey volume internationally, according to Euromonitor International. Blended Scotch, by comparison, makes up about 27% of the world whiskey market.
Still, U.S. whiskey has "huge potential to grow," said Jeremy Cunnington, Euromonitor's senior drinks analyst. For one, it's a fairly new product in many countries, so there's a curiosity factor. Also, "it's got a relatively easy taste on the palate, so it can be appealing for people who aren't quite ready to move to the more complex taste of Scotch," Mr. Cunnington said.
U.S. whiskey had a minuscule presence abroad until about 25 years ago. At that point, marketers started looking overseas to replace the sagging U.S. demand at the time, as drinkers here turned to other options, such as vodka, gin, tequila and even drugs, Mr. Cowdery said. Japan, in particular, proved to be fertile ground. "Younger Japanese men didn't want to drink what their fathers drank. Their fathers drank Scotch. So they wanted to drink something else. So a bourbon boom started."
Since then, the trend has spread to the point where leading U.S. brand Jack Daniel's now exports to more than 130 countries, generating more than half its business from foreign markets, according to brand owner Brown-Forman. Even so, Jack Daniel's still ranks seventh among whiskeys globally, according to a recent report from Drinks International. Jim Beam, sold in 110 countries, ranks 11th. The top seller is Bagpiper brand from India, which remains a large but fairly isolated market due to high tariffs on spirits.
Euromonitor forecasts that through 2016, 70% of yearly U.S. whiskey growth will come from non-U.S. markets. As such, American companies are beefing up marketing overseas. Louisville, Ky.-based Brown-Forman first launched a globalization strategy in 1994 and now has major sales and marketing operations in London, Sydney, Hamburg, Guadalajara and Warsaw. Beam Inc., the Illinois-based liquor company that owns Jim Beam, has put global marketing muscle behind a black-cherry flavored Jim Beam line extension called Red Stag, which launched in the U.S. in 2009 and is now in 22 countries. Jim Beam's U.S. creative agency is Strawberry Frog but it uses various overseas agencies for global work.
At the same time, companies are getting a boost from Discus (Distilled Spirits Council of the United States), which conducts whiskey seminars around the world. It also brings in foreign journalists for tours of the American Whiskey Trail, which includes stops at distilleries in Kentucky and Tennessee as well as George Washington's Distillery at Mount Vernon. The efforts are partly funded by a federal government program designed to promote U.S. agriculture commodities and products.
No matter where U.S. whiskeys go, they never seem to stray from their roots in the American South. A tagline from a recent print ad in the U.K. for Jack Daniel's , for instance, states that "from some bar stools, you can see all the way to Tennessee,"referring to its distillery in Lynchburg. "People everywhere connect with the genuine, unpretentious nature of the place and the people," said a spokeswoman. The brand's agency is Arnold .
Even smaller brands are heading abroad. Consider Maker's Mark, which is owned by Beam and is made in tiny Loretto, Ky. The brand's global breakthrough came from a bit of luck after Toyota opened a Camry plant in Kentucky in the 1980s. Japanese managers "all landed here in Kentucky as Scotch drinkers, and it didn't take long before they were introduced to Maker's Mark," said Chief Operating Officer Rob Samuels. "And when they would return home they would take bottles of Maker's Mark back to Japan." Today, Maker's sells in a dozen large international cities, including London, Sydney and Berlin.
Of course, marketers still must adapt to local traditions and flavors. In Asia, for instance, bourbon is mixed with fruit juice; in Holland it's paired with bitter lemon, said Max Shapira, president of Heaven Hill Distilleries, which owns the Evan Williams brand. "We have to bend our traditional rules a bit," he said.