Campari America "Not a One-Trick Pony"

FILED APRIL 10, 2012

Dear Client:

It's been a busy year. Since January Campari America has changed its name from Skyy Spirits, appointed a new coo (Paolo Perego), announced a new $44 million packaging facility at the Wild Turkey distillery in Kentucky and joined the Distilled Spirits Council. All these things suggest a renewed focus on its North American and US businesses. Chief Gerry Ruvo told WSD it is all part of their evolution.

"We were a one-brand company back in 1992, Skyy Spirits, and it was like that for 20 years. Although it was a huge success, we've expanded our portfolio dramatically in the last six or seven years, ever since Campari has taken a majority ownership in the company." Their portfolio now includes 25 brands that span all price points and categories. "So we felt it was right for a name change that would more closely align us with our parent. And we needed the industry to really know that we are not a one-trick pony.. We have broad resources behind these brands that are coming from Gruppo Campari, which is the sixth largest premium spirits company in the world."

ON WILD TURKEY HONEY: Last year Wild Turkey American Honey grew "right around 30%," said Gerry. "It really was the pioneer of the recent boom in flavored whisky products to the degree it is now being copied by every single one of our competitors basically." American Honey tends to be split pretty evenly between the on- and off-premise "because consumers love to do a shot of American Honey, but they also buy it and have it at home in the freezer."

"I really love innovation - we're starting to see it steer the bourbon category. It's a clear demonstration of not just the health of the whiskey category but the industry overall. There is the famous quote, 'necessity is the mother of invention,' but I think in the case of bourbon specifically that flavor is the mother of invention."

And that innovation is being driven by the consumers. "Consumers are demanding high quality products with more flavor. There are flavor nomads out there that are not content with some of the old flavors. They want new choices, and they want great quality. I think there is a huge opportunity in every category in the business, and we're seeing it in the bourbon area specifically with American Honey."

So would they consider launching other Wild Turkey flavors? "We're looking at every single category. I can't get into it specifically, but we are all looking in the bourbon category. Whether it ends up as American Honey extension or Wild Turkey or even something else, we think there's great opportunity there."

WILD TURKEY FLAGSHIP BENEFITTING: While Honey has been a successful extension, the Wild Turkey flagship brand is performing strongly as well. "We're hot with Wild Turkey as well and interestingly enough in different areas. It's definitely a younger consumer - somewhere between legal drinking age and 35 - that is entering the bourbon category. Maybe tasting a brand like American Honey and then maybe" moving on to regular bourbon. Wild Turkey 101 is particularly strong off-premise. "It has a very loyal consumer, and its strength is in the middle of the country."

"So I think what's happened is American Honey is a real bright spot for the company. It's bringing more consumers into the Wild Turkey franchise overall who are discovering there's a lot of things going on in this whiskey area."

Campari is also backing Wild Turkey with new levels of investment around the "sometimes controversial" 'Give 'Em The Bird Campaign.' "We are going to go on TV with that in another approximately 30 to 45 days," said Gerry, which marks the first time that Wild Turkey has been on television in its over 100 years in the United States.

They also have a social media presence. "Our Facebook fans have tripled in the last two months."

RYE AND 81 ALSO GROWING: "Wild Turkey Rye is really hot for us. We constantly run out of it, we can't keep it in stock." It is mostly an on-premise product. "Lots of mixologists love our Rye," said Gerry. "It's a great brand to use in a lot of different cocktails."

Wild Turkey 81 is their newest entry. "It has the incredible Wild Turkey flavor but with a little less alcohol than our 101, our standard bearer, and it's doing incredibly well with younger consumers," said Gerry. 81 is targeted more on the on-premise because of its mixability.

"It's really the first what we call truly mixable bourbon and it has exceeded our expectations right out of the gate, which has been basically in the last six months. Rye is also available in this 81 proof. So we're doing a lot in this area."

BEHIND THE WILD TURKEY GROWTH: So is it mainly Honey and increased advertising that is growing the Wild Turkey family? Of course those things help, but Gerry points out that the bourbon and whiskey categories as a whole are growing. "Consumers are interested in whiskey, whether that's bourbon, American whiskey, Scotch whiskey or Japanese whiskey."

It also helps that Wild Turkey is getting more support from all angles. The prior owners, Pernod Ricard, "weren't spending on the brand to really drive the brand, at least here in the United States. And we're doing that now." You see that with the new ad campaign, the new packaging facility and the new visitor's centers that will be unveiled this summer. All of that is in addition to a $50 million expansion to the Wild Turkey distillery in 2011 that more than doubled its production. "We've done all that because we're going to aggressively promote the brand for a long period. It's obviously for the extended future, and we wanted to make sure we took control of everything that we were doing, including the bottling piece."

After they bought Wild Turkey from Pernod is 2009 for $575 million, "it took us a little while to get to know the brand and the consumers because we weren't in this category before. So I think what you're seeing behind the big investment push is just that we believe so much in the category. Even more so, we believe in the Wild Turkey brand. It is an American icon." In all, Campari has dedicated $100 million in investments to Wild Turkey over the past three years.

Stay tuned tomorrow for Gerry's thoughts on Skyy, the vodka category at large and the health of the industry.


You may recall last month the Pennsylvania Senate unanimously passed a bill that would allow locals to purchase up to 24 bottles of wine a month for home delivery. Now the legislation sits in the House where some legislators are trying to tie it to a larger proposal to privatize wine and spirits sales in the state. "Direct shipment is part of an overhaul of privatization legislation and which we are working with Gov. [Tom] Corbett on an amendment," spokesman Steve Miskin said as reported by The Patriot-News. Recall that Gov Corbett supports privatization.

That privatization proposal has faced a major overhaul since it was first introduced. In December legislators scrapped a measure that would require the state to sell off its liquor stores to the highest bidders. Instead, the PLCB would continue to operate its stores selling wine and spirits. However, the legislation would add 1,200 "enhanced distributor" licenses that would allow beer distributors and others to pay $50,000 for a license to sell six-packs of beer and wine. [You can read more here].

According to the article, more amendments to the privatization bill are expected, and it could face a vote this spring. If the direct-shipping bill is added to this larger privatization proposal, then a number of state legislators predict it would likely face a delay in passing.

Until tomorrow, Megan

"To lengthen thy life, lessen thy meals."
Benjamin Franklin

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