Ciroc Adding an Amaretto?

FILED MAY 23, 2013

Dear Client:

Yesterday artist and entrepreneur Sean "P. Diddy" Combs let the cat out of the bag that Ciroc would soon be introducing an Amaretto flavor. P. Diddy was visiting the Pennsylvania Liquor Control Board members in order to discuss the brand and new flavors when local media picked up on the news.

As in many other places, Ciroc is a strong seller in Pennsylvania. PLCB spokeswoman Stacy Kriedman says in the past 52 weeks they have sold 58,000 cases. Despite the immense popularity of flavored vodka, Ciroc has resisted the temptation to extend the line too quickly. Recall, the brand's flavor extensions currently only include Red Berry, Coconut and Peach. But can it sustain growth with that strategy?

"In 2012, Ciroc's growth rate benefited strongly from the launch of new flavours, especially Ciroc Peach, with the unflavoured SKU's growing much slower than the overall brand," wrote Bernstein analyst Trevor Stirling in February. The brand's rolling 3 month trends to February were down 9%, compared to 81% growth during the year Diageo launched Peach, according to Bernstein.

P. Diddy, who has represented the brand since 2007, has a net worth of $580 million, most of which can be attributed to his deal with Ciroc, according to Forbes. You may also recall in 2011 P. Diddy said he was looking to get involved with tequila (see WSD 12-21-2011 ). At the time P. Diddy boasted that we would "probably" see him go toe to toe with John Paul Jones DeJoria (who co-founded Patron) within a year. Should we expect to see something from him soon or has the idea fallen by the wayside? As of press time, Diageo was unable to comment on this story.

FLAVORED PRODUCTS ACCOUNT FOR HALF OF 2013 NEW ENTRANTS

Spirits innovation and extensions are laying the groundwork to reach new heights in 2013. Year-to-date there have been 120 new spirits products introduced, according to on-premise research firm Technomic. In 2012 there were 739, according to DISCUS. Thus far there are nearly 60 new flavored products, including:

- 23 cordials and liqueurs
- 21 flavored vodkas
- 7 flavored rums
- 6 flavored whiskies.

As most of the "normal" flavors are pretty over saturated, there's nowhere to go but further towards the unusual. "We're seeing unexpected flavors, such as Pernod Ricard's Mama Walker's line of breakfast-inspired liqueurs, involving flavors like Maple Bacon and Blueberry Pancake. The dessert trend is continuing in vodka, with Smirnoff Sorbet Light in Mango Passionfruit and Raspberry Pomegranate launching, and Beam adding Rainbow Sherbert to the already extensive Pinnacle line-up. Spice is showing up in whiskeys and liqueurs, and exotic fruit and floral flavors are also still on trend," says Donna Hood Crecca, Technomic's senior director of adult beverage resource.

EASTER TIMING SKEWS WINE GROWTH IN APRIL

Due to the timing of Easter this year, wine sales and volumes took a dive for the 4 weeks to April 27 in all Nielsen-measured outlets. Sales were down 0.4% in conjunction with a 1.1% drop in volumes. Most categories aligned with these trends, but we noticed there were some with strong enough sales to buck the declines.

IMPORTS IN THE BLACK: Overall, import table wine sales were down nearly 3%. But New Zealand (9.9%), Argentine (11.3%) and Spanish (5.7%) imports all managed to stay in the black. They were also the only imports to raise price. New Zealand and Spanish wines increased by 1 cent, while Argentine wine was up 3 cents.

$15-$20 WINES LOSE FAVOR: Although they all decelerated a bit, every pricing segment delivered increases with the exception of $6-$9 and $15-$20 wines. The $6-$9 price segment, down 8.3%, has been ailing for a while, so that's not much of a surprise. However, in 2012 the $15-$20 displayed very similar growth to the $12-$15 category. But for this period the $15-$20 segment dropped 1.8%, while the $12-$15 segment pulled ahead with a 3.7% increase.

The $9-$12 sweet spot continued to stay on top, up 5.4%, followed by $20 and above price segment up 3.6%. The $0-$3 and $3-$6 price segments were up 0.9% and 0.6% respectively.

GENERIC WINES OUTPACE VARIETALS: While single varietal wine sales dropped 0.4%, generic wines were up 7% for the 4 weeks. This may be a reflection of the strength of the blends category. Blended table wine was up 10.4%. More specifically, red wine blends were up 11.5%, and white blends were up 5.5%.

Sales of the second largest varietal, cabernet sauvignon, were up 2.5%. For comparison, chardonnay, the largest single varietal segment, delivered a 1.7% decrease in sales. Meanwhile, moscato stayed solid at 11.2%, followed by malbec up 6.6%, and pinot noir and sauvignon blanc up 4.5% and 4.6% respectively.

Despite this blip in the trends, we expect wine to continue solid growth throughout 2013. As premiumization trends are going strong in the spirits category, we'll be keeping a close eye on the pricing trends for wine this year.

WSD BRIEFS:

WHOLE FOODS HAS UNVEILED ITS SUMMER WINE SELECTION. Targeted toward value shoppers and outdoor occasions. The list includes: Donnafugata Anthilia, Vinum Cellars Chardonnay, Monte Velho Red, Icardi Barbera d'Asti, Mont Gravet Cotes de Gascogne, Lamatum Ribera del Duero Crianza, Robert Mondavi Fume Blanc, H&G Washington State Merlot, Chateau Grand Claret Cotes de Bordeaux, Seaglass Santa Barbara Pinot Noir, Cupcake Vineyards Riesling and Pizzolato Moscato Dolce

INDEPENDENT DISTILLERS USA, the US arm of Japan's Asahi Group Holdings and the fourth largest RTD producer in the world, has added three new flavors to its Twisted Shotz portfolio. The new additions include Dos Locos Paloma, a tequila and citrus combination, Polar Bear, a white chocolate cream and peppermint liqueur, and Blazin' Apple, made with apple and cinnamon liqueurs. According to Independent Distillers USA they have sold over 30 million shots. The Twisted Shotz are available in 4 packs for $6.

WSD PIC: A quick COLA scan confirms the reports that Diageo is adding an Amaretto flavor to the Ciroc lineup.




Until tomorrow, Emily

"Had the price of looking been blindness, I would have looked."
-- Ralph Ellison


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