Beam Releasing Two Big New Flavor Innovations

FILED AUGUST 16, 2013

Dear Client:

Flavored whiskey continues to drive the growth of the entire category and the trend is only accelerating. For the 4 weeks to July 20 flavored whiskey sales were up 124% in all Nielsen-measured channels. Beam inc. is currently in the process of releasing two new flavored whiskey innovations that are right in the intersection of multiple growing consumer trends: Red Stag Hardcore Cider and Jim Beam Maple.

Cider has taken the beer category by storm - in all Nielsen-measured channels cider's sales are up 93% for the 4 weeks ended July 20. Beam must be paying attention because the newest extension to the Red Stag line is a cider-infused bourbon whiskey. At 80 proof, Red Stag Hardcore Cider retails for approximately $18 and will be available nationwide this month.

HardCore Cider will join Red Stag's other offerings, which include Black Cherry, Honey Tea and Spiced Cinnamon. You may recall Red Stag has been very successful innovation for Beam, performing extraordinarily well right out of the gate and grown double digits every year since its launch. Our most recent figures put the brand at more than 300,000 cases.

Maple has also proven to be a popular one among consumers. You may recall Crown Royal's maple extension has been credited with reinvigorating the premium Canadian whisky category. Representatives from Beam have confirmed to WSD that Jim Beam is getting a maple flavored extension that should hit shelves next month. At 70 proof Jim Beam Maple will retail for approximately $16 a 750 ml.

Jim Beam does have a few extensions like Devil's Cut, Jim Beam Black and Jacob's Ghost, but Jim Beam Maple will only be the second flavored extension alongside Jim Beam Honey.

HIGH-END WINES DRIVE GROWTH FOR THE CATEGORY

Table wine sales are continuing to chug along up 3% for the 4 weeks to July 20, but recent volume trends for the category dipped into the red. To be more specific, volumes were down 0.2% in all Nielsen-measured outlets. With sales up 5%, red table wines picked up some dollar share from white wine (up 3.2%), while blush wines remained consistent, up 4.6%.

WINE $20 AND UP GET A BOOST: All pricing segments grew sales for the 4 weeks with the exception of the $6 - $9 wines. Though all wine pricing segment less than $9 continued to lose share to the higher priced segments.

Wines priced over $20 and the $12-$15 segment were neck and neck at the beginning of the year. Then for the 4 weeks to May 24 sales for the $12 - $15 segment had pushed passed the $20 and up segment. But this is no longer the case as sales for the $20 an up segment shot up 15.3% in the most recent 4-week period. Meanwhile, the $12 - $15 segment hovered at nearly 11%.

VARIETAL TRENDS: As one of the smallest segments, Rose had the highest sales trends for the 4 weeks, up 35.6%. Blended wines are still on the upswing with Red Blend sales up 13.6%, White Blends up 12% and Blush Blends up 28.6%. Sweet Red Blend sales are still up (12%), but trends have slow drastically from the 33% growth delivered in the 52 weeks.

Speaking of hot trends that have slowed a bit, Moscato sales were up 10.3% compared to its 19.5% growth in the 52 weeks. Though we concede that the slowdown could have something to do with tough comparisons from last year as both Sweet Red Blends and Moscato gained share in the 4 weeks.

As the king and queen of wine, both Cabernet Sauvignon and Chardonnay delivered sales growth of 6.1% and 2%, respectively. Though Chardonnay volumes went red, down 0.1% for the 4 weeks. Meanwhile, popular wine varietals like Pinot Grigio, Pinot Noir, Malbec and Sauvignon Blanc continue their upward climb. Pinot Grigio sales were up 9%, Sauvignon Blanc was up 7.8%, Malbec was up 14% and Pinot Noir was up 9.6%. Of the four, Malbec's trends were with only ones accelerating during the 4 weeks.

There was a period in the not-so-distant past that Riesling was doing pretty well, but the rise in other white wine varietals have hurt the category significantly. Sales for Riesling were down 6.6% in the 4 weeks, and that's compared to a 3.4% decrease for the 52 weeks.

IMPORTS VS. DOMESTICS: Despite the fact that wine import sales trends are accelerating (from 3.3% in 52 weeks to 3.5% in 4 weeks) they still lost share to domestic wines, whose sales trends are decelerating (6% in the 52 weeks to 4.4%). Volumes for imports were up 2.1%, while domestic volumes were up 0.8%. Average price of a domestic bottle of wine is hovering at about $6.30, while the average price for an import bottle is about $6.90.

ARGENTINA/NEW ZEALAND STILL DOMINATE: The import trends remain much the same as they have been. Argentine wines delivered the most sales growth up 15%. It is now the third biggest import category behind Italian and Australian. Although it has a much smaller piece of the pie, New Zealand imports were right behind Argentina, up 13.4%.

While most countries' sales trends mirrored the larger category (which is to say they decelerated), both Chilean and French import trends accelerated. Chilean sales went from -0.2% in the 52 weeks to up 0.6% in the 4 weeks. Meanwhile, French sales went from being up 2.8% in the 52 weeks to 5.5% in the 4 weeks. French wine also has the highest average bottle price at $11.46.

WSD BRIEF:

GLAZER'S HAS APPOINTED R.B. Wedel as senior vp, alliance division, Missouri, effective August 26. In the newly created position R.B. will be responsible for Missouri's top line sales performance for the division. He will report to Scott Westerman, regional president for Missouri, Kansas and Iowa. R.B. comes to Glazer's after 20 years with Brown-Forman where he held most recently held the title of vp. national retail field director.

Until Monday, Emily

"I always wanted to be somebody, but now I realize I should have been more specific."
- Lily Tomlin

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