After the successful sale of Angel's Envy earlier this year, one of the brand's co-founders, Marc Bushala, announced he would establish a $50 million Innovation Fund through his Chicago-based company Liquid Asset Brands (LAB) to invest in other small spirits businesses [see WSD 04-15-15].
LAB has revealed its first investment will be $14 million for a majority stake in Stolen Spirits out of New Zealand. Stolen Spirits' portfolio currently includes four rums from Trinidad & Tobago -- Stolen Dark, Stolen Spiced, Stolen Gold and Stolen White -- which will be launched in NY, FL, CA, MA, IL in early 2016, and followed by a nationwide rollout.
"It was always my dream to take the Stolen brand to the USA, the most dynamic spirits market in the world," says Stolen founder Jamie Duff. "We're very fortunate to work with LAB as our global partner, which will enable us to do everything we want to do with this brand. Not only expanding into US markets but also developing Stolen product extensions."
You may also recall LAB has said it will create and launch its own brands and open a distillery in Chicago.
DIAGEO'S TAKE ON THE CRAFT SPIRITS TREND
Last week, WSD covered how Diageo intends to improve on its marketing and organizational operations in the US [see WSD 11-12-2015] Another popular topic of discussion during the company's Investor Day last week was the craft movement and how Diageo plans to capitalize on it. Here's what the company's top brass had to say on the matter:
DEFINING CRAFT. Despite some fledgling attempts, no one definition of the term craft spirit has risen to the top, leaving the concept open to a variety of interpretations. For instance, Diageo's North American chief Deirdre Mahlan doesn't think size is a defining characteristic of a craft brand. Instead she believes the primary appeal of craft spirits is their authenticity and credibility.
"My view is if you want to really bring this kind of new movement to the consumers, you have to act authentic… and make sure your brand is present effectively in culture - be where the people are in a way that's authentic to the brand."
DIFFERENCES IN BEER, SPIRITS. As our readers are well aware, craft beer exploded on the bev alc scene a couple decades before craft spirits, giving spirits execs plenty of time to dissect the effects on the category. Diageo chief Ivan Menezes said "There is a big difference in the dynamic of what's happening in beer and what's happening in spirits."
He explained that in the beer space, craft means being local, fresh and close to the consumers, but for spirits the concept of craft is about brand heritage, ingredient quality, provenance, authenticity, purpose and attention to detail.
The big breweries have not been terribly successful at tapping into craft beer sales, which is why the last couple of years we've seen the big companies scooping up craft beer brands like they're on deadline. Ivan said Diageo has a better shot at leveraging craft credentials with "distinctive, well-made and authentic products" like Bulleit, George Dickel and Don Julio.
"We think we're the ones who lead today with big brands that actually play in that space by using effectively what is true to that brand in the messaging," said Deirdre.
FUNDING CRAFT. In addition to positioning its premium brands to capitalize on craft characteristics, Diageo is taking one from the tech world's playbook by launching the Distill Ventures program in the US. Distill Ventures is a seed-money program that allows Diageo to provide startup capital, support and expertise to spirits brands who want to make it big.
Although Diageo provides the money and expertise, the company says the brands remain independent and are not integrated into its distribution footprint. "Their destiny is in their hands and that is what creates and maintains the entrepreneurial magic," said Ivan.
The program is already active in Europe and Asia. To date the company has made eight seed-stage investments across a range of categories, and two larger investments with long-term commitments in strategic areas of focus for Diageo -- all unnamed so far.
"We hope to be more public with these in the future, but [in the meantime] when you see a hot new brand in the future, ask yourself if it could be with Distill Ventures," said Ivan.
ON-PREMISE WORSENS, WHILE SPIRITS KEEPS IMPROVING
The on-premise channel's performance worsened yet again in the four weeks through November 1, per new GuestMetrics data. Traffic was down -3%, falling below the year-to-date trend (-1.6%), while total alcohol volume was down -4.3% during the period. This is consistent with the poor performance experienced by the restaurant industry in October [see WSD 11-13-2015], as "consumers held back on discretionary spending."
All categories were down, but spirits keeps moving towards getting back in the black. Wine volumes were down 7%, beer volumes were down 6.9% and spirits volumes were down 0.2% - a 0.1% increase over the month before (and still above the -0.7% year-to-date trend).
The wine and spirits categories that gained shares during the period were cabernet sauvignon, prosecco, sauvignon blanc, red blend, moscato, tequila, Irish, vodka (continuing to hold its own in positive territory), gin and brandy. Meanwhile, merlot, chardonnay, riesling, shiraz/syrah, pinot gris, bourbons/blends (including flavored varieties), rum, cordials and Scotch all lost shares.
DON SEBASTIANI & SONS EXPANDS WINE-ON-TAP BUSINESS. Don Sebastiani & Sons has been committed to the wine-on-tap movement since 2013 when it teamed up with Free Flow wines to release its pinot noir on tap, but the vintners have pledged to further increase their presence in the category in 2016. In fact, they are aiming for 26% growth for its keg wine business next year. Don & Sons' wine-on-tap portfolio now includes Sivas-Sonoma, Sonoma County, Cabernet Sauvignon, the Crusher, Clarksburg, Petite Sirah and Custard, Sonoma Valley, Chardonnay wines. "By making a move to grow our kegging business, I am taking a page out of my grandfather's book and taking risks when it comes to new and exciting ways of bringing wine to today's consumers," says president and chief Donny Sebastiani.
MICHTER'S RELEASES 10 YEAR AND 20 YEAR SINGLE BARREL BOURBONS. Originally set to be released at the beginning of this year, Michter's 10 Year and 20 Year Single Barrel Bourbons will be available in December. The 10 year expression retails at about $120 a 750 ml and the 20 year expression retails at about $600 a 750 ml.
ANCHOR DISTILLING CO. TO RELEASE ANNUAL CHRISTMAS SPIRIT. Anchor Distilling Co. and Anchor Brewing teamed up again to create the Christmas Spirit, which first launched in 2012. It is created by distilling Anchor Brewing's Christmas Ale into a winter-spiced white spirit, bottled at 90 proof. Christmas Spirit will be available from November 30 until December 31 exclusively at California retailers at a suggested retail price of $55 a 750 ml.
WYOMING WHISKEY LAUNCHES FIRST BARREL STRENGTH BOURBON. A total of 111 bottles were produced with 96 made available for sale, bottled at 116 proof and 120 proof. The packaging is a "paperless, minimalist bottle with enamel labeling." Before it hit shelves, ten gallons of the 116 proof and 12 gallons of the 120 proof sold out, per a release. The Barrel Strength Bourbon is available in select markets, retailing at about $199 a 750 ml. Wyoming Whiskey is also releasing two pallets of its Single Barrel Bourbon.
TIGER PAW BEVERAGE INC. INTRODUCES PURPLE HAZE LIQUEUR TO THE WEST COAST. Tiger Paw Beverage and Jimi Hendrix's brother, Leon Hendrix introduce Purple Haze Liqueur. Tiger Paw has created a portfolio, with products inspired by Jimi Hendrix songs. Purple Haze is a blend of vodka, cognac and exotic berries and bottled at 17% abv. It has only been available in Georgia but will now be available in California as well, beginning this month.
"A good listener is usually thinking about something else." -- Kin Hubbard
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