Brown-Forman is not only tapping further into at-home consumption trends with new “can” packaging for an el Jimador Tequila cocktail mix, but going head to head with beer – particularly Mexican imports and flavored beers like Bud Light Lime, it seems. Beginning in December with California then rolling out to the remainder of the U.S. by late spring, el Jimador “New Mix,” a ready-to-drink tequila cocktail, will be available where spirits are sold in a single serving or four-pack of cans. New Mix comes in three cocktails: the Paloma (most popular in Mexico), the Margarita, and Spicy Mango Margarita. Each cocktail comes in a 12-ounce can at 5% ABV, similar to most beers.
"Because of the popularity of New Mix in Mexico and the increasing call for tequila in the U.S., it was an easy decision to bring New Mix to the U.S.," said John Hayes, managing director for Casa Herradura.
"New Mix delivers a premium alternative to beer in a true spirit-based, readymade cocktail that consumers have been looking for," said Carrie Kleban, global marketing director for Casa Herradura. "New Mix makes it easy to enjoy the perfect pour of your favorite tequila cocktail at barbeques, tailgating, or sitting by the pool." Interestingly, it appears that B-F is looking towards the warmer months in promoting this product, which is the most important time of year for beer.
NEW MIX ENTERING BEER’S TERRITORY. Okay, so the off-premise isn’t exclusively beer’s territory, but it certainly has a larger share of at-home occasions than spirits, traditionally. B-F chief Paul Varga said it himself, almost predicting this shift to RTDs two years ago. On November 29, 2007 at the company second quarter earnings call, chief Paul Varga admitted then that beer was benefitting from the consumer shift to the off-premise: "When people move their consumption from on-premise to off-premise spirits suffers a little bit because they're not as easy to prepare. Beer and wine is actually easier for consumers to prepare in their homes than making a Cosmo or a mixed drink at home," said Paul. That's an interesting take. The move to off-premise actually helps beer because it's easier to open and drink.
A shift to RTDs has been a new strategy of Brown-Forman’s over the past year. In their recent first quarter conference call with investors, company execs reiterated that building the off-premise will continue to be a big focus as consumers drink more at home. As a result, B-F reallocated money spent on advertising and promotion in the first quarter ended July 31 to boost value added packs and increase their presence at retail stores. Not surprisingly, the New Mix launch will be supported by a new advertising campaign and slightly different can design than in Mexico. Mainly the US cans feature the el Jimador name more prominently, along with the 21+ responsibility message.
Recall that the company expanded Southern Comfort and Jack Daniel’s RTDs in the first quarter. Paul noted that RTDs “play important roles on two fronts.” One, they make it more convenient for consumers to drink spirits at home, and offer an alternative to beer and wine. They also help boost the flagship brand. However, B-F is still focused on their distilled spirits brands. Paul was quick to point out during B-F’s first quarter call that shifting some focus on RTDs “is just one example of how we’re being adaptive and thoughtful” in light of the changing economic conditions.
A BIG QUESTION IS why wouldn’t B-F make this a malt based product since its abv is only 5%? As a spirits based product it can only be sold at package stores (in most states) and will be taxed at a higher rate. We assume that B-F is hoping this will reinvigorate consumer interest in spirits, particularly tequila, and particularly el Jimador. We also think they’re directly targeting the beer industry, more so than other RTDs. They’re reaching out to consumers who still want cocktails but don’t want to play bartender at home, or perhaps even purchase it at bars and restaurants.
BEAM GLOBAL ADDS NEW RTD FLAVORS TO SAUZA AND CRUZAN
B-F isn’t the only spirits company expanding its RTDs. This afternoon Beam announced it has expanded its ready-to-drink Cocktail Cube product line with new flavors for Sauza Tequila and Cruzan Rum. In January 2010, Strawberry Margarita and Mojito flavors will join the Original Margarita Cocktail Cube on shelves nationwide, complete with redesigned packaging. The new packaging includes a pour spout to make it even easier to drink at home, and keeps the cocktails fresh for up to six weeks after opening. The 19.9-proof Cocktail Cubes have a suggested retail price of $17.99, which will vary by market.
“We exceeded expectations with the launch of our Original Margarita earlier this year and are excited to bring more flavors and cocktails to our consumers,” said Pryce Greenow, general manager for the Mixables category, Beam Global Spirits & Wine, Inc.
FED EX AND UPS TELL OUT-OF-STATE RETAILERS TO STOP SHIPPING WINE TO TEXAS CONSUMERS
In a memo from the Specialty Wine Retailers Association (SWRA), it alerted its members that the State of Texas has issued “cease and desist” orders to Fed Ex and UPS asking them not to deliver wine from out-of-state retailers to Texas consumers. Under the current law, retailers must hold a Texas license and purchase their wine from a Texas wholesaler in order to ship direct. In other words, Texas retailers and US wineries with direct shipper permits are only allowed to ship direct to residents.
According to the statement, this is the first instance of Fed Ex and UPS receiving the same cease and desist letters that the State of Texas sent to many wine retailers earlier this year. In response, Fed Ex and UPS sent a letter to at least one out-of-state retailer stating they must use their services to ship to authorized states. Since Texas is not authorized, the SWRA believes Fed Ex and UPS are warning wine retailers that they face losing “their status as authorized wine shippers anywhere serviced by Federal Express and/or UPS, which would effectively shut down their businesses,” says the retail group's statement.
Recall that the industry still awaits the decision from the Fifth Circuit Court of Appeals. A district court judge ruled last year that although Texas violated the constitution by discriminating against out-of-state retailers, the state could require out-of-state retailers to purchase the wines they ship from Texas wholesalers. Obviously this created some confusion and the industry is awaiting the outcome with bated breath.
CONSTELLATION MAKES HEADLINES THIS WEEK
Already two big announcements from Constellation this week. Recall that yesterday Constellation entered an agreement to sell its Gaymer Cider Company business (and all its brands) to C&C Group PLC of Dublin Ireland for approximately $70 million. The transaction is expected to close by mid-January 2010, and Constellation expects to use proceeds from the sale to pay down debt. "...As the company's strategy has evolved to focus on premium higher-growth, higher-margin wine, beer and spirits brands, it made good strategic sense to sell the cider business,” said chief Rob Sands.
Then this morning they announced that Jose Fernandez, chief of Constellation Wines North America, has taken a leave of absence due to personal medical reasons. As a result, they promoted Jay Wright to president of CWNA effective immediately. Prior to this appointment, Jay served as executive vp and chief commercial officer of Constellation Wines US since March, 2009.
SOUTHERN NAMES NEW VP, CORPORATE COMMUNICATIONS & NATIONAL EVENTS. In another industry appointment, Southern said this morning it has promoted Lee Brian Schrager from director of media relations and special events to vp, corporate communications and national events. Lee joined Southern in 2000 after being with the InterContinental Hotel Group for over 15 years in various leadership roles.
US WINE CONSUMPTION will increase yet again in 2009 but only by about 0.5%, according to The U.S. Wine Market: Impact Databank Review and Forecast, 2009 Edition. Domestic red wines such as pinot noir and cabernet sauvignon are expected to be the fastest growing segment in 2009. Price wise, the largest volume gains were seen in wines priced between $3 and $7 per bottle.
FOOT TRAFFIC IN RESTAURANTS dipped 2% for the year ended in September, contributing to flat year-over-year sales for 2009, according to The NPD Group. They added that it does not expect traffic trends to turn positive until after June 2010. In comparison, NPD said industry traffic grew by 0.5 percent for the year ended in September 2008 and by 1 percent in the same 2007 period.
SWEDEN-BASED PURITY VODKA has named Claes G. Fick to the position of ceo, replacing current chief Thomas Kuuttanen who is assuming the role of Master Distiller. Claes joined the company in early 2009 as its coo and the leader of Purity Vodka’s global sales and marketing.
HARRAH’S ENTERTAINMENT has filed an application to purchase the Planet Hollywood Resort & Casino in Las Vegas, according to the Nevada Gaming Control Board.
ADMIRAL IMPORTS will be the exclusive US importer of Italy-based Villa Trasqua effective January 1, 2010.
Until tomorrow, Megan
“We do not know what we want and yet we are responsible for what we are - that is the fact.”
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