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02.2006

Massachusetts Beverage Business

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Article By: Aimsel Ponti

This is hardly surprising as cordials are virtually everywhere and are often key ingredients in creative martinis and myriad other cocktails, while also being frequently served on their own.

The last year saw some unique product launches, a variety of savvy promotions and the continued hot streak of the once-obscure Jagermeister. One of the remarkable things about the cordials category is that it impacts every age group and culture and is a major moneymaker for liquor stores, bars and restaurants alike. There's a cordial out there for everyone, from the older drinkers to the ones just of age. The trick in the industry is to hone in on what flavor is hot and come up with imaginative drink recipes and promotions to market to the masses.

FACTS+FIGURES While the entire category had a strong year, the number one brand all around continues to be the DeKuyper line which boasted 2.8 millions cases in sales in 2OO4. According to a recent release from the Distilled Spirits Council, cordials and liqueurs are the third leading category in the US spirits market, representing 12.5% of all spirits consumed. Revenue grew 12.1% last year, with premium and high-end premium responsible for the growth at 15.2% and 2O.7%. As for the imports, they shined even brighter with an increase of 5.3% to 1O.1 million cases. According to the 2OO5 adams liquor handbook, Massachusetts boasts the biggest cordial market in the country, spending a hefty amount on brands in 2OO4 to the tune of $285 million dollars.

JAGERMEISTER SHAKES THINGS UP Who could have predicted that Jagermeister, once a little-known dark brown elixir, would become a household name that would go on to sponsor hard rock concerts and have their own chillers in bars nationwide? The brand has gone gangbusters and was the number one import with sales in 'O4 hitting the 1.8 million case mark, a tremendous 38.5% increase over the previous year. The German concoction of 56 secret herbs and spices has been around for 7O years and continues to win people over with its mass cross-marketing campaigns, innovative promotions and use of the internet. Over the last five years it has really increased in popularity and is now part of every consumer's vernacular, particularly the younger set. "Jagermeister still trucks along, it still does very well," says Gary Park, owner of Gary's Liquors in Chestnut Hill. Bob Epstein, President of Horizon Beverage Company further illustrates the point saying, "Jagermeister continues to be, both in the local scene and the national scene, the hottest of them all." He adds, "It has a mystique and it has a cult following. It's just amazing to me." Epstein notes that it is the college crowd and beyond who are still so enamored with it. "Every time you get a new class in Boston, everybody knows about Jagermeister, it's the Jack Daniels of the cordials business and by that I mean it transcends generations," he comments. Many bars that cater to the college and Generation Y crowd now have Jagermeister On-Tap, a special chiller that dispenses Jager at its optimum temperature - ice cold. "They've sold thousands across the county and they can't keep up with demand," says Epstein. Kirk Conard, a bartender at Felt, the popular nightclub on Washington Street in downtown Boston says, "As far as the club crowd goes it's a very popular drink because it mixes well with other things." As for the hip Jager drink du jour, Conard says, "One of more popular drinks is a Jagerbomb which mixes a shot of Jager with Red Bull." According to their website, Jagermeister currently ranks number 15 in impact international's relevant list of the top 1OO premium spirits worldwide.

CREAM of the CROP In the cream liqueur category, Baileys continued to perform very well. "Baileys is the brand that surprises most, it still is doing tremendous - and even with the diet phase of low-carb, Baileys always moves along," says Gary Park. This comes as no big surprise as Baileys, which was founded in 1974, was the first cream liqueur of its kind. Add to that the continuing popularity of all things Irish (especially in the Massachusetts market) and it's no wonder Baileys continues to perform so well. According to the Diageo website, 226O glasses of Baileys are drunk every minute of every day. Last year Baileys got into the TV game with a three part VH1 series called "Baileys-The Set" which featured live performances from bands like Duran Duran and gave Baileys a huge opportunity to advertise to VH1 viewers. Ami-Lynn Bakshi, Director of Marketing for Baileys with Diageo, comments on the brand's continued growth and success: "The last year's been good for Baileys, it is still the 6th largest spirit brand in the world, and between Thanksgiving and New Year's their 75Oml bottle is the number one selling spirit." They are also rolling out two limited edition Baileys flavors in time for St. Patrick's Day: mint chocolate and caramel. In terms of this past holiday season, Bailey's promotion was focused on giving consumers easy solutions for at-home entertaining. "If you think about trying to make a Mojito or trying to make a fancy martini of any kind, there's always risk in getting the mix right. With Baileys, it's great because you can just shake it with ice and pour in into a martini glass," says Bakshi. This winter Baileys will be launching their "Serve Chilled" campaign which Bakshi explains is all about taking them more into the realm of year 'round consumption.

COFFEE COOLDOWN Moving from cream to the coffee category, Kahlua is king no more. Once the indomitable import brand to catch, it has slipped a little over the last couple of years, though it does still maintain a strong foothold in the industry. It will be interesting to see what happens now that Pernod Ricard has taken over the brand. "I'm very hesitant, Allied Domecq did a great job with Kahlua and I am very leery about what Pernod Ricard could to the brand," says Gary Park. Bob Epstein has a different take on the Pernod Ricard acquisition, commenting, "Hopefully they will reenergize the brand because the road Allied Domecq was going down, it just wasn't working and I think they lost a generation of consumers because of a lack of marketing." He adds, "They're still a good brand but they sort of lost their identity a bit and they've got to get back on track. They have dropped in Massachusetts, they're probably down half of what it was fifteen years ago." Peter Colettis, Senior VP and General Sales Manager with Martignetti, also expresses concern about Kahlua. "One other brand that unfortunately has had problems with maintaining its line is Kahlua," he says. Peter also has some idea of the work Pernod Ricard has cut out for them with regard to Kahlua. "Their task is to take the imagery and make it more contemporary, get back on premise, attract a younger consumer - and I think it's well within their ability to do that," he remarks. From the bar standpoint, Kirk Conard notes that the club-goers are shying away from the spirit while the theater crowd still indulges. "When the theater crowd comes into our restaurant, they'll have a lot of White Russians and Kahlua and coffee, but as far the club crowd it's not a big seller and it can't really be drunk on its own." Certainly the immense popularity of the Cosmo and Appletini has had an effect on Kahlua's sales. Many who were once White Russian or Sombrero drinkers have switched to the equally sweet but hipper "up drinks".

In terms of some other big names, Colettis brings up a few for discussion. "We've had big success involved with a variety of products in martinis - the creative martinis. Brands like Cointreau have done very well for us," he says, adding, "Another brand that has done really well is Grand Marnier. It's found new life as an ingredient in margaritas and I think Grand Marnier straight up is making a comeback." On the downside, Peter points to things like brandies and creme de cocoas, which he says have been slowly dying. "What's happening now is the new flavors are taking over the traditional flavors."

REGAL RASPBERRY The French black raspberry liqueur Chambord continues to knock consumers' socks off as people are enjoying it year 'round in a variety of drinks from raspberry margaritas to flavored martinis. Though the last few years have seen many raspberry flavored spirits come onto the market, from cordials to vodkas, Chambord remains top of its category. "We've had another really great year for Chambord. Our sales have been up 9 or 1O% this year, and our sales have gone up for the past ten years in a row," says Kevin O'Brien, National Sales Manager for Chambord. O'Brien points out that it's the younger set who are zeroing in on different types of drinks as they get a bit older. "There's a cocktail explosion going on around the country and the young people who have graduated college seem to be moving away from beer as the beverage of choice and they are discovering the more complex taste of spirits and cocktails and Chambord is used in a million different cocktails," he says. As far as promotions go, Chambord teamed up with Project ALS this year and is running the ongoing campaign: The Chambord Project: Raise Money by Raising Your Glass. Chambord has sponsored a variety of both on- and off-premise promotions to benefit the project including donating $1 for each drink made with Chambord at participating bars and restaurants on specific holidays throughout the year.

The DeKUYPER FACTOR It's impossible to examine the cordials category without looking at the brand from Holland that dates back to the late 16OOs. DeKuyper planted its roots stateside in 1933 and in 1987 they were bought by Jim Beam Brands. At present they have 55 flavors available - everything from Anisette to Thrilla Vanilla and beyond. Brand Director Nicole Ertas says that the Pucker line of DeKuyper have been the frontrunners. "DeKuyper is the best selling line of cordials in the US and DeKuyper Pucker is the best-selling line of sweet-and-sour schnapps," she says. Let's not forget that it's their Pucker Sour Apple Schnapps that is the cornerstone ingredient of the original Appletini that is still a hugely popular drink. This year DeKuyper celebrates the 2O-year anniversary of their classic Peachtree Schnapps, and they have plans to use this fact to reinvigorate it. As for other promotions, Ertas speaks of bartender education, consumer education with regard to home mixing, and an expansion of marketing efforts with on- and off-premise promotions and sampling in core markets and key gay markets. "According to a survey that we conducted last summer, the cocktail culture is a trend that's here to stay and flavor innovation is the main factor driving the popularity of cocktails," says Ertas. As for one of the big challenges, Ertas strives to get the on-premise consumers to do some home mixing. "It's not easy to convince them that they can make the same cocktails at home, but we're confident that DeKuyper can lead the way in building consumer confidence and showing them that mixing cocktails at home is surprisingly easy to do."

NEW PLAYERS 2OO5 saw several unique additions in the cordials category making for quite an interesting year. Starbucks created a stir by jumping into the spirits world. Teaming up with Jim Beam, they first they introduced a coffee liqueur and just recently added to that with a cream liqueur. "It's been an outstanding year, Starbucks Coffee Liqueur launched in February of 2OO5 and we have been so pleased with the trade and consumer response that we decided to launch Starbucks Cream Liqueur as a quick follower to capitalize on the holiday and gift giving season," says Kelly Doss, Global Brands Director of Starbucks Liqueurs from Jim Beam Brands Worldwide. Doss adds that the cream liqueur is their highest scoring product ever tested by JBB, including all those flavored DeKuyper brands. However, the brand has been slow to catch on in retail stores in Massachusetts. "Starbucks, I did nothing with. I sold one bottle and I've had it since it came out. I'm not bothering with the cream liqueur," says Jim Chiesa, owner of Leahy's Liquors in Taunton. "The biggest disappointment has been Starbucks," agrees Gary Park. When asked to elaborate, Park points to price. "It's priced a lot higher than Kahlua, about 25% more and Kahlua has a very strong image. It's always been competitively priced. If Pernod messes with Kahlua that could help Starbucks out," he says. Epstein, however, remarks that fans of coffee and Starbucks are showing an interest. "If you're a coffee drinker or a Starbucks loyalist, they're coming on very nicely and Jim Beam is doing a very effective job of getting out distribution and getting out a product," he says

One particularly interesting addition to the market last year was a chai-flavored liqueur. The sweet spiced tea from India has certainly become part of the American beverage vocabulary when it comes to things like lattes, but what about in the cordial category? Enter into the picture Voyant Chai Cream Liqueur. It's made with aged virgin island rum, fresh Dutch cream, black tea from India, premium spirits from Holland, and a blend of spices from Asia. Robert Back, VP of Operations for Bacmar International, importers of Voyant Chai Liqueur, explains that he and his business partner did some research and quickly discovered that chai sales were approaching a billion dollars and it has become extremely mainstream. Still, they had to really roll up their sleeves to get their idea off the ground. "It was very difficult to formulate Voyant; it took us almost a year to finalize the recipe. We wanted a cream liqueur where the spices are balanced and where you could actually drink more than a glass without getting the alcohol "burn" associated with most liqueurs," he says. Voyant's immediate marketing plans are "viral", meaning simply word of mouth, and then they hope to move onto print advertising and other marketing. At present Voyant is focusing also on on-premise tastings at liquor stores and other events. They also know what a vital role the bartender plays. "Bartenders, if they are good, must try all liqueurs, not just Voyant. They must keep abreast of new flavor profiles out there and then be creative in creating the next new, big cocktail," says Back.

Baileys also launched an entirely new enchilada called Dulseda that is a far cry from their Irish Cream. The super premium liqueur, made with Caribbean rum and cream, launched in October and capitalizes on the fact that in the Hispanic culture and beyond, the taste of dulce de leche is revered. "It's a fantastic product," says Bakshi, adding that it is best enjoyed on the rocks or sipped straight. "It's targeted toward the Hispanic consumer or toward the consumer who's really interested in discovery that goes looking for interesting new brands." Bakshi explains that the whole campaign for Dulseda is "'Trading your spoon for a glass.' In traditional Latin culture you would eat dulce de leche and now we have this opportunity for you to drink it."

Another newbie to the US market is super-premium Rhum Clement's liqueur called Creole Shrubb, which actually dates back to 1887 from Martinique. It's made with orange peels and pulp as well as traditional Creole spices which are macerated and infused into pure cane syrup then mixed with white rum. Kate Laufer, a representative from the public relations firm Evans Communications, explains that Creole Shrubb has its own unique identity. "The orange flavor offers a unique aspect to the rum which consumer enjoy. It is often compared to Grand Marnier, but receives a more positive response as to its lightness and smoothness," she says. "Because cordials are available in different options from Baileys to Schnapps and now Creole Shrubb, consumer education is critical, whether it comes through the media or one of the most influential outlets - the bartender," she says.

One of the new liqueurs getting a lot of buzz this year is the pink potion X-Rated Fusion Liqueur, which has caught on like a house on fire. It blends French vodka and Provence blood orange along with mango and passion fruit. Geared more towards female consumers, with drinks like the "Ex-Boyfriend Shot", X-Rated has been in the spotlight due to heavy promotion and exposure with celebrities like the cast of Desperate Housewives. Park and Chiesa, at the retail level, both point out that it does well for them. "It has a very nice sweet fruity flavor and mixes really with just about everything for a really lighter flavor shot, something that is not too strong and not too heavy," says Kirk Conard at Felt.

the WORD from BEHIND the BAR So what's the latest in the Boston restaurant scene? Ryan Shocklee, Bar Manager at Sibling Rivalry in Boston's South End, says the hottest drink they're mixing these days is what they call a Pear Sidecar. It combines pear brandy with Cointreau and fresh lemon juice, and is served in a sugar-rimmed glass.This is hardly surprising as cordials are virtually everywhere and are often key ingredients in creative martinis and a myriad other cocktails, while also being frequently served on their own. "We found that we were selling a lot of Sidecars as it were so we decided to go with something a little more fall/winter. We have a French butter pear amaretto crisp on our dessert menu so we wanted to kind of mirror that with something on the cocktail list as well," he says. Across town at the Ruth's Chris Steakhouse, Senior Manager Dominic Delimpio says that the Sidecar drinks and martinis are doing quite well. "Everything is back to retro now." Though he also says that there are a couple of new products that have sparked public interest. "The two new ones that they're dabbling with are Limoncello and a new one out called Amber, and they're making an attempt to make an impact in the cordial market." Amber is the new single malt scotch whiskey liqueur with maple and pecan flavors that was recently launched by Macallan. It seems that at this restaurant, old school is the new school. "I've asked three of four bartenders and three of four distributors and they've all agreed that it's the old basics; the ports, the cognacs, the sambucas. Sambuca is the number one right now, it's going right back to the old days," says Delimpio.

The Pendulum Swing Clearly the cocktail craze is here to stay and it is certainly fueled by the younger generation of consumers who continue to branch out and educate themselves in terms of what they're drinking. "The cordials and liqueurs consumer base has broadened due to the resurgence of the cocktail culture and the introduction of new flavors," says Nicole Ertas. Amy Bakshi agrees, commenting, "There's been a huge shift towards cocktail culture with consumers." She also knows that cordials are in the forefront every month of the year. "Consumers are very savvy and they're looking at different kinds of cocktails for different times of the day or the year. They're not just looking at cordials as after dinner or at the holidays anymore, they're really looking at them as more of a year 'round drink." Peter Colettis chimes in as well on the subject of the cocktail's skyward ascent. "The fashionabilty of the spirits and the glassware that is being utilized - plus the return of classic cocktails - have really had a positive effect on the cordial business." He also notices a trend towards the lighter side. "I think the thing you see in common for the most part now is that the cordials that are doing so well seem to be a little lighter in style and viscosity," he says, noting that Baileys is one exception to that. "It's actually pretty exciting to consider the pendulum swing that has occurred with cordials and how they're right back in the height of fashion again."

CREATIVE CORDIAL COCKTAILS
Here are some recipes to shake things up with that use some of the cordials and liqueurs mentioned in this article, including some that keep Valentine's Day in mind.

CAFE GINGER
1 part Starbucks Coffee Liqueur
Ginger Ale
Pour Starbucks Coffee Liqueur into a rocks glass filled with ice. Add ginger ale and garnish with a cherry.

X-PLICIT DREAM
1 part X-Rated
1 part Malibu Coconut Rum
1 part White Cream de Cacao
Shake over ice and straine into a sugar-rimmed shot glass.

CANDY APPLE MARTINI
1 and 1/2 shots of vodka
1/2 shot of lemon juice
1/2 shot of Chambord
3/4 shot of apple liqueur
Shake and serve in a martini glass.

FREDDY KRUEGER
1/2 ounce of sambuca
1/2 ounce of vodka
1/2 ounce of Jagermeister
Mix and serve in a chilled shot glass.

BEAM ME UP SCOTTY
3/4 ounce of Kahlua
3/4 ounce of banana liqueur
3/4 ounce of Baileys
Carefully add the ingredients, in the order listed, into a cordial glass - layering each on top of the previous.

VALENTINE
2 ounces of banana liqueur
1 ounce of vodka
3 ounces of cranberry juice
Shake banana liqueur, vodka and cranberry juice with ice and strain into a red wine glass.

SATIN SHEETS
1 ounce of Kahlua
1 ounce of Bailey's Irish Cream
1 ounce of chocolate liqueur (Godiva)
Milk
Combine Kahlua, Bailey's and chocolate liqueur over ice. Add milk to fill the glass.

LOVE POTION
3/4 ounce of Remy Martin
1/4 ounce of Di Saronno Amaretto
1/4 ounce of Frangelico
2 ounces of cream
1 dash of Grenadine
Shake and strain over crushed ice in a cocktail glass.

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