Packaging Spirits (April 2012)

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Information about Packaging Spirits (April 2012)

Published on October 29, 2016

Author: VictoriaGaitskell


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2. VICTORIA GAITSKELL T his spring and summer, a flood of new flavoured spirits on the shelves of the Liquor Control Board of Ontario (LCBO) may make your shopping experience seem more like choosing ice cream than alcohol. The addition of fruit, spice, and candy flavours; deluxe small-batch manufacturing; and screen-printing on bottles in place of paper labels are among recent trends pushing for an evolution in the packaging and contents of alcoholic spirits. Behind these dramatic innova- tions is a two-pronged strategy to grow sales: On the one hand, by reaching out to younger drinkers and first-time experi- menters, and on the other hand, by strengthening the loy- alty of established customers and extending the lifetime and range of their purchases within their preferred brands. I spoke with Stacee Roth, LCBO’s Cate- gory Manager for White Spirits, Ready-To-Drink and Accessories, as well as Marijke McLean, LCBO’s Category Manager for Brown Spirits and Duty Free, to learn more about the products, packaging, and marketing strate- gies driving this season’s latest trends. Cake, marshmallow, and cinnamon vodka Roth reports, that in the past five years, LCBO’s overall vodka sales have grown over $100 million and since 2009 have overtaken Canadian whiskey to become their largest sin- gle product category. She attributes this rise in popularity to the fact that vodka is clear, colour- less, relatively mild tasting and, therefore, versa- tile for combining with mixers. She adds that vodka’s relatively low calorie count appeals to weight-watchers, who tend to belong to a younger age demographic. Roth says, that from April until the end of September of this year, the LCBO will be pushing its seasonal program of flavoured vodkas “heavily and extensively.” As confirmation, my recent survey of LCBO’s vodka shelves turned up an amazing assort- ment of flavoured options alongside the more tradi- tional formulas of such major brands as American Smirnoff (all of whose flavoured varieties cost $25.95 for 750 ml and include coconut, green apple, lime, or- ange, raspberry, vanilla, and watermelon). LCBO is spotlighting six trendy and new dessert- flavoured vodkas. The leading SKU in this series, Three Olives Cake (750 ml, $25.95), is an English vodka with added artificial tastes of cake and vanilla icing. It comes in a festive, label-less bottle with electric blue lettering and simulated rainbow – coloured sprinkles scattered all over it.“Consumers are gravitating toward cocktails, and the flavoured vodkas don’t take a lot of time to mix. You just chill them and serve them neat,”explains Roth. “Three Olives Cake has a lower ABV [alcohol by vol- ume] content at 35 percent alcohol, whereas straight spirits typically have 40 percent alcohol, so it does not deliver as much of a burn.” Allied products include Pinnacle Whipped Vodka, flavoured with imitation whipped cream (France,750 ml, $25.45), Smirnoff Fluffed Marshmallow Vodka (U.S.A., 750 ml, $25.95), and soon-to-be-released-in-Ontario So- bievski Cinnamon (Poland), a product that already ranks among the fastest-growing spirits in the United States. Crystal skulls, small-batch and artisanal brands Roth says LCBO’s flavoured vodka segment is enjoying current sales growth of over 6.5 percent, but deluxe vodkas such as Grey Goose (France, 750 ml, $48.95) are even more popular. Other drivers in the vodka segment include three unflavoured brands: Tag No. 5 (Canada, 750 ml, $25.30), Russian Standard (Russia, 750 ml, $25.45), and Crystal Head Vodka, a packaging showpiece (Canada, 750 ml, $59.95). Crystal Head comes in a clear- glass bottle inside a cardboard box and is shaped to resemble one of the 13 mysterious quartz- crystal skulls that archaeologists have excavated from various ancient cultures around the world. Launched in 2008, Crystal Head Vodka is filtered by an unusual process using quartz crystals and was born of a busi- ness partnership between actor Dan Akyroyd and artist John Alexander. Roth says such pre- mium offerings serve to retain and upsell established customers, and that LCBO is handling increasing numbers of these unique high- end products aimed at spirits devotees and status-seekers. McLean says LCBO’s brown-spirits category has added new small-batch and artisanal products as well, some from major distilleries that she says are just as capable as small suppliers of making pre- mium products in a more controlled, hand- crafted way. “Small batches, especially of American whiskey, are very new to Canada and there is still not a lot of supply, but they have been very successful,” she says. “For these products, suppliers tend to put a lot of thought, energy, and dollars into packaging. For example, Maker’s Mark 46 [U.S.A., 750 ml, $49.95] hand- dips and seals every bottle in wax. Blanton’s Original Bourbon [U.S.A., 750 ml, $64.65] has an interesting, 36-sided dice bottle with hand- dipped wax and a small equestrian figurine on top. In some cases, the bottles are hand-numbered to emphasize that it’s a small-batch product.” LCBO’s fancy new offerings and recent marketing push to transform hard liquor into two innocuous polarities – either frivolous, fruity cocktails or posh, handcrafted giftware – had me wondering: Could these innovations encourage people to consume alcohol in increasing, ever more dangerous, amounts? Research has shown this is not the case. Rather,alcohol can be categorized as a mature product, meaning consumers are already aware of the product and its basic characteristics. Thus, overall consumption of the product is not significantly affected by advertis- ing specific brands. In fact, a landmark study by Joseph C. Fisher, Advertising, Alcohol Consumption, and Abuse: A Worldwide Survey (1993), suggests that advertising APRIL 2012 • PRINTACTION • 11 Packaging Spirits

3. has no impact whatsoever on either alcohol consump- tion or alcohol abuse. Under Fisher’s findings, if adver- tising cannot increase total alcohol consumption, the most alcohol advertisers can achieve is either to strengthen the loyalty of their established customers or else gain market share by inducing new customers to try their brand or to have other brands’ customers to switch. A bottle of spice, gin rebirth and whiskey Roth reports that LCBO’s rum category is grow- ing well at 4.7 percent. Again, the key driver for rum is the flavoured segment – in this case meaning rum flavoured with spices – a product now growing at an amazing rate of 29 percent. “The trend started with the success of Captain Morgan Spiced Rum (Canada, 750 ml $28.45) and has grown significantly, with the newest en- trants being Malibu Black Coconut Flavoured Rum (Canada, 750 ml, $27.95), which has the characteristics of a liqueur, and Bacardi Oakheart Spiced Rum (U.S.A., 750 ml, $28.45), which is based on amber Bacardi rums aged in oak barrels plus vanilla flavouring,” explains Roth. Their number-one seller is The Kraken Black Space Rum (Trinidad and Tobago, 750 ml, $27.95), a brand launched over a year ago, with an indi- vidualistically shaped proprietary bot- tle depicting the kraken (a monstrous mythological squid) on its convention- ally stuck-on paper label. Roth says, as with vodka consumers, seasoned rum customers are trading up to higher-end aged products that currently show 10.9-percent growth (for example, Pyrat XO Reserve Rum, Guyana, 750 ml, $44.95). Roth cites gin as a remarkable success story: After a long stretch of flat or declining sales, the spirit is now experiencing a resurgence of interest and current growth of 4.7 percent. “Gin is basically vodka steeped with juniper berries or other botanicals,” explains Roth.“People are transferring from vodka to gin because they want more flavour and the com- plexity gin adds to cocktails. “Deluxe gins in particular have been growing at a phenomenal rate of 42 percent,” she adds. “Most of the interest in the higher priced gin and vodka offerings is because of the status associ- ated with premium brands.”Although gin is still a relatively small category, she says the LCBO intends to keep adding new products in the near future to build it. “In my categories, suppliers have been looking at designing distinctive, high-impact bottles to enforce their brand identity and call out their prod- uct on the shelf,” says Roth. “The Kraken’s bottle and Crystal Head Vodka’s container are among the more extreme examples. Other propri- etary bottles that have im- pressed us lately include Chambord Flavored Vodka [France, 750 ml, $34.95, flavoured with Chambord Black Raspberry Liqueur] and No. 3 London Dry Gin [England, 750 ml, $49.95 ], a new green bottle that looks as if an antique key has been pressed into it. The key is a symbol that talks to the identity of the brand.”The name No. 3 refers to the ad- dress in St. James’s Street, London, where the product’s manufacturers, Berry Bros. & Rudd, have operated since 1698. “Alternatively, suppliers are calling out key attributes of their product on the bottle or label design,”Roth con- tinues. “For example, Absolut Elyx [Sweden, 750 ml, $48.95] comes in a uniquely shaped bottlethat is stouter, squared off, and metallic copper in colour to represent the copper-kettle manufacturing method used to produce it. The name and packaging of Beefeater 24 [England, 750 ml, $32.95] emphasize the 24 hours during which the product is steeped in botanicals. More deluxe gins tend to have packaging that 12 • PRINTACTION • APRIL 2012 Continued on page 27

4. APRIL 2012 • PRINTACTION • 27 is tall, slim and elegant. Clearly, manufacturers are capitalizing on all these trends to make their products more appealing and distinctive to con- sumers.” “A lot of my brands are whiskies,” says McLean. “Canadian and Scotch whiskies both have fairly long, uninterrupted histo- ries, and there’s not a lot of innovation in the liquid, the brand- ing or the positioning of the product to the customer. The demo- graphic who drinks it is getting older, so the product is not bringing in many new customers. “But manufactur- ing of both Irish and American whiskies was interrupted for a long time by historical events: Prohibition in the U.S. and taxes or wars with the Irish. Only re- cently, in the last 20 years, have the products begun to get up and running again. The result is that they are both now growing faster than Scotch and Canadian whiskies, mimicking the same ef- fect that is happening with vodka and rum.” Over the last four years, LCBO’s American whiskey sales grew 13 percent, and during the same period, Irish whiskey has grown 17 percent consis- tently year over year. Honey, low-cal and ready to drink McLean continues: “The Ameri- can and Irish categories are domi- nated by two large brands [respectively]: Jack Daniel’s and Jamieson. Both are very iconic from a branding perspective and have not changed their packaging a lot. Some bourbons and Irish whiskies are more creative with their packaging, but compared to vodka and gin, there hasn’t been as much innovation. “But this year Jack Daniel’s launched its first new brand extension in 40 years: Jack Daniel’s Tennessee Honey, a honey- flavoured bourbon in a bottle made in the same mould as the traditional Jack Daniel’s bottle, but with a lighter label trying to reach the female drinker.Brown spirits still know their core customers are men, but women will try the sweeter product, be- cause it’s more palatable. On average, con- sumers of whiskies are 70 percent male and 30 percent female. But newer advertising is aimed at teaching consumers that bourbon is as mixable as vodka in drinks like Jack and Ginger [ginger ale] and Jack and Jill [Jack Daniel’s and rootbeer schnapps shaken over ice and served up as a shot]. Their more deluxe product, Jack Daniel’s Single Barrel Whiskey [U.S.A.,750 ml, $52.05] is an extension of their tradi- tional iconic brand.” Roth adds: “Depending on brand, in vodka and gin, the male-female customer ratio is more like 60:40. Smirnoff still has a more male-domi- nated advertising focus, but now a lower- calorie vodka is coming on the scene in the U.S., and brands specifically targeting females, such as Van Gogh Vodka [a brand that in- cludes flavours like Dutch caramel, espresso, pomegranate, and peanut butter and jelly] are coming in this year. Vodka sup- pliers are finding a marketing opportunity to women they had previously ignored.” McLean notes, that in the last year and a half, Jack Daniel’s has also entered the Ready to Drink (RTD) market – consisting of coolers and pre-mixed cocktails – with its iconic branding replicated into a carton for- mat containing Jack & Cola, Jack & Diet Cola, or Jack & Ginger [U.S.A., 4- pack carton of 355 ml cans, $9.94]. “Lots of spe- cific spirit brands are leveraging RTD as an entry point for consumers from the legal drink- ing age up to 25 years old, hoping to trade them up eventually into the spirits cate- gories,”adds Roth. McLean con- cludes by saying that, although only four coun- tries like Canada, the U.S., Scot- land, and Ireland have traditionally produced the world’s supply of whiskeys, they are now facing competition from many other countries that have started manufacturing this spirit, including France, Sweden, Taiwan, and the Czech Republic. Presumably, this new international development will translate into even more and growing diversity in the spirits appearing on LCBO’s shelves. Victoria Gaitskell is keen to exchange ideas with readers at Gaitskell Continued from page 12 TRADE PRINTING

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