US Bourbons threaten Scotch dominance

Scotland remains the world’s number one for producing powerful drinks brands, with Johnnie Walker taking the top spot in the Power 100 report for 2015, but the US is closing in on the Scots who’ve held the title for the past 10 years.

According to the brand valuation experts Intangible Business’s 10th annual Power 100 report, Jack Daniels has seen the largest rise in total score in the last year at 7% compared to an 11% drop for Johnnie Walker as drinkers’ appetites shift away from Scotch and towards US whiskeys and bourbon.

According to the report, a falling demand for Scotch in China has affected brand owners with export numbers falling dramatically.

Intangible Business rates the brands according to share of market, future growth, premium price position, awareness, relevance, heritage and brand perception.

In the Power 100 for 2015 Baileys represents the top-performing Irish brand at number 13 (down one place from the 2014 ratings), with Jameson next in the list at 14th, up one place.

“No brand is unaffected by market conditions and China’s falling appetite for Scotch has certainly hit the market hard” commented Stuart Whitwell, Joint Managing Director at Intangible Business, “Johnnie Walker, Chivas Regal and Rémy Martin have all felt the effects. The US has also emerged as a worthy market competitor, challenging Scotch’s dominance with strong brands such as Jack Daniel’s and pricing advantages. Whilst consumers will always be prepared to pay for premium Scotch, other premium whiskey categories such as Bourbon, Japanese and Irish whiskey are starting to be genuinely attractive in the premium and super premium segments; Scotch is facing some tough competition.

“We expect to see both Irish and American whiskey to continue to capture market share from Scotch whisky. Recent figures show Scotch whisky exports fell in 2014 and this is partly down to China’s dwindling appetite for imported whisky. Equally, renewed interest in bourbon brands such as Jim Beam means that the US is edging closer to Scotland as the number one country of origin for premium spirits brands.

“These market conditions make Johnnie Walker’s dominance of the Power 100 all the more impressive. Diageo’s ability to retain supremacy with Johnnie Walker and Smirnoff reiterates the sheer market power they possess and their dexterity in reacting to adverse market conditions.

“Given this year’s results and the direction the global drinks market is taking, we can expect to see more movement and upheaval in the rankings in the following years. The US is likely to continue to grow its market share with whiskey and bourbon brands – Suntory’s acquisition of Beam including their namesake brand Jim Beam last year further underlines bourbon as a growth area. Furthermore, I would expect to see more M&A activity as brand owners look to boost their own whiskey and bourbon offerings.”
Decades top trends

Intangible Business reports that the last 10 years in the drinks industry have been epitomised by transformation with globalisation, consolidation, the global recession and innovation all contributing to change in the industry.

“Brands such as Jägermeister, Grey Goose and Russian Standard have all benefited from globalization,”states the report, “boosting their regional brands through a series of distribution deals globally.

“Consolidation has also been a major driver of growth in the drinks market – we’re seeing a much more streamlined market where mega-brands dominate after a series of mergers and acquisitions.

This trend doesn’t look like it is likely to slow down.”
Intangible Business expects Beam Suntory, Campari and Proximo Spirits in particular to acquire more brands.

As China’s growth continues to slow, other emerging markets such as Latin America are expected to offer development opportunities for drinks brands.

“Finally, innovation has also been a key theme across the market over the last 10 years and this is likely to continue as brands look to capture a greater share of an increasingly competitive market.

“More and more brands have experimented with new flavoured variants – especially in the white spirit sector which has struggled to compete with the more fashionable darker, aged drinks.

“Smirnoff’s unusual flavoured versions such as fluffed marshmallow have ensured the brand remains relevant in the changing market.”


Movers and Shakers

The report states, “Wine brands Kendall Jackson and Lindemans were the biggest risers in the Power 100 this year, soaring 17 and 13 places up the table respectively.

“Southern Comfort also rose 13 places to the 56th spot after enjoying an impressive 19% year-on-year growth.

“Competition in the wine industry remains fierce and Hardy’s has been a casualty, falling 16 places in the rankings to 46th.


Star Performer

This year the Star Performer awards go to Captain Morgan, Havana Club, Jameson Irish Whiskey and Lindemans in recognition of the brands’ increasing total scores.

Cap: Scotland remains the world’s number one for producing powerful drinks brands, with Johnnie Walker taking the top spot in the Power 100 report for 2015.

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