Liqueurs: Top of the pile

The cocktail remains central to liqueurs action and, for producers, keeping their brand relevant is a number one priority. Patience Gould reports

Very few drinks categories boast the inherent qualities of the vast pantheon that is the liqueurs market. Put simply, there is a liqueur brand to suit all tastes, appeal across all age groups and, what’s more, the action is constantly evolving in order to meet the ever-changing consumer demand. All of which makes for a hugely fragmented and highly complicated sector.  

There are traditional liqueur brands, such as Drambuie and the coffee lines Kahlua and Tia Maria, along with the cassis and fruit liqueur brands like Gabriel Boudier and Merlet. Then there are the diverse ranges of De Kuyper, Bols and Wenneker. The list goes on and on, until you come to the new age liqueur types like Malibu. Interestingly though, considering the staggering diversity, the one common denominator is the ongoing importance of the cocktail, which means the US and UK are the crucial hubs for liqueur-mongers.

In fact, liqueurs have been delivering flavour and sweetness to mixed drinks throughout cocktail history. In the US there is a further trend towards sweetness in general. Every flavour/brand of liqueur has different sweetness levels depending on the intensity of the flavour or blend. Consumers are looking for new experiences and flavours, either from a brand or a skilled mixologist.

Defining the sector

“Generally it is difficult to put your finger on liqueurs, and there is a definitional problem with Malibu – which we see as a Caribbean rum and coconut drink,” says Paul Duffy, brand owner Absolut’s chairman and CEO. “Consumers are not buying Malibu or, for that matter Kahlua, which is more of a classic, because they are liqueurs – they’re buying the brand.”

As such innovation is central to Malibu’s strategy in order to keep the brand relevant. In March the company launched updated packaging for Malibu and recent launches, geared to extend the brand’s franchise, have included Malibu Rum Island Spiced, described as a “blend of Caribbean rum and coconut liqueur with light spices, smoked vanilla, cinnamon and a touch of natural sweetness with Truvia, zero-calorie sweetener”. 

The result is a lower-calorie, “full-flavoured spiced rum alternative” which is ideal for its prime consumer. “Malibu’s consumers start at legal drinking age and go into the late 20s and it is more skewed to females,” says Duffy. “Malibu is all about the summer state of mind, fun and the barbecue. Most recently we have launched two dessert-flavoured line extensions – Malibu Sundae and Malibu Swirl.” Sundae combines coconut with chocolate ice cream flavour and Swirl has a strawberries and cream flavour. “It’s all conceptual, and meant to be fun,” says Duffy. “Most of the US is a take-home market, so choice and convenience are important.”

Not surprisingly then, its range of Malibu premix cocktails in pouches has gone down a treat Stateside and has recently been extended to include Blue Hawaiian and Pina Colada Light. In addition, a three strong-range of Malibu premixes, pineapple, cranberry and cola has been unveiled in cans. 

These launches come on top of Malibu Red’s debut in September last year. The intriguing mix, which includes tequila, is fronted by R&B singer/song writer Ne-Yo and is proving “very successful” in both the US and the UK. “The US is easily Malibu’s biggest market and the brand has gone from strength to strength. As such we are tremendously satisfied,” says Duffy. 

Indeed, according to IWSR figures over the past five years, Malibu has moved in the US from 1.6 million cases (2008) to just under 1.9 million by close of play 2012. 

In contrast, Kahlua, Malibu’s partner in the Pernod Ricard-owned Absolut camp, has been in decline from a high of 1.1 million cases to 939,000 cases over the same period. This is against a backdrop of improving fortunes for liqueurs overall Stateside, which fell from 20.4 million cases in 2008 to a low of 19.5 million in 2010, but has since rallied to 20.3 million cases last year.

However, Pernod Ricard is clearly out to improve the world’s number one coffee liqueur’s fortunes and has really been getting behind the brand. “Kahlua has a slightly older consumer profile than Malibu. The brand has particular appeal among the 25 to 35-year-old age group and older. We’ve started a process of being more explorative,” says Duffy. 

This has resulted in the advent of two new expressions – Kahlua Midnight, which is a mix of Kahlua and rum and is positioned as a shot brand, and Kahlua Pumpkin Spice, which is primed for special occasions such as Halloween and Thanksgiving. “It’s all about making the brand more relevant and contemporary,” says Duffy.  

The upturn in the US has also been good news for Scotch whisky liqueur Drambuie. “We are satisfied with our start to calendar 2013,” says global marketing director Tim Dewey. “Generally there has been good progress in Asia, the UK and the US. While traditional liqueurs have grown by 10% in the UK, Drambuie has grown by well over twice that rate.” The company attributes the recent growth in the US to the continued developed of the flavoured whisky market, “especially Jack Daniel’s Honey”. 

“We feel this is a positive development for us and Drambuie is showing slight growth in the US,” says Dewey.  

Currently Drambuie employs six full-time brand ambassadors in the US who work with on-trade outlets in major cities pushing the consumption of Drambuie cocktails on bar menus. “Our efforts are not behind one specific cocktail but we put ideas to the outlets and the mixologists within these outlets build on these or create their own recipes that they feel will work well.” 

The same is true in the UK, where Drambuie now has a full-time brand ambassador in Scotland. “Here we have developed a couple of lead serves for the UK this summer, in particular the Scottish Sangria and the Dram-bru-ie, which plays off both the UK and US trend for beer-based cocktails which are particularly appealing to male consumers.  

“In Canada we have taken this further and have a unique partnership with Rickard’s beer, part of the Molson Coors portfolio,” says Dewey.

The company is now in the process of recruiting for a similar role in London to help work with distribution partner Bacardi UK and so further its cocktail agenda. “Overall, given Drambuie’s flexibility, it allows us to promote a range of cocktails, from the classic Rusty Nail (for which we own the trademark) through to twists on classic cocktails (a Rusty Margarita, where the triple sec is replaced with Drambuie), through to wholly bespoke cocktails,” says Dewey.

Even sales spread

This ongoing cocktail activity is helping to create a more even spread of sales outside the key periods, namely Christmas – albeit a slow process. Interestingly, over the 12 week run-up to the festivities in the UK, Drambuie’s sales were ahead by an impressive 15%. 

 “It remains an incredibly strong period for Drambuie because consumers still see this period as an important, sociable occasion within the family and Drambuie is seen as a drink that transcends the generations. But we have managed to  move beyond that,” says Dewey. “The days of seeing Drambuie as ‘only a Christmas drink’ are well behind us.”

The UK and the US as well as the cocktail are critical to the classic French fruit liqueur producer Merlet. “In terms of developments, we are in our third year in the US and, for a niche brand like ours, the time is necessary,” says Luc Merlet. “Although an established market, as far as liqueurs brands (especially fruit ones) are concerned, it’s only recently that high-quality craft brands have come to the fore, so there is still some room to improve. But in the next year or two we expect the US will be our first export market.”

Luc Merlet had something of a road to Damascus moment while in the UK between 2006 and 2008. “I realised that bartenders had completely changed their perception of liqueurs and had turned them into a source of creativity. They were begging for high-quality products, and this really made the difference between average products and ours.”

As a result, Merlet “completely changed its brand strategy and reoriented it towards the cocktail culture”. It was a gamble at the time but it has more than paid off. “Working closely with bartenders opened doors on a new world of creativity,” says Merlet. “I believe this is a win-win relationship and we realised that the benefit, in terms of two-way flow of ideas, was far beyond mere market strategy.”

Emerging markets

Outside the UK and US, Russia is an up-and-coming market for Merlet and, again, it’s the on-trade which is the prime focus. “We started with a new importer almost two years ago, and we are focusing a lot on the on-trade business,” says Merlet. “The market is not mature yet, so there is a lot of education to do as the bartenders only had access, until now, to low-end products in the main.”

Buoyed by progress in these three markets, Merlet is now planning to launch in Asia and the aim is to get exports underway by the end of the year to Singapore, Hong Kong and China, and then to concentrate on major cities.  “Liqueurs are still fairly new there, but a cocktail culture is emerging and demand is starting to rise in these areas,” says Merlet.