Herbal Hotspot

Recruiting new consumers is the main challenge facing bitters, but the cocktail is there to help. Patience Gould reports

To misquote Jane Austen completely: “It is a truth – not, I think, universally acknowledged – that a single man in possession of a good fortune and after an excellent meal must be in want of herbal bitters to aid the digestion.” Although it’s hard to imagine any of Ms Austen’s heroes, let alone her heroines, swigging back (and surviving) a swift jigger of bitters after dinner, it’s interesting to note that when she herself was 18 years old the now Czech Republic brand Becherovka was no longer just a twinkle in its founder Joseph Becher’s eye.  

He was an apothecary and that is not at all surprising as most of these “herbal delights” started life as medicinal tinctures – hence their status as a digestif which, in part, remains their prowess today, although by necessity there have been changes along the way. 

The key challenge for herbal bitter liqueurs today is to attract the all important ‘youth’ market as traditional consumers are not getting any younger. Indeed, it’s the old marketing chestnut – how to attract the young without offending the traditional consumer. 

Some brands have risen to this challenge remarkably successfully, perhaps most notably Germany’s Jägermeister, which is head and shoulders the leader of the pack. 

As a brand it is an absolute powerhouse, particularly in the US where the judicious use of the Jägermeister tap machine, which freezes the liqueur, has aided and abetted the brand’s progress predominantly among the vast student population.

It is now available in some 90 markets and exports account for 80% of the brand’s volume. Last year was yet another record and saw Jägermeister ranked 24th in Drinks International’s Brands By Value league 2013. With annual volume now nudging the 7 million case mark – and a growth of 3% (Drinks International’s The Millionaire’s Club), Jägermeister is in robust health – and that in spite of the economic climate in the eurozone and continuing difficulties Stateside, its number one market. 

The company cites the UK – where sales topped 7 million bottles for the first time – Spain, Russia and the Czech Republic as particular bright spots. Also Brazil, South Africa and South Korea reported ‘outstanding growth’. Indeed, South Korea turned in a three and a half-fold increase in volume compared with 2011, making Jägermeister ‘a clear sales driver in Asia’.

Down Under last year was something of a watershed for Jagermeister in that the company introduced its first line extensions with two flavoured RTDs: Raw, a strong blend of Jägermeister, guarana extract and other 100% natural ingredients, and Ginger Lime, in both New Zealand and Australia. Interestingly the company has changed distributors in Australia, moving the brand from Suntory, where it has been for 10 years and grown from nothing into a 100,000 case phenomenon, into the Brown-Forman stable.

As to the coming year Jägermeister is quietly confident it is still in a position to grow. “We expect the euro region to continue its struggle with the debt crisis in 2013,” says Paolo Dell’Antonio, spokesperson for the executive board of Mast-Jägermeister SE. 

“However, providing the general economic difficulties in southern and eastern Europe in particular do not intensify significantly and the upturn in the US gains strength, we expect a moderate increase in sales.”

It’s often the case that if the category leader is in good shape then so is the category and, overall, the herbal bitter liqueurs market is a good business to be in. It’s not massive in comparison with the likes of vodka but over the 10 years from 2001-2011, it moved from 22 million cases to more than 30 million cases (IWSR). Considering the taste factor of these brands is – to be polite – at best challenging, this growth is no mean feat.

“It’s not big business but it is moving in the right direction,” says Anthony Schofield, CEO of Jan Becher, a Pernod Ricard-owned company and Czech Republic-based producer of Becherovka. 

The Czech herbal liqueur is an icon in the country due to its rich heritage, aided by a history which spans more than 200 years. 

“In Prague it’s everywhere,” says Schofield. “But, while there is genuine regard for the brand among all age groups, the younger consumers are not drinking bitters, they are looking towards imported brands – particularly dark spirits, so it’s a double edged sword.”

As a result the bitters market is declining by around 10% a year but Becherovka’s fall is more in the order of just 2%. As a result the company is looking to exports to offset the decline at home – and the strategy is paying off.  Becherovka is finding a ready market in the old Communist Bloc markets such as East Germany, the Ukraine, Belarus, Kazakhstan, Armenia and Russia itself.

“These are the key markets. In Russia we have concentrated on Moscow and St Petersburg – and if growth here and in the Ukraine is maintained we are confident that in two years our domestic to home sales ratio will be50:50,” says  Schofield. 

Future potential

Of course, other brands have noticed the potential in both Russia and the Ukraine so Becherovka is facing growing competition from the likes of Jägermeister which, with its heavyweight marketing, including the freezer tap machine and the Jäger Bomb (where the liqueur is mixed with Red Bull) has immediate youth appeal and has hit the market running.

However the Russian traveller is important to Becherovka and there are two flights a day from Russia to the Czech Republic which has boosted the brand’s showing in duty free. 

“We are also doing well in duty free – sales are up 20% year on year and at Prague airport we estimate that every other shopper buys a bottle of Becherovka,” says Schofield.

Unlike most of its competitors, Becherovka is relatively pale in colour, making it more versatile when it comes to the cocktail circuit. The status of bartenders in the Czech Republic is very high and Becherovka now lists 60 cocktails on its website, some of which have been created by the country’s leading mixologists. 

“To be a bartender here is considered a good profession,” says Schofield. “And its golden colour makes Becherovka an unusual brand which is very versatile. Czech bartenders love to get behind the brand on the international circuit – and that’s a good development.”

Cocktail lifeline

The cocktail per se is proving something of a lifeline for Italian bitters brand Averna. The bitters market in Italy – like the Czech Republic – has been in decline for some years and there are signs that the downturn is much “keener in Italy that in many other European countries”. As a result developing exports and broadening a brand’s usage are paramount.

 “We are still developing in a healthy way in our export markets,” says Averna export director Michel Jordens. “We have experienced modest growth in Germany and double-digit growth in the last years in Benelux, Austria and the US.”

However, salient to the company’s strategy is the repositioning of the brand and this has been underway in the US. “We have started a process of positioning more and more our product as a nice ingredient to work within the bartender community,” says Jordens, “in the first place in the US, where we have been holding seminars in Tales of the Cocktail and have started to put ‘amaro’ (the Italian word for bitter) on the map and in the mindset.”

It was back in 2010 that Averna staged its first cocktail challenge Stateside and since then interest has been growing not only for Averna but for amaro in general. 

“Bartenders have been discovering the excellent mixing possibilities offered for a product like ours with its natural ingredients, and it has become like a challenge to them to discover all sorts of directions the product can evolve in mixing it,” says Jordens. “Indeed, it has become a new frontier – the exact opposite to what the more neutral vodka offers in a cocktail.”

As a result volumes have grown “substantially over the last few years”. Jordens adds: “But we still think we are just at the beginning. There are now amaro cocktail lists and more and more amaro bars are opening.” says Jordens.

Up until the move into the cocktail arena Italian restaurants the world over were – and indeed still are – vital hubs for popularising Italian brands. “We consider that the Italian restaurants are still good ambassadors for us in the world and they are a nice platform to work from,” says Jordens. 

“But a totally new world for us lies open within the cocktail field. Definitely a brand such as Averna, with authenticity and craftmanship behind the product, is well respected and of interest for the bartender community internationally.”

Plans in the pipeline include an Averna cocktail competition in the UK and the overall strategy is to concentrate on developing “goodwill for the brand” and a growing interest for all things amaro. 

Cult success

The bartending community is vital for the ongoing success of the number one Italian bitters brand, Fernet Branca, which in the US has become something of a cult. 

The brand is also hugely popular in South America, most notably Argentina. All of which adds up to healthy sales development. Since 2009 the brand has been on the up – then its annual case tally was 3.3 million and it ended last year on 5.4 million, which was a significant 17% increase on 2011 (The Millionaires Club). 

This makes it the world’s number two herbal bitter liqueur – and very much the brand with the momentum. 

Of course the cocktail has been a lifeline for many drinks categories and it’s easy to understand why – by mixing a spirit it becomes more drinkable. 

Drinkability is something that Herbal Nor, the Norwegian producer of Herbal Harmony, has taken into consideration – this is a herbal brew but without the bitter elements.

“We wanted to create something new into the market, a drink that was made of herbs but one that should be consumed as a good Cognac,” says Herbal Nor CEO Ståle Johnsen. “It’s also perfect for creating new drinks and cocktails.”

Herbal Harmony was 10 years in the making and was eventually launched in 2011 in its home market, Norway. It has since made its debut in Denmark, Germany, Belgium and China. The US beckons but Herbal Nor wants to find ‘the right importer’. 

“It’s very much a step-by-step approach to becoming an international brand,” says Johnsen. “Duty free is also interesting in terms of potential.”

It does seem likely that, in the future, more product development with herbs will be on the cards as the global demand for all natural products continues to grow. Also, there’s the belief that herbs ‘are good for you’ and arguably it’s this fact which has sustained the category over the years and certainly before the cocktail era. 

The going is far from easy and the traditional hubs for herbal bitter liqueurs – primarily Germany and elsewhere in Europe – have been contracting. But there is life in the likes of Russia and the old USSR countries and, combined with the potential the cocktail arena offers, producers can afford to be modestly optimistic.