THE DEFINITIVE RANKING OF THE WORLD'S MILLION-CASE SPIRITS BRANDS 2014 TPSSPVUHPYLThe Z» The TPSSPVUHPYLZ» JUNE 2014 DRINKSINT.COM 3 GRAND DESIGNS t was once a case of the worldly and the parochial – the global brands and the local brands. But what happens when local goes international, when low- value operators premiumise? In The Millionaires’ IClub 2014, we have learned of such grand plans. Take our immovable champion, Jinro. Far from content with 66.5m case sales concentrated in South Korea and nearby Japan, Hite-Jinro has set about achieving 100m cases in the next 10 years, by seeding the brand in the 11 world markets with a population of more than 100m. That includes the US – a market now inhabited by Philippine rum Tanduay and the world’s latest largest whisky brand, Officer’s Choice, which has entered New York. In the west there is a tendency to think the flow of globalisation only works in one direction, from traditional to emerging markets. But the growth obsession is an instinct of business, not the preserve of the elite. Spirits companies propagated in volatile emerging markets are all too aware that a one-market policy can build volumes but not a secure future. Market plurality is the best way to mitigate exposure. Johnnie Walker is the exemplar. With Asia ailing in 2013, the brand’s worldwide distribution kept sales walking in the right direction. Of course, emerging brands will have to climb the premium ladder quickly if they are to take on Johnnie contents Walker’s ilk in the likes of the US and western Europe. But MARKET OVERVIEW WHISKIES some of the first skirmishes of east versus west, established Hamish Smith sums up the issues Regionals take on internationals versus emerging, are in the Middle East and Sub-Saharan 5 26 FULL LISTING RUM & CACHAÇA Africa. Indian brands in particular have established quasi- All the Millionaires Excitement builds premium products here and started to build consumer 9 30 loyalty. If they can gentrify in line with the population, they FASTEST GROWING COGNAC & BRANDY Climbers and fallers Emperador dominates will have the foothold to put up a fight. 14 32 So can Officer’s Choice, Tanduay, Ginebra San Miguel, THE MAJOR PLAYERS SOJU, SHOCHU, BAIJIU McDowell’s or Jinro join Smirnoff, Johnnie Walker and Who’s who in the Club 16 The good news/bad news sector 33 Bacardi as recognised global leaders in the near future? THE BIG INTERVIEW OTHER CATEGORIES Probably no. But less of a no, than it used to be. Officer’s Choice’s Deepak Roy New markets open up Hamish Smith 18 34 VODKA ONES TO WATCH Supplement Editor A mixed bag 21 Crystal-ball time 37 Supplement Editor Production Editor Publisher Commercial Director Hamish Smith Jaq Bayles Justin Smith Roger Betríu +44 (0)1293 590045 +44 (0)1293 590048 +44 (0)1293 590041 +44 (0)1293 590043 [email protected] [email protected] [email protected] [email protected] Researcher/Co-Writer Art Editor Senior Account Manager Drinks International Holly Motion Amber Stoddart Carmen Poel Francesch Longley House, International +44 (0)1293 590046 +44 (0)7876 350166 +44 (0)1293 590042 Drive Southgate Ave, West [email protected] [email protected] [email protected] Sussex RH10 6AQ UK The TPSSPVUHPYLZ» JUNE 2014 DRINKSINT.COM 5 There have been ups and downs in every sector over the past year. Hamish Smith crunches the numbers THE SPIRITS MARKET here are few constants Some outright refused to give sales rather than colossal brands, Red Star left in the world, but data – perhaps because of negative aside (16m-17m cases in 2012). Unlike humankind’s appetite for results or company policy – others the likes of India and the Philippines, alcoholic drinks is one. were incommunicado. But where where giants are grown, baijiu is regional Last year earth’s great vice there is sufficient evidence of million- in its style and mostly in its distribution. Tstood at 24bn litres of wine, 190bn litres case or more annual sales in recent Reportedly baijiu brands struggled in of beer and 21bn litres of spirits (industry times, we have listed the brand in our 2013. The much-publicised government estimates). Even spread around 7bn Nondisclosure list. Give or gift-giving ban among officialdom people, it’s surprising much gets done. To ` reduced some premium brands to say which is the most popular category is CATEGORIES take, there heavy discounting and sales were not difficult – at least once abv is taken into By a long, long way, the biggest category are about 200 as expected during Chinese New Year account – but what we can say is that in the spirits industry is baijiu, which and the Mid-Autumn Festival. Moutai, spirits consumption is on the up. grew 6% to 555m cases in 2013. As million-case China’s most famous baijiu, straddles a Between 2008 and 2013 the global drinks historian David Wondrich brands selling number of price points and reportedly spirits market grew 11% and from 2013- eloquently put it: “Baijiu is the dark experienced difficulties last year. 2018 it is forecast for a further 13% spurt, matter of the spirits world – it pervades in the world In the big international categories, according to Euromonitor International everything but we don’t see it.” That’s so signs are that a coup is afoot. We’ll have today (all spirits figures henceforth). That true, unless of course you live in China, to wait until 2018 to find out but if demand has to be met and, in the main, it in which case it pervades everything and a Euromonitor International’s forecast is will be the members of The Millionaires’ you do see it. Baijiu makes up a quarter right, vodka (+0.8% CAGR for 2013- Club that step up. This year its numbers of all spirits – which is arresting reading, 2018 to 381m cases) will be overtaken by rose by three to 179 brands, and of those though less so when you think one in five whisky (+17.1% CAGR to 387m cases). around 50% were in growth, 10% were of the world’s mouths are Chinese. That’s four years away but, if it happens, flat and 40% in decline. So overall, more So The Millionaires’ Club should be it represents a remarkable turn around plusses than minuses. teeming with baijiu brands – certainly for whisky. It was only a few decades ago Give or take, there are about 200 there should be a few more than have that scotch stood at the edge of a whisky million-case brands selling in the world provided data. Alas, pinning down loch staring out in deep reflection. Irish today. So, in the interests of transparency category data is an almost impossible whiskey was also a lost soul until Pernod and completeness Drinks International task. From what is known of the baijiu Ricard grabbed the category by the collar has listed those that proved elusive. industry, it is populated by medium and dragged it into double- page 6 The 6 TPSSPVUHPYLZ» JUNE 2014 DRINKSINT.COM 7 digit growth, while American whiskey’s to eke out 3% growth, the latter buoyed He said the target was “the 11 countries return to form is one of the stories of by its soon-to-be top market, the UK– with populations of more than 100 2014’s Millionaires’ Club. where it has become an on and off-trade million” and in particular Nigeria, India, Five of the six million-case American British standard. As for Grey Goose, after China, the US, Russia and Vietnam. whiskey brands showed growth in growing just 0.4m cases in five years, we Interestingly he also told us he was open 2013 – Jack Daniel’s, Jim Beam, Evan can say the brand is steady but has lost a to a buy-out offer from Diageo, although Williams, Maker’s Mark and Wild bit of its cool. You know what they say in nothing has transpired since. Turkey – while Seagram’s 7 was flat. business about standing still. Though it may not always seem like Though Irish, bourbon and Japanese Brands exposed to Ukraine and Russia it, gin and tequila are the minnows of have all contributed brands to this have not fared as well. The Ukrainian the spirits world. In reality they are far year’s list, scotch and Indian are the real brands Khlibniy Dar, Khortytsa, Prime smaller than domestic categories such powerhouses of this 46-millionaire brand and Istynna all had a tough time of it. as soju and Brazil’s cachaça, which is category. Nemiroff chose the right year to have a 95m cases. At times gin feels like it is the Of scotch’s 23 brands in the club, there trading hiatus – 2013 was not a great new vodka such is the conveyor belt of is mixed news. But most of the down- time to do business in Ukraine. All launches, nearly all of which appear to be trading can be explained by political the aforementioned brands suffered made at London’s Thames Distillers. volatility in key markets rather than a double-digit declines last year while Of the 60m cases sold each year about waning of interest in the category or its Pyat Ozer, Green Mark and Belenkaya, a third is down to San Miguel’s Ginebra brands (more on this on page 26). with significant exposure to the Russian from the Philippines. The sugarcane- Greater trouble for scotch - and other market, also suffered. produced gin appears to operate in whisky categories - could lie in wait.