Irish Whiskey Is Pushing Ahead

Millennial consumers are driving innovation and sales in the category.

The Irish whiskey category has long been dominated by Pernod Ricard’s Jameson (distillery pictured above). But the popular offering is facing new competition from craft players, non-distiller producers and even boutique-type marques within its parent company’s portfolio.
The Irish whiskey category has long been dominated by Pernod Ricard’s Jameson (distillery pictured above). But the popular offering is facing new competition from craft players, non-distiller producers and even boutique-type marques within its parent company’s portfolio.

Like most brown spirits, Irish whiskey these days is all about new brands, millennial consumers and premiumization. But unlike other categories that have displayed more measured growth, Irish whiskey has experienced a surge that’s nothing short of extraordinary. “Sales have really taken off over the last three years,” says Denis Lynch, general manager and spirits buyer for Vine & Table in Carmel, Indiana. At 67 Wine & Spirits in New York City, owner Bernie Weiser cites a 20-percent increase Irish whiskey sales from 2014 to 2015. “The category was flat last year, but it may be plateauing at the moment, getting ready for another hike,” he notes.

Impact Databank bears out retailers’ observations. Last year, the Irish whiskey category increased 17.8 percent, gaining momentum on its 8.5-percent growth in 2014 and passing the 3 million–case mark. Leading brand Jameson dominated the category, posting depletions of 2.4 million cases. A few major players declined—notably No.-2 label Bushmills, falling 3 percent to 223,000 cases. Fifth-ranked Paddy—which Sazerac Co. acquired from Pernod Ricard earlier this year—and sixth-ranked Powers also showed losses.

But much of Irish whiskey’s current success flies under the radar. Smaller, premium labels—made by craft producers, packaged by non-distiller producers or added as line extensions to existing brands—are driving sales at retailers across the country. “We average nearly $8,000 a month in Irish whiskey sales, and the uptick has been at the higher end,” 67 Wine’s Weiser says, citing such brands as Connemara ($46 to $74 a 750-ml. bottle), Teeling ($52 to $63) and Green Spot Château Léoville Barton ($110) as top-sellers. “Yellow Spot is $105 a bottle, and it’s amazing how much we sell.”

At Chicago-based Binny’s Beverage Depot (Lincolnwood location pictured), newer Irish whiskey brands have taken off with younger consumers looking to experiment.
At Chicago-based Binny’s Beverage Depot (Lincolnwood location pictured), newer Irish whiskey brands have taken off with younger consumers looking to experiment.

Premium Surge

At Chicago-based Binny’s Beverage Depot, Jameson leads Irish whiskey sales. But spirits buyer Brett Pontoni says that’s only one part of the story at the 33-unit chain, which stocks over 70 Irish whiskey SKUs at its larger stores. “We do tens of thousands of cases of Jameson a year,” he explains. “But in terms of growth, prestige and margins, brands like Glendalough help the most. They’re perceived as different and independent, and that’s good for business.” Pontoni notes that Glendalough ($30 to $90 a 750-ml. bottle) has sold well thanks to the brand’s investment in consumer outreach via on- and off-premise tastings with Irish brand ambassadors. Other top-selling brands at Binny’s include West Cork Distillers ($30 to $60), Teeling ($38 to $80), Lord Lieutenant Kinahan’s ($40 to $65), Knappogue Castle ($45 to $60), Green Spot ($60 to $100) and Jack Ryan Beggar’s Bush 12-year-old single malt ($70). “Teeling has spent a lot of time telling their story in this market, and that’s put them in the spotlight,” Pontoni adds. “People may try it in a bar for free, but they remember the label.”

Vine & Table carries roughly 50 SKUs of Irish whiskey, and Lynch says the sweet spot for pricing is around $40 to $50. “We’ve tested the market with higher-priced brands and ended up taking them off the shelves,” he explains. “Any product over $60 has to be really good, because you can buy so much great whiskey for less than that. Irish whiskey has an excellent price-to-quality value ratio right now.” Lynch adds that offerings like Green Spot ($55), Redbreast ($65 to $300 a 750-ml. bottle), Powers John’s Lane ($68), and Bushmills 16-year-old ($80) and 21-year-old ($120) are driving sales.

Among the many Irish whiskies that populate shelves these days is a growing number of brands—typically blends—from non-distiller producers (NDPs). The segment isn’t new, but the pricing floor has risen in the last few years and new entries are crowding shelves. “These brands used to come in at $19.99 to $29.99, with specialties like single malts at higher prices,” Pontoni says. “Nowadays, they’re starting at $29.99. If they have a made-up name and lack a coherent story, they aren’t successful.” Lynch considers the practice shortsighted. “Some of the marketing is questionable,” he says. “People are jumping on the bandwagon hoping to make a quick buck, but they’re going to find it hard down the road. Consumers are pretty clued in these days.”

Wyatt’s Wet Goods—a beverage alcohol retail outlet that opened in Longmont, Colorado,  in November 2015—often adds Irish whiskey SKUs based on customer demand. “People asked for Tyrconnell, so I brought it in and it’s moving,” says managing partner Dennis Dinsmore. “At $38, it’s more premium than Jameson and Tullamore DEW, our top-sellers. People are trading up.” But consumers don’t have to leave their favorite brand to try premium expressions. Tullamore DEW released Trilogy 15-year-old blended whiskey ($79.99 a 750-ml. bottle) in February, and it has a 14-year-old single malt ($69.99) and an 18-year-old single malt ($109.99) planned for later this year. “These new products will complement, not compete with, our core range,” says Tullamore DEW senior brand manager Paige Parness.

After decades of purchasing whiskey from other distilleries, William Grant & Sons’ Tullamore DEW (malt still pictured) brand opened its own facility in 2014.
After decades of purchasing whiskey from other distilleries, William Grant & Sons’ Tullamore DEW (malt still pictured) brand opened its own facility in 2014.

Leading Brands

Pernod Ricard is also using innovation to keep drinkers within the Jameson portfolio. In August 2015, the company launched Jameson Caskmates ($29.99 a 750-ml. bottle), an expression aged in craft beer barrels from Cork, Ireland’s Franciscan Well Brewery. Caskmates met with immediate success, selling 42,000 cases in its first partial year, and Impact Databank projects depletions of 100,000 cases in 2016.

“With Caskmates, we took a product to the marketing department rather than the other way around,” says Jameson head cooper Ger Buckley. “Demand is enormous. We’ve partnered with craft brewers in local markets, like KelSo Brewing Co. in Brooklyn, New York. They age their beer in Jameson barrels, then ship the barrels back to Ireland to be refilled with whiskey. It’s expensive, but it’s exciting to be in a city whose local beer has been influenced by Jameson and vice versa. Served together, the two products really complement each other.”

Buckley also has been instrumental in the development of Jameson Cooper’s Croze ($69.99 a 750-ml. bottle), which launched in August. It’s the first release in the new Whiskey Makers Series. “Cooper’s Croze highlights the craft of coopering and the contribution of wood to whiskey’s maturation and flavor profile,” says Pernod Ricard vice president of marketing for high-end Irish whiskey Sona Bajaria. “The range will showcase the people and heritage behind the Jameson brand.” Future releases will highlight the distiller and the blender.

This fall, Pernod Ricard is planning to roll out new packaging for Jameson Black Barrel, and it will extend a marketing campaign highlighting the Jameson family motto, “Sine Metu,” meaning “Without Fear.” Bajaria notes the importance of the on-premise in driving momentum. “We aim to stay relevant to bartenders,” she explains. “We want to ensure they understand the brand and are excited by it.”

In the off-premise, the company’s upscaling efforts are working. Lynch at Vine & Table notes that Jameson’s high-end marques are thriving. “Jameson 18-year-old sells very well at $125 a bottle,” he says. “People know the Jameson name and that it’s good quality. That creates an opportunity to move them up the scale. It’s the same with Redbreast. People are graduating from the 12-year-old to the older expressions. The 21-year-old is $300, and people are buying it because they know Redbreast is good.”

Teeling Whiskey Co. is also betting on Irish whiskey’s premiumization trend. The company offers the “Teeling Trinity,” which includes three expressions: Small Batch ($40 a 750-ml. bottle), Single Grain ($50) and Single Malt ($60). “It’s a ladder for people to experiment within the brand,” explains cofounder Stephen Teeling. Small Batch accounts for roughly 65 percent of sales, with the remainder evenly split between Single Grain and Single Malt. “When we started the company, we saw opportunity in the premium segment,” Teeling adds. “Irish whiskey was growing very quickly, dominated by a few big brands, and we feared that if someone didn’t push the premium end, the momentum could be lost. When we were launching in the United States, retailers told us that they wouldn’t have taken the meeting if we’d offered another blended whiskey priced at $19.99 because the category doesn’t need more of those.”

Teeling notes that the biggest Irish whiskey brands can be constrained by their long legacies. “With Teeling Whiskey Co., we had the opportunity to present something that people didn’t expect in Irish whiskey,” he says. “We want to add to the category through innovation, so we present ourselves as a whiskey that’s from Ireland—not just another Irish whiskey.” In addition to its three core products, Teeling recently offered 13 single casks for different accounts throughout the United States, a program it aims to continue in 2017. The company is also releasing a 24-year-old single malt whiskey later this year.

Teeling Whiskey Co. cofounder Stephen Teeling says consumers are seeking an emotional connection to the product.
Teeling Whiskey Co. cofounder Stephen Teeling says consumers are seeking an emotional connection to the product. (Photo by Conor McCabe)

Cultivating Consumers

Innovation isn’t limited to small producers, however. Although its category dominance lies with Jameson, Pernod Ricard has invested in boutique-type marques like Redbreast, Green Spot and Yellow Spot, which launched in February 2015. The company has also released special variants, such as Green Spot finished in barrels from Bordeaux’s Château Léoville Barton and Redbreast Sherry Finish Lustau Edition, a permanent part of the lineup that’s debuting this fall. While Redbreast and Green Spot account for a tiny portion of the company’s Irish whiskey sales, they’re growing fast—up 27.5 percent and 11.6 percent last year, respectively, according to Impact Databank. “Pernod Ricard has done a great job advertising Redbreast as a single pot still Irish whiskey and getting the information to the consumer,” says Vine & Table’s Lynch. “They’ve defined that category. People are now coming in asking what pot still whiskey is all about.”

Shoppers at Wyatt’s are also showing curiosity about Irish whiskey. “People ask questions about the brands,” Dinsmore says. “They want to learn and experiment. It’s fun to turn them on to different things. We talk about taste profiles, and it gives me the chance to discuss the whiskey and the distillery. That goes a long way.” Lynch agrees that telling a whiskey’s story drives interest. “Millennial consumers are interested in provenance and taste, and they’re inquisitive,” he says. “Many are tasting Irish whiskey at bars and then coming in to buy it. We get a lot of whisk(e)y newcomers, as well as people coming over because they’re getting priced out of Scotch.”

Binny’s is seeing similar trends. “Younger people are coming into the category because they’re exploring and experimenting with brown spirits in general,” Pontoni notes. “There’s a sort of hipness to Irish whiskey now. Many people might start with a shot of Jameson, but as the selection increases, they’ll try new brands.” He adds that craft beer drinkers are also gravitating toward Irish whiskey, and that trend shows up on-premise in some brands’ marketing strategies. Tullamore DEW promotes “DEW and a Brew,” pairing its Original expression with craft beer. “In key markets like New York City, some accounts even have Tully on Tap,” Parness says. “Consumers are starting to appreciate Irish whiskey as more than a shot.”

Parness notes that consumers are looking for experiences, and Teeling agrees. “Whiskey drinkers want an emotional connection and like to meet the people making the product,” he says. “They aren’t consuming brands anymore—they’re going after experiences. They want to learn, and they’re educating themselves. There’s no better market research than having a stand at WhiskyFest. People don’t hesitate to share their opinion.”

The "Teeling Trinity" of Single Grain, Small Batch and Single Malt whiskies provides a ladder for consumers looking to trade up.

Continued Innovation

All signs indicate that Irish whiskey will sustain its strong growth for at least the near term. Retailers point to the wave of investment sweeping the category, with distillery expansion and construction underway throughout Ireland. “What’s going on in Ireland at the moment mirrors America’s craft spirits renaissance,” says Pontoni of Binny’s. “There’s still plenty of room for growth, but there’s going to be a battle for share. Craft distillers are getting big, and the major players like Midleton, Bushmills, Tullamore and the new Great Northern distillery in Dundalk have massive developments coming online. Everyone’s trying to take advantage of the newfound interest in the category.”

At Vine & Table, Lynch—who’s an Irish ex-pat—looks forward to the fray. “I’d be happy if our inventory doubled or tripled,” he says. “There’s room for it, and customers are waiting.” Ongoing innovation in the category makes him excited. “I predict more styles of Irish whiskey becoming available,” he adds. “Craft producers will experiment with new recipes, different casks, higher proofs and other variations. Irish whiskey is moving beyond its fuddy-duddy image.”

Teeling is realistic about the challenges of the resurgence. “This is the start of a long journey,” he says. “The United States is blazing a trail for Irish whiskey at the moment, but it’s only scratching the surface. We’re constantly thinking about how to add to the category and excite drinkers.”