Among the thousands of Bourbons available in the Liquor Barn chain in Kentucky, there are few, if any, that are collecting dust. “There’s nothing that’s not hot, nothing that doesn’t move” in the Bourbon sector, according to Jonathan Blue, principal of Liquor Barn and alcohol strategy for e-commerce player Gopuff, which recently acquired the Kentucky retail group.
The pandemic did little to temper demand for the whiskey and now, with recovery underway, the long-vibrant segment is still booming. “I see absolutely no cooling off,” Blue says. “It’s as hot as it’s ever been and there’s no end in sight.”
In Virginia, Brewer Richardson—who is bar manager for Repeal Bourbon & Burgers in Virginia Beach—is seeing similar traffic. “We’re selling even more whiskey and other spirits than before the pandemic,” says Richardson. “My beer and wine sales however are definitely down. The demand for Bourbon has not only survived the pandemic, but it also seems to have thrived.” Repeal Bourbon & Burgers has a broad range of brands on offer. “If a whiskey is available in the state of Virginia, there’s a good chance it’s on my shelves,” Richardson says. Selling through is not the problem, but availability of certain brands is a constant struggle, he adds.
Bourbon has been on a tear in the U.S. market for the past several years, according to Impact Databank. The consumer demand for Bourbon began ramping up in the mid-2000s and accelerated greatly in the 2010s. The category added more than 10 million cases between 2010 and 2020, ending 2020 at nearly 26 million 9-liter case depletions.
Even a pandemic that ravaged the economy and kept restaurants and bars closed or minimally open for months didn’t curtail growth. “We’re in an industry that frankly flourished during the pandemic for all sorts of reasons,” says John Hayes, president for USA & Canada for Brown-Forman. Instead of curbing consumption when the on-premise was shuttered, consumers switched to retail in droves. And while restaurant and bar reopenings have been scattered this year, by late spring and into summer many venues were again teeming with people. Thus, it would stand to reason that the off-premise would be a bit soft. That’s not fully the case, however. “The latest numbers are looking surprisingly better than we expected,” Hayes notes.
For Bardstown, Kentucky-based Heaven Hill Brands, 2020’s stay-at-home orders presented major opportunities at the retail end. “Most every brand in our portfolio benefited from showings at retail,” Susan Wahl, vice president of American whiskey at Heaven Hill, recently told Market Watch sister publication Impact Newsletter. “The bigger brands have that consumer awareness and trust certainly saw strong sales, but people were really buying across all price points.”
In fact, eight of the top ten Bourbon and Tennessee whiskey brands in the U.S. market registered gains in 2020 despite the shutdown of the on-premise. Jack Daniel’s Tennessee whiskey, owned by Brown-Forman, continued to lead the field, despite a 2% decline to 5.32 million cases, followed by Jim Beam Bourbon, which leads the Beam Suntory portfolio and registered a 5.8% increase to 4.5 million cases, according to Impact Databank.
Major Player Success
Brown-Forman and Beam Suntory are the two biggest players in the category, together making up more than 60% of the overall market in 2020, according to Impact Databank. Super-premium brands within the Brown-Forman portfolio thrived, with Woodford Reserve skyrocketing 23.4% to 977,000 cases and Gentleman Jack surging 17% to 489,000 cases, according to Impact Databank.
One surprising shift has been the revitalization of the Old Forester brand, which jumped 15.3% to 320,000 cases. Hayes says the brand has experienced an “amazing renaissance” that started a few years ago but accelerated during the pandemic. “Seven or eight years ago Old Forester was a 70,000-80,000 case brand in the U.S. and was pretty much collecting dust outside of Kentucky and Alabama,” he says. “Led by Old Forester president and managing director Campbell Brown, the brand now has a whole new line called Whiskey Row, which is our $50-and-above extension of Old Forrester, and it’s closing in on half a million cases in the U.S. That’s just a completely incredible success story.”
Super-premium brands also gained considerable headway in the Beam Suntory portfolio. Super-premium brand Maker’s Mark gained 4.6% to 1.99 million cases, while Knob Creek advanced 2.3% to 520,000 cases. Basil Hayden fared even better, surging 23% to 393,000 cases.
In fact, the super-premium end of the Bourbon sector is thriving across the board. Of the top ten brands priced at the super-premium level, all gained volume and seven turned in double-digit increases, according to Impact Databank.
“Premiumization is something we’re seeing across the entire category—the sub-$20 players are struggling but the brands within $25-40 are doing quite well, and over $40 there’s incredible growth, and it’s not slowing down,” Sean Yelle, director of dark spirits at Campari America, told Impact. Wild Turkey shot up 15% last year to 810,000 cases.
Indeed, super-premium Bourbon has nearly doubled in the past five years, rising from a base of 4.75 million cases in the U.S. in 2015 to 8.83 million cases in 2020.
Brown-Forman’s Hayes notes that while the volume is still concentrated on the premium end of the business, the growth is disproportionally with the higher-priced entries. “If you look at the growth rates in the industry, in particular the $30-and-above segment is where we’re seeing significant growth,” he says.
For its part, Campari saw considerable growth for its Rare Breed Bourbon last year, and Yelle points to its more upscale image as reason for this growth. “Rare Breed is another mark of ours that has simply exploded, people are recognizing that when you have time and disposable income the ability to sample and experiment is there,” he says.
Steve Carpentier, general manager of Allied Management, Inc., which manages the Livingston, New Jersey-based retail chain Bottle King, says he sees first-hand the customers’ ongoing penchant for premium brands. Among the “big guys” doing well in his store are Maker’s Mark, Woodford Reserve, Bulleit, and Jim Beam—all but the latter are super-premium priced. Carpentier also mentions smaller-volume, high-end brands like Angel’s Envy, Basil Hayden, and Elijah Craig.
The invigoration of the higher-end, coupled with the huge success of a broad swath of craft distilleries around the country, has made for a dynamic and lucrative Bourbon sector for the past several years. Hundreds of new brands have been launched; many more are in the works. “Bourbon is a very active category and we get excited about new brands, but we have to be careful in our selection as we are limited to the amount of shelf space even after we have expanded the amount of space several times,” notes Carpentier.
Blue Run Spirits is one company trying to make its mark in the sector. “The exceptionally high consumer interest in the category has allowed Blue Run Spirits to explode onto the scene and make an immediate impact as whiskey fans seek out new, exciting bottlings beyond what is offered by the big suppliers,” says co-founder and CEO Mike Montgomery. “This is exactly what we have seen for our last three whiskey releases.”
The 56.5% abv Blue Run 14-year-old Small Batch Bourbon carries a suggested retail price of $200 a 750-ml. Montgomery notes that Blue Run focuses on the luxury tier to avoid a saturated market. “The top shelf actually has room for another high-end brand that pairs quality on the inside and outside of the bottle,” he says.
At a lower but still super-premium price point, Redwood Empire Whiskey recently launched Redwood Empire Pipe Dream Bourbon with a suggested retail price of $40. The company, which also produces Emerald Giant Rye whiskey and Lost Monarch blended whiskey, isn’t stopping with just one Bourbon label. “We are also about to launch our third annual Bourbon barrel pick program, called Redwood Empire Haystack Needle, also named after a famous redwood tree,” Redwood Empire president and CEO Aaron Webb says. “It can be hard to find and typically sells out in only a few days. Lastly, this fall we will launch two bottled-in-bond products.”
Bottled-in-bond Bourbons are on the upswing throughout the category. “Bottled-in-bond whiskies are incredibly hot right now, and there’s such a wide variety on the market now,” says Heaven Hill’s Wahl. “Not only are they a step up in terms of proof, but people gravitate towards bottled in bond now before they go up to the most top shelf Bourbon, because they generally have a more approachable price point.”
Education And Experimentation
One aspect of Bourbon specifically and spirits in general that has emerged in recent years is the thirst for knowledge about brands and categories. In years past consumers usually didn’t know the backstories about their favorite brands but the current generation of consumers has a noted desire for education.
That has been instrumental in the success of many line extensions and new brands. For example, Heaven Hill’s Larceny and Elijah Craig brands each released barrel-proof iterations of their core whiskies in recent years. According to Wahl, new releases like these succeed in part because they attract the more educated Bourbon consumer. “A good portion of Bourbon consumers are so highly educated on the process that they’ve all become explorers in some ways, looking for the next unicorn bottling that they can bring home and try with friends and taste against other products,” she says.
Morgan Barron, lead bartender at the Kimpton Banneker in Washington, D.C, says that with the pandemic, the level of education among consumers has ratcheted even higher. “I think people are taking more time and learning about what they’re buying,” she says. Barron held virtual classes during the pandemic, and often students would actively bring forth brands to discuss, she says.
Notably, the pandemic inspired a surge in consumption of well-known brands because many consumers were ordering online and simply choosing tried-and-true products. Now, reopening markets present opportunities. “The pandemic created an increased demand for authentic experiences while people were stuck inside or forced to maintain a physical distance from friends and family for months on end,” says Blue Run’s Montgomery. “We think this will continue unabated, and we think people will continue to seek out brands like Blue Run rather than returning to their pre-pandemic standard selections.”
Whiskey, in particular, lends itself to a lot of trial so consumers can discern nuances among the thousands of brands on offer. That spirit of exploration is what drives interest in some of the lesser-known or newer brands. “Pipe Dream, and all of Redwood Empire, truly resonates with the person we call the ‘whiskey explorer’,” Webb says. “Our consumer likely discovered whiskeys from Kentucky and Tennessee. Now their love for whiskey and their thirst for exploration takes them beyond the Bourbon belt and to other high-quality products.”
One development area that is still nascent in the Bourbon sector, compared to some other spirits types, is the involvement of celebrities in ownership or promotion of individual brands. Country singer Lee Greenwood took the plunge earlier this year with the launch of Lee Greenwood Signature Bourbon, in partnership with Omaha, Nebraska’s Soldier Valley Spirits. The Bourbon ($55 a 750-ml.), features the same liquid as Soldier Valley’s 6 Bourbon, which will be phased out as the new release gains distribution.
Liquor Barn’s Blue also points to the recent launch of Brother’s Bond Bourbon from actors Ian Somerhalder and Paul Wesley, stars of “The Vampire Diaries.” “It’s late to Bourbon but the celebrity trend is coming,” he says, anticipating more brands in the coming months.
Other differentiators could also play a role. The Kimpton Banneker’s Barron says the hotel is launching a new rooftop venue called Lady Bird, which at press time was scheduled to open in August. She’s assessing portfolio options for all spirits, including Bourbons, and has some unique requests. “I’m looking for more women- and Black-owned distilleries and companies in general,” she says. “Very popular names do well, but I do want to make an effort at Lady Bird to offer Bourbons that are accessible and are supporting more diversity in the producing mix.”