Whiskey goes where vodka has given up treading

Vodka distillers who sought to win customers with flavours from marshmallow to cupcake saw the experiment backfire as consumers tired of the tastes.

That hasn’t stopped whiskey producers from trying the same trick. After the success of Jack Daniel’s Tennessee Honey, the creation of ever-more obscure whiskey flavours such as Diageo’s dessert-themed Piehole echoes vodka, where unusual varieties including fresh-cut grass created a consumer backlash and contributed to the category’s slowdown.

“This sort of rampant line extending is what undermined the vodka category in the US,” said Martin Deboo, an analyst at Jefferies in London.

Unlike vodka, where flavours provided the main thrust of growth for more than two decades, whiskey doesn’t lend itself to such a wide range of extensions.

Even though most flavoured whiskeys are only a few years old, Diageo’s North American president Larry Schwartz spoke last month of the “flavour fatigue” that hurt vodka sales doing the same to whiskey, jeopardising what has been one of the fastest-growing segments of the $453 billion spirits industry.

The latest crop of flavoured whiskies are seeking “transient populist appeal that may prove to be as evanescent as it is destructive to brand equity,” Mr Deboo said.

Absolut, owned by Pernod Ricard since 2008, started introducing flavoured vodkas in 1986 with Absolut Peppar – used as a base for a Bloody Mary – and added Citron two years later.

Over the past decade, flavoured vodkas in the US have boosted volume by 13 per cent a year, on average, compared with 4 per cent for traditional vodkas.

Last year alone, more than 200 new vodkas were introduced, and flavours comprised about a fifth of the US vodka market.

That share has receded by about 2 percentage points as consumers have embraced unflavoured upstarts like Tito’s Handmade Vodka. New flavour varieties – Purple, Cupcake, and Glazed Donut – have also come out of left field.

Diageo’s Fluffed Marshmallow Smirnoff variant boasted an “airy scent that is met with the subtle sweetness of confection,” a 2011 press release said.

Things took an even stranger turn the following year when Pernod debuted Oddka vodka in flavours such as electricity, apple pie, and fresh-cut grass. “It tastes exactly like it says on the bottle,” said a reviewer of the fresh-cut grass variant on Amazon.com. “Whether or not this is a good thing is entirely subjective.”

Oddka was “reasonably unsuccessful” and is no longer available across the US, Pierre Pringuet, Pernod’s outgoing chief executive officer said in September.

Flavours are driving about two-thirds of the growth in North American whiskies, according to Diageo, which is due to report first-half earnings on Thursday.

Much of that has come from Jack Daniel’s Tennessee Honey, which now accounts for more than 10 per cent of volume for Brown-Forman’s flagship brand, and Jim Beam’s Red Stag from Beam Suntory.

Flavoured bourbons accounted for just 3.3 per cent of US whiskey volume in 2013, according to data tracker IWSR, yet have grown about 87 per cent a year, on average, since 2008.

‘A new level of insanity’

Flavours have “immeasurably broadened” whiskey’s appeal, IWSR analyst Daniel Mettyear wrote in the researcher’s latest industry outlook. “This is widely seen as just the beginning.” And that’s the problem.

Take Piehole: The drink blends apple, pecan, and cherry-flavoured liqueurs alongside Canadian whiskey to create "lovable flavours" that "your pie hole is sure to love," Diageo said. Food and Wine magazine deemed the product "a new level of insanity."

Spirits makers say they won’t go overboard with whiskey flavours. Diageo says the y won’t sell one unless it “helps the base brand.”

Drinkers of flavoured whiskey are "completely different" from those who drink unflavoured spirits, said Charles Cowdery, author of Bourbon, Straight and an authority on American whiskey.

Yet it’s those who favour the flavours who are likely to get bored with honey and cinnamon, leading distillers to try new ones –peach, anyone? – with diminishing returns.

Industry researcher Canadean found that three out of four drinkers in bars and clubs are reluctant to try new products.

“In the face of so many new drinks they often stick to tried-and-tested favorites,” said Canadean analyst Sam Allen.

– Bloomberg