Irish whiskey: a refreshing take on an inherently conservative market

It has been a surprisingly good year for the global whiskey industry.

But stripping away the statistical noise created by the skyrocketing sales of lower-end ‘other whiskey’ varietals, the obscure, if relatively healthy, Canadian and Japanese offerings and the momentarily stalling Scotch heavyweights, the Irish take on the tipple appears to be the one perfectly capturing the zeitgeist .

Youth-oriented and smoother on the palate, ideal for mixing and affordable, playful and casual, Irish whiskey’s entry-level credentials are translating into unparalleled dynamism, while paving the way for significant gains in the years to come. Euromonitor International investigates.

From Ireland to the world

It has been repeatedly suggested over the past year that any solid recovery for the heavily indebted Republic of Ireland would have to be export-led. And what better representation of ‘brand Ireland’ than Irish whiskey, encapsulating the nation’s quirky twist on a category that has almost come to be identified with the serious, conservative and overly sophisticated Scotch varietals.

It was exactly Scotch’s outdated positioning that gradually created a gap in the market, opening the floodgates for Irish whiskey to tap into the ever-inquisitive, upwardly mobile young urbanites in a rising number of key mature markets. Posting 2% total volume growth on a global level in 2009 is no mean feat, especially considering the dismal international economic backdrop.

The US, Ireland, France, the UK, South Africa and Germany top the global rankings in terms of volume sales in what, at first glance, appears to be a mixed bag of performances. Nevertheless, it is only Irish whiskey’s birthplace itself as well as neighbouring UK that actually came face to face with declines.

Posting 5% and 2% drops, respectively, in 2009, the slump taking place in Ireland and the UK should be examined through the looking glass of severe recessionary pressure as well as the lack of novelty element that catapulted the segment’s sales in the rest of its key markets.

And catapult it did. Irish whiskey continued to record the strongest growth in the US in 2009, growing by a mind-boggling 11% in total volume terms. While this growth is derived from a relatively small sales base of 10 million litres in 2009 – accounting for only a 3% share of total volume sales of whiskey in the US – the almost uniform stalling of the domestic alcoholic drinks market in the country makes this accomplishment all the more impressive.

Men in the 25-35-year-old demographic, infamously volatile in their lifestyle choices, used Irish whiskey as a trading down or across alternative switching away from vodka-based cocktails or cheaper bourbon.

Nevertheless, US consumers are not the only ones embracing the low-key Irish offering. German consumers are also rapidly moving down the same path, providing 7% total volume growth for the category in 2009 while South Africa was not far behind with 4%.

The category’s signature affordability is providing an additional incentive for both cash-strapped and increasingly thrifty audiences, and as long as consumer confidence remains subdued, Irish whiskey will continue its steady ascent. But even that is not enough.

New directions

Irish whiskey is expected to post 3% total volume growth on a global level over 2009-2014. While volume gains are more than welcome and certainly preferable than fighting over share in otherwise stagnating mature markets, diversification, standardisation and education are the only tried and tested routes to value growth.

New product launches are already hinting towards a more premium direction, with Cooley Distillery’s Kilbeggan Reserve Malt being the latest in a series of small batch, aged or limited releases. And while selling a premium brand these days goes hand in hand with selling a story, regulating production procedures secures the implied positioning.

Irish whiskey distillers are in the advanced stages of drafting a document to give their products protected name status in the EU. If approved, ministers will then take the file to the European Commission, which will decide whether to make Irish whiskey a protected designation of origin (PDO), a status already enjoyed by Scotch distillers. While Scotch has wholeheartedly subscribed to the ”Age matters” campaign, Irish whiskey is a great example of the view that age is not the only thing that matters.