Uncovering the opportunities and threats resulting from emerging categories and media, highlighting how to maximise future potential.

Alan Moss December 2013

My background13 years with Remy/Maxxium: UK, India, S.E. Asia/Korea.

Consultancy for Campari International.

9 years in absinthe category, selling to over 30 countries.

Investigating the recent re-emergence of absinthe to determine whether the category will achieve critical mass this time around.

How emerging categories and sub-categories impact your innovation pipelines

Investigating the recent re-emergence of absinthe to determine whether the category will achieve critical mass this time around.

Savoy Cocktails

All cocktails Ingredients

% Absinthe drinks Ingredients %

Gin 421 48 58 54

Vermouth 286 33 47 44

Brandy 134 15 16 15

Whisky 117 13 19 18

Absinthe 108 12 108 100

Rum 91 16 18 17

Cointreau 48 12 18 17

Sherry 29 13 14 13

Vodka 4 27 9 8

Total 878 1,603 108

Achieving critical mass?

Not yet, at least not by "big company" standards.

Less than 250,000 x 9 litre cases in total (Source: IWSR 2012). c. 40% in USA.

At $60+ a bottle, however, it is an interesting "craft spirits" category.

With improvements in product quality (following the Swiss and US examples), and better product marketing, the category IS growing in most markets, especially in large cities, and in top new bars.

Critical mass is being achieved in key sectors, especially in USA.

Canon Seattle

Absinthes Page 1

Critical Mass?No. of US bars with more than 10 higher quality absinthes (i.e. ones with no artificial colours) in many States, especially NY, California, Nevada, Illinois, Washington DC, Florida, Texas, Louisiana, Colorado. No. = 100+

Similar UK bars? No. = 5?

No. of US liquor store groups (20+ outlets) with more than 5 higher quality absinthes in CA, Illinois, Texas , Nevada etc. No. = 5+

Similar UK liquor store groups? No. = 0.

Typical Absinthe Sales Chart (years)

0

25

50

75

100

1 2 3 4 5 6 7 8 9 10

The Misinformed

Minus the Disappointed

The Well Educated

Absinthe 2000 - 20132000 La Fée Versinthe *2001 Pernod Absente * Francois Guy200220032004 Jade2005 Kubler La Clandestine20062007 Lucid St. George Mansinthe2008 USA Flood! St. Antoine20092010 USA Casualties2011 France resolved20122013 Pernod re-launch La Fée re-launch

Absinthe constraint factors

100 years of misunderstanding.

15 years of sub-standard products and questionable marketing outside the control of Portman etc.

Emphasis on, or innuendoes about "the absinthe effect."

Burning.

No definition (except in Switzerland).

Absinthe growth factors

Move to all-natural, distilled absinthes.

Moving from "absinthe effects" and burning to "terroir" and heritage.

Growth of cocktails.

Big company interest.

Costs and pricing.

Opportunities in E. Europe, Asia, and S. America.

Potential market size: 1 million x 9 litre cases within 5 years.

How emerging categories and sub-categories impact your innovation pipelines

Some top industry trendsGlobal growth of cocktails, both classic and modern. YES

Premium/super premium spirits share growth. YES

Move to craft drinks with authenticity/heritage and localised appeal. YES

Low alcohol/low calorie. NO

Category blurring, e.g. Flavoured Tequila, Ciroc Amaretto. NO

Innovation in Absinthe?The category remains very new for most consumers: so is innovation appropriate?

Flavoured and RTD absinthe mixes have been tried in the US, unsuccessfully so far.

Higher strength products.

Lower strength products, including cream, egg and chocolate bases.

Barrel-aged absinthes.

Packaging, especially 200 ml.

Product DevelopmentLike most Swiss companies, we re-entered with a "blanche" style: we decided early on to get into the bigger "verte" sector, with two brands, including an absinthe first made in the USA in 1902 (a 12 month project).

We are testing an ultra-premium expression: six year barrel-aged absinthe. Rather "niche."

Dessert style absinthe drinks being marketed. We have an Absinthe Egg Nog; another company has a chocolate flavoured absinthe.

Smaller bottles are good for trial and/or affordability.

SummaryCritical mass is being achieved, especially in the USA. Much more to come.

Social media can allow smaller brands to compete with the bigger brands.

Innovation may be less important for a market that is still young (the second time around!), and that is still so widely misunderstood.