American whiskey is on fire — cinnamon-flavored fire — and it isn't going out any time soon, according to whiskey industry experts.
In the first four months of this year, sales of domestic whiskey are up 4 percent, with bourbon and Tennessee whiskey the dominant story, according to analysts at Rabobank, a Dutch banking and financial services giant.
The trend in flavored vodka might have peaked, but flavored whiskey is just getting started.
Brown-Forman executives seemed to echo that sentiment in comments made to analysts Wednesday after the Louisville-based spirits giant announced fourth-quarter earnings.
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"The phenomenon of flavored whiskies in the U.S. appears to be in its infancy, but it's already driving the most explosive growth seen in spirits in years," said Jane Morreau, chief financial officer of giant Brown-Forman.
For the year, the company reported sales were up 6 percent. But sales of Tennessee Honey, its Jack Daniel's spinoff, were up 36 percent.
The Rabobank report indicates that isn't an isolated success but a major trend: Whiskey as a category grew 6.2 percent last year, but an estimated 45 percent of that growth was driven by flavored whiskies.
Leading the way: Sazerac's stealthily marketed Fireball cinnamon whiskey.
Almost exclusively through social media, Fireball, once a fairly obscure brand, has achieved a fierce domination of the "shot occasion," when groups of friends — or strangers, frankly — down shots together, often in bars.
New Orleans-based Sazerac, which owns the brand, does not comment on Fireball. Ever. The company leaves it to consumers to do that via Twitter and Facebook.
And that's the way they like it: Fireball is like an 800-pound gorilla in the whiskey-soaked mist.
According to Bloomberg, Fireball skyrocketed from less than $2 million in sales in 2011 to $61 million in 2013.
Other whiskey brands have taken notice. In 2001, Jim Beam added a spiced cinnamon version to its popular Red Stag line of flavored whiskies; in 2013, Heaven Hill launched Cinerator; last year, Wild Turkey debuted a spiced bourbon; and in April, Brown-Forman began testing Tennessee Fire, a cinnamon variant of Jack Daniel's Tennessee whiskey.
"Fireball is such a phenomenon. I don't know that its an issue of catching Fireball," said Stephen Rannekleiv, senior wine and spirits analyst for Rabobank. "But there are a lot of competitors trying."
The cinnamon wars follow the sweet success of honey-flavored extensions of drink brands. Jack Daniel's Tennessee Honey, which this year became the first honeyed whiskey to sell a million cases, is becoming a standalone brand. Jim Beam's Red Stag has its own spinoffs, and Wild Turkey American Honey has relaunched to solid growth for its parent company, Campari.
But can this go on forever?
"Flavored line extensions present a dilemma for whiskey brand owners," Rannekleiv said. "American whiskey brands are having great success attracting new consumers by using sweeter, more approachable flavor variations; however, if not managed correctly, they could risk deteriorating the prestige of their brand in the long run, similar to what happened with the Blue Nun wine brand in the 1970s," he said, referencing a German wine brand that was phenomenally popular in the mid-20th century but fell out of favor.
"Scotch players are currently avoiding that danger by not venturing into flavor variations, but the lack of innovation — which might draw new consumers — carries its own risks," he said.
Flavored whiskies go after a different consumer, at the opposite end of the spectrum, from the other big trend in whiskey: super-premium brands.
"The nice thing about some of these flavored whiskies is it brings in new consumers in other markets. That's the upside," Rannekleiv said. "There are discussions in the industry of whether or not whiskey should go down the same road as vodka and chase after a new flavor every month. What does that mean for the brand in the long run? ...
"You don't see the flavors being added and expanded across some of the really super-premium brands — you don't see it with Maker's Mark or Woodford Reserve, for instance. I think there's an understanding there are different consumers, and they don't want to position brands in that way."
To whiskey purists, flavored whiskies like Fireball aren't worth the little plastic bottles they come in.
But few spirits companies can afford to ignore what they see as a new breed of consumer, provided they can avoid depreciating their brand or cannibalizing premium sales.
"Flavored whiskey is a larger segment than cognac, than Irish whiskey," Brown-Forman CEO Paul Vargo said Wednesday. "It will be larger than scotch, pretty soon."