Bacardi to take on Baileys in cream liqueur market
leading alcohol brand owners in the UK are turning their attention
to other segments as RTD sales begin to stagnate. Widespread growth
in the liqueur market means that this is likely to become the next
battleground, with a number of product launches already planned.
Bacardi-Martini, one of the pioneers of the RTD category in the UK with its Breezer brand, is set once again to go head-to-head with rival Diageo (maker of the Smirnoff Ice RTD brand) following the launch of a new cream liqueur brand called Kalyr. Diageo's Baileys is the undisputed market leader in the cream liqueur category.
Due to be test marketed in Northern Ireland prior to a nationwide UK rollout, Kalyr is a cream liqueur made from exotic fruit and cream and is aimed at 25 to 45 year old women. At 12.5 per cent abv, its alcohol content is lower than its main rivals - Baileys and Tia Lusso, the cream liqueur variant of Allied Domecq's Tia Maria brand - both of which are 17 per cent abv.
According to Pat Brazzier of PASH Beverage Research in the UK, both Diageo and Allied Domecq have been focusing their attention on dispelling the myth that cream liqueurs are only for Christmas, and Bacardi is seeking to capitalise on the momentum they have created.
Baileys is the leading liqueur brand in the world with sales in 2003 of 6.6 million cases (up 10 per cent on the year before), and the UK market alone accounts for 1 million cases accounting for around 1 million cases. Brand extensions such as Bailey's Minis in 2002 and the more recent RTD variant, Baileys Glide, have helped boost sales further.
Allied Domecq's Tia Lusso had an extensive €50 million launch in key markets across Europe in 2002. The brand has retained its position as the number two selling cream liqueur in the United Kingdom and continues to gain share, Brazzier said.
However, last week, Philip Bowman, Allied Domecq's chief executive, underlined how competitive the cream liqueur market remains. "Diageo has attacked Tia Lusso aggressively with pricing, particularly last Christmas. We interpreted that as a move that was designed to kill us off."
As a result, the budgeted move into profit for Tia Lusso in the fourth year after its launch has now been pushed back by at least a year, Bowman said, but insisted that the market was big enough for both Bailey's and Tia Lusso to "make decent money" - although what impact Kalyr will have on this dynamic remains to be seen.
Diageo, for its part, has refuted the claims that is looking to kill off Tia Lusso. "Consumer pricing is driven by retailers and it would not be in our interest to devalue Baileys as a brand [by reducing the price too sharply]," the company said.
The liqueurs category is clearly seen as one with the greatest potential in the immediate future, especially in light of the slowdown in the RTD category. In the last few weeks alone, Scotch whisky group Whyte & Mackay has launched a new RTD cocktail product under its Vladivar vodka brand, while Blavod Extreme Spirits has begun rolling out traditional French Marie Brizard liqueurs to the supermarket sector, both cashing in continued growth in the liqueur/cocktail markets.
