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Jack Daniel’s maker ventures into the Irish whiskey market

Whiskey And Tequila Continue To Increase Market Share Over Beer Within U.S.Whiskey And Tequila Continue To Increase Market Share Over Beer Within U.S.
Jack Daniel's producer Brown-Forman unveiled plans to enter the Irish whiskey category.Photograph by Scott Olson — Getty Images

Jack Daniel’s whiskey maker Brown-Forman is venturing into the fast-growing Irish whiskey market, with plans to sell new Irish whiskeys in the spring of 2017.

The maker of U.S. whiskeys such as Woodford Reserve and Old Forester has acquired Slane Castle Irish Whiskey, and will invest about $50 million to build a new distillery in County Meath, Ireland, which is less than an hour by car from Dublin.

Bourbons and Tennessee whiskeys have posted very strong sales growth in the U.S. in recent years, stealing market share from vodka as consumers are lured by blended whiskeys that help introduce new consumers to the category, as well as savvy marketing that often talks about a brand’s heritage and quality. Bourbon and Tennessee whiskeys grew by 7.4% in 2014, but Irish whiskey jumped an even stronger 9.1%. Irish whiskey, which is a far smaller category by volume, leapt an even more impressive 17.5% in 2013, according to the Distilled Spirits Council of America.

“Irish whiskey has been one of the fastest growing segments in the global whiskey category over the last few years,” said Lawson Whiting, Brown-Forman’s chief brands & strategy officer.

Brown-Forman (BF.B), which also sells tequilas and vodkas, for decades imported and marketed Bushmills Irish whiskey, but lost those rights in 2001. It hasn’t ever owned its own Irish whiskey brand.

It makes sense for the company to diversify and branch into additional alcoholic beverage subcategories. The company’s executives told analysts on Wednesday that there are fewer competitors in the Irish whiskey category, and thus it felt like it was a good opportunity to jump into the category before others do so. Brown-Forman said it wants to replicate the success it has seen when developing and marketing the pricey bourbon Woodford Reserve, which the company introduced in 1996.

And to Brown-Forman’s credit, the company has disclosed that the new Irish whiskeys it will initially sell in 2017 will be made with whiskey purchased from other Irish distilleries, and then finished to Slane’s specifications. Whiskeys take time to mature and age in bourbon barrels. New brands are often initially produced with whiskeys that are made from other distilleries, but many spirit makers hide where their whiskeys come from, a practice that has led to some criticism among influential alcoholic beverage bloggers and whiskey aficionados.