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Content
1. Introduction
2.  Methodology
3.  Key Issues
4.  Biggest Movers: Going UP
5. Biggest Movers: Going DOWN
6.  The Top 10
7.  Top Sectors
8.  Strongest Brands
9.  Biggest Brand Owners
10. Countries of Origin
11. The Top 100

1. Introduction

Intangible Business is the world’s leading independent brand valuation consultancy, specialising in the valuation and development of brands. It has valued and advised some of the world’s biggest brands from a management, legal and financial point of view.

 

Over the years Intangible Business has worked closely with many of the world’s leading spirits and wine brands. The Power 100 2008 is the third of Intangible Business’ annual reports into the most powerful spirits and wine brands in the world. The study uses a robust methodology which takes into account the consumer’s perception of brand strength and its financial performance. A panel of leading international drinks experts are asked to score each brand on a variety of measures and these scores are combined with hard volume data to create a league table of the most powerful international drinks brands in the world.

 

This study is the only one of its kind to provide access to the mechanics of the calculations and demonstrate how each brand generates its value. Workings have been deliberately left unlocked to allow for an open discussion of the brand rankings.

 

The Power 100 2008 looks at the key issues affecting the wines and spirits industry and identifies the brands which have performed well and those that have experienced difficulties over the past year.

 

2. Methodology

Nearly 10,000 brands in the spirits and wine sectors were researched to derive a list of the 100 most powerful spirits and wine brands in the world. Power is defined by a brand’s ability to generate value for its owner. Value is classified by a series of measures as identified below. The population for the research is all current and potential users of alcoholic drinks.

 

Scoring

Hard measures
•  Share of market: volume based measure of market share
•  Brand growth: projected growth based on 10 years historical data and future trends
•  Price positioning: a measure of a brand’s ability to command a premium
•  Market scope: number of markets in which the brand has a significant presence

Soft measures
•  Brand awareness: a combination of prompted and spontaneous awareness
•  Brand relevancy: capacity to relate to the brand and a propensity to purchase
•  Brand heritage: a brand’s longevity and a measure of how it is embedded in local culture
•  Brand perception: loyalty and how close a strong brand image is to a desire for ownership

 

A panel of eight leading experts in the drinks industry independently ranked each selected brand out of 10 on the above measures (10 = high, 0 = low). The scores given by the individual panel members were aggregated and averaged to reach a total score for each brand. A total score was achieved by multiplying a brand’s weighted volume by its brand score, within a defined range. The weighting is designed to adjust the volumes to a comparable level. Brand score is a derivative of the eight measures of brand strength. This results in a ranking of the world’s most powerful alcohol drinks brands.

 

The Panelists

The panel of drinks experts has over 200 year’s combined experience in the global drinks industry. They have been involved with all of the major drinks companies and held positions of responsibility in virtually every market. Between them they hold detailed financial and marketing knowledge of every brand covered in this report, and many more besides. Nearly 10,000 brands were looked at in the compilation of this research, across all markets, in every territory.

 

Stuart Whitwell, joint managing director of Intangible Business
Stuart spent ten years with Hiram Walker in Europe and Asia Pacific, specialising in brand and market business development projects, holding various senior positions in finance, business development and general management, latterly as regional director of finance and business development for Asia Pacific. Since leaving Hong Kong, where he set up a consultancy undertaking projects for Brown-Forman, Pernod Ricard and Jose Estevez in China and the Philippines, Stuart has carried out many projects for drinks companies such as Allied Domecq, Pernod Ricard, Fortune Brands and Angostura. Stuart is co-founder and joint managing director of Intangible Business.

 

Allan Caldwell, director at Intangible Business
Allan has considerable international drinks experience working throughout Europe, North and South America and the Far East. For ten years he held a variety of senior, commercial and finance roles and was responsible for numerous business restructurings, acquisitions and sustained profit growth, latterly as finance & commercial services director for Allied Domecq’s Duty Free division. He has since been heavily involved in the drinks industry through his work as a director of Intangible Business.

 

Donard Gaynor, President of International, Beam Global
An industry veteran with more than two decades of global business experience, Gaynor oversees all international business interests for the company, from commercial and marketing operations to strategic partnership development. Gaynor is a member of the Beam Global’s executive committee, and leads the organizations international senior leadership team. He also sits on the board of Maxxium Holdings, the global sales and distribution arm for Beam Global. Gaynor’s team plays a key role collaborating with many global trade partners, including Maxxium.

 

Charles Richardson, consultant at Intangible Business
Charles Richardson spent his entire career in the wine and spirits industry, latterly as President of Allied Domecq Duty Free for 11 years. Charles is now a special consultant with Intangible Business, providing expert insight into the wine and spirits market.

 

Jamie Odell, Managing Director – Foster’s Australia, Asia & Pacific
Jamie Odell is Managing Director of Foster’s in the Australian and Asia Pacific region with responsibility for the sales and marketing of Foster’s extensive portfolio of beer, wine, spirits and other alcoholic and non-alcoholic beverages. Jamie has more than 25 years’ experience in the beverage sector in Australia, Asia and Europe. Jamie joined Foster’s in April 2000. He was promoted from Managing Director of the Asia Pacific region of Beringer Blass Wine Estates (BBWE) to the position of Chief Operating Officer in early 2004. After leading Foster’s Wine Trade Operational Review, he became Managing Director of BBWE at the beginning of 2005. Following Foster’s acquisition of Southcorp Wines in mid 2005, Jamie Odell became Managing Director of the combined international wine business, Foster’s Wine Estates.

 

Malcolm Davis, director of brand strategy and development, Intangible Business
Malcolm has held many senior positions in international drinks management, notably in Asia Pacific markets. He has worked at Hiram Walker and Allied Domecq and was a senior director at Harveys of Bristol Ltd, Suntory and Baskin Robbins. Malcolm is currently a director of Duval-Leroy Champagne and a director of Intangible Business.

 

Patrick Gillon, director of brand strategy and development, Intangible Business
Continental Europe and Latin America are Patrick’s specialist markets. His career spans senior marketing and management positions in UDV, Hiram Walker and Allied Domecq, with whom he was president of Latin America for four years. Patrick is currently involved in several Continental Europe initiatives and has recently been involved in valuing Allied Domecq’s brands and business as part of its acquisition by Pernod Ricard and Fortune Brands.

 

The Drinks Business
The Drinks Business is a leading UK drinks trade publication and is at the forefront of what is happening in the industry. Published monthly, The Drinks Business is often the first to hear about new development. It launched a new research arm, Drinks Insight with more research and data analysis than in any other trade title. This, combined with its many reports and continued attendance at all the international fairs, give the Drinks Business team a privileged insight into the latest industry trends.

 

3. Key Issues

US/ World Economy
The current economic slowdown will inevitably impact the global drinks market but the extent of its impact remains unclear. Recent figures reveal that American consumers are already reducing their number of shopping trips as they begin to feel the pinch of an economic downturn. This trend is likely to spread across the globe as consumers look for value rather than luxury and there will be a decrease in the demand for premium products. The USA is a key market for many of the brands in the Power 100 and they will surely feel the pressure of an economic slowdown. Yet despite the threat of a global economic demise, the drinks industry has a history of remaining relatively buoyant in times of economic decline.

 

Consolidation vs. Innovation
The trend for consolidation has continued into 2008 with Pernod Ricard in the process of swallowing up Vin & Sprit. Pernod Ricard will soon complete its acquisition of the Absolut brand and its expansion puts it only slightly behind Diageo in volume figures. The formation of these drinks giants has led to increased market dominance at the expense of the smaller companies which will be pushed further out of the market by these aggressive market leaders.

 

Beam Global, which already counts Jim Beam and Sauza tequila in its portfolio, will be looking for acquisitions to stand a chance of competing against Diageo or Pernod Ricard, or risk becoming a bid target itself. If Beam is on the look out for a vodka brand to enhance its portfolio it may consider bidding for Stolichnaya when Pernod Ricard relinquishes its distribution rights. Pernod Ricard has been responsible for marketing Stolichnaya internationally but it will now switch its focus onto the newly acquired Absolut brand.

 

Innovation appears to have been overshadowed by growth this year. Companies have been more concerned with adding existing strong brands to their portfolios rather than developing new brands. One exception has been the phenomenal rise of Patron Tequila. It has been marketed as an ultra-premium product and described as the ‘Dom Pérignon of tequilas.’ The Patron Spirits Company has experienced double digit sales growth in the past few years and its growth and popularity shows no sign of abating.

 

Brand Depth
The scotch category, led by Johnnie Walker and the winning combination of Ballantines and Chivas Regal, is rapidly encroaching on the vodka category. The trend is particularly noticeable in this year’s two most powerful brands: Smirnoff, which has clung to the number one position and Johnnie Walker, which, although sitting in second place, has a significantly higher brand score than Smirnoff. If Johnnie Walker’s growth continues, Smirnoff could be superseded. This is a result of brand depth and territorial relevance. Scotch is performing very well in all continents while vodka still has a heavy reliance upon the US market. This indicates that the vodka category may have reached a plateau and the drinks groups will need to look beyond the next vodka flavour to generate growth.

 

New World vs. Old World
Wine has been performing well across the board over the past year. The Spanish brand Concha y Toro and Australian brands such as Yellow Tail have achieved good growth across their key markets and look set to continue this upward trend.

 

France is one of the world’s greatest wine producers but it is missing out on valuable opportunities by failing to tap into a segment of the market that the new world wines have excelled in. France largely relies on its regions and reputation as a producer of exceptional wines. The new world wine producers such as the Australian Hardys brand provide a good standard of wine at a reasonable price. Research has shown that consumers are attracted to strong brands and imagery. Picking out a wine based on region or origin creates confusion amongst consumers. Wine manufacturers in Australia, Spain, the US and South Africa have produced a very high standard of wine and carved out strong brands for themselves.

 

French wine manufacturers should follow the example of their native Champagne brands which have managed to build strong brands around their heritage. Veuve Cliquot, Moet Chandon, Louis Roederer and Bollinger are examples of successful Champagne brands to emerge from France.

 

5. The Biggest Movers – Going UP

1. Johnnie Walker, total score up 20%
Over the past few years Johnnie Walker has gone from strength to strength with a total score increase of 20% in 2008. It has replaced Bacardi as the world’s second most powerful spirit brand and its continued growth and momentum threatens to knock Smirnoff off the number one spot in 2009. Johnnie Walker is not the only thriving whisky brand; the whisky category has experienced an upward trend in the last year with other brands experiencing strong growth.

 

2. Patron, total score up 7%
Patron has taken a giant leap up to number 35 this year after becoming one of the fastest growing drink brands of the past year. It has become the top selling ultra-premium tequila in the world and its smooth taste and luxury image sets it apart from the other tequila brands. Tequila has been enjoying a renaissance in recent years and Patron’s popularity amongst celebrities has increased its kudos.

 

3. Hennessy, total score up 7%
The brand that boasts ‘an incredible capacity to slip easily into the most diverse of cultures’ has continued its impressive growth across all of the major markets. Hennessy is the definitive cognac with an iconic status and stands head and shoulders above the other cognac brands in the Power 100. It has had especially rapid growth in China, Russia and Vietnam over the last year.

 

4. Jim Beam, total score up 5%
Jim Beam leapt 7 places to number 13 this year. Its brand equity has also increased by 5%, scoring especially well on heritage and brand awareness. It has had success with Jim Beam Black and has performed especially well in the Australian market. The bourbon category as a whole, however, lacks the depth of heritage and product range to compete effectively with the Scotch whiskey category across many international markets.

 

5. Hardys, total score up 2%
Hardys has had another successful year climbing into the top 20 and now looks poised to become the most powerful wine brand in 2009. Its main competitor, Gallo, has not experienced the same steady rate of growth as Hardys and is only a fraction ahead. Hardys has continued to enhance its image and has a good position in the UK market where it is planning to embark on a new £12m advertising campaign.

 

6. The Biggest Movers – Going DOWN

1. Larios, -23 positions
Larios’ brand equity has decreased by 5% since 2007 for two possible reasons. Firstly, the gin category has fallen out of favour and like several other gin brands, Larios is in need of an image overhaul. Secondly, its integration into the Beam Global stable appears not to have gone as smoothly as it could have done. With renewed investment and management attention, Larios has the potential to steady the ship.

 

2. 100 Pipers, -22 positions
100 Pipers is owned by Pernod Ricard but is overshadowed by Pernod’s highly successful leading brands, Chivas Regal and Ballantines. 100 Pipers is not a premium blend and the brand lacks aspiration. Pernod Ricard could reconsider its price positioning in order to give the brand a boost. 100 Pipers experienced a sharp decline in sales in Asia and this has had a severe impact.

 

3. Kahlúa, -8 positions
Kahlúa has been declining steadily for the past few years despite Pernod Ricard’s best efforts to revitalise the brand with the unveiling of new packaging and the launch of two new flavours; Kahlúa Hazelnut and Kahlúa French Vanilla. Kahlúa’s top markets are the USA and Canada. The economic problems could have a severe impact on the brand.

 

4. Southern Comfort, -8 positions
Southern Comfort is a sweet liquer aimed at younger consumers and is at risk of losing its target audience as their tastes change and mature. Its key markets are the USA and Canada and like many other brands with a strong position in the US, it may struggle to maintain its position in the current economic climate.

 

5. Gordons Gin, -4 positions
Despite its position as the world’s most popular gin brand, Gordon’s has dropped out of the top 20 this year. Its decline could be attributed to gin’s general decrease in popularity in recent years. Gordon’s sales remain steady but further investment into the brand has perhaps been overlooked in favour of the Diageo’s more successful brands.

 

7. The Top 10

1. Smirnoff
Smirnoff has held onto its top spot for the third year running and its popularity remains unwavering. Smirnoff is an innovative, versatile brand and has branched out several sub brands including Smirnoff Black Label and Smirnoff Blue Label. The lucrative cocktail market shows no sign of waning and helps to drive the demand for vodka. However, with Johnnie Walker hot on its heels, Smirnoff’s future as the world’s number one spirit brand looks uncertain. As the brand generates a significant amount of income from the US, it may suffer as the economy continues to weaken. Also, its position and potential in the growing Asian markets is significantly weaker than its dark spirit competitors.

 

2. Johnnie Walker
Johnnie Walker is the world’s most powerful whisky brand and is rapidly encroaching on Smirnoff as a contender for the number one spot. Both Johnnie Walker and Smirnoff are owned by Diageo, the world’s leading premium drinks business. Johnnie Walker is made up of numerous brands; Johnnie Walker Red Label; Black Label; Gold Label; Blue Label; Green Label and Premier Malt. Johnnie Walker largest markets are the US, Global Duty Free, Greece, Australia and Spain. Also, its premium status and growth potential in lucrative Asian markets mark it out as one to watch. Johnnie Walker is probably the only spirits and wine brand that can claim to be truly global with leading market positions in multiple markets spanning all continents.

 

3. Bacardi
Bacardi’s position as the second most powerful spirit brand in the world was usurped this year by Johnnie Walker. It was one of only two brands in the top 10 to lose value, its equity falling 2% as sales stagnated. However, it continues to dominate the rum category and its brand score has increased by 3% since last year. Bacardi is marketed all over the world and its key markets are the US, Mexico, UK, Spain and Trinidad.

 

4. Martini
Martini has had a good year with its total score up 8% and its number 4 position maintained. Its brand equity too, has performed well with the panel of experts deeming it 6% more valuable than the previous year with a particular increase in its market scope, market share and relevancy. With Bacardi also in its owners brand portfolio, Martini is well supported, aiding its distribution and price positioning.

 

5. Hennessy
Hennessy is the world’s number one cognac, a powerful and rich brand that defines the cognac category. It has an excellent heritage and a refined, luxury image that places it head and shoulders above the other cognac brands in the Power 100. It continues to garner a huge share of the cognac market while Martell, its nearest competitor, sits 25 places below Hennessy at number 30. It is sold all over the world and has performed particularly well in its major markets; duty free US and Asia.

 

6. Absolut
In the last year, Absolut has become the world’s sixth most powerful spirit and the second most powerful vodka brand. Its brand equity has increased by 5% and it has expanded its range with the introduction of new flavours and the recent launch of Absolut 100. Pernod Ricard recently beat off fierce competition to snap up Absolut and the transfer to Pernod Ricard should boost its growth and strengthen the brand. Pernod will need to manage the brand carefully and ensure a smooth transition to avoid distribution problems.

 

7. Jack Daniels
Jack Daniels, a truly iconic masterpiece, is the world’s second most powerful whiskey brand and the most popular American spirit brand in the world. It has achieved a superb position but could struggle to maintain this momentum. Jack Daniels is another exceptionally rich brand that defines its category. After many years of growth it will require an increase in its brand equity to maintain its current position.

 

8. Chivas Regal
Chivas Regal is still the second most powerful blended Scotch after Johnnie Walker. The brand has performed particularly well in the last year with its volume increasing by 19%. Chivas Regal’s key markets are the US, travel retail, Japan, Italy, France, Spain and South Korea. It has also experienced growth in Central and South America over the past year. Although the brand was ranked the same as last year, its equity has increased by 2%, benefiting from it relationship with Ballantines and the stewardship of Pernod Ricard.

 

9. Baileys
Baileys has risen to number 9 this year and remains the world’s number one liquer brand. It dominates its category and to bolster its position yet further, Diageo launched a range of flavoured Baileys in 2006, including Baileys with a hint of mint chocolate. This strategy supported the main brand, increasing its relevance with consumers and encouraging trial. Baileys’ brand equity consequently increased by 2% in 2008 and is expected to continue its success in 2009.

 

10. Ballantines
Ballantines is a new entry in the top 10 this year, moving up one place. The brand had struggled in previous years but Ballantines and Chivas Regal have become the ultimate combination for Pernod Ricard and both brands have achieved considerable growth. Its brand equity increased by 5% following volume growth and a brand score up 7%. Its key markets are Continental Europe for Ballantines Finest and the Far East and Duty Free for the defining 17 year old blend. It is not reliant upon the US market so will be more resilient to the brewing economic storm than others. Also, its penetration into the Asian markets creates a solid base for future growth in both volume and value terms.