This article was initially published in the December/January issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
There may be a ‘sameness’ to the cream liqueur category, but new entrants are shaking things up with creative serves, pairings and NPD. Category leader Baileys isn’t sitting still either, reports Jaq Bayles.
A regular review of the cream liqueur category has something of a ‘Groundhog Day’ feel about it: mainly unchanging, with Baileys way in the lead and a cast of lesser-known supporting characters popping up in a variety of roles each year.
Given the remarkable dominance of the Diageo brand, that looks unlikely to change significantly anytime soon. However, innovation and premiumisation are bringing something new to the party, and sales have seen some major growth, despite the category seemingly running contrary to current consumer trends.
In terms of overall sales, IWSR Drinks Market Analysis research shows the global cream liqueur category grew 17% in volume terms in 2021 versus 2020, exceeding 2019's levels, while value increased by 25%.
Mary Sadlier, CEO of Coole Swan Irish Cream Liqueurs, points out that IWSR's 'Irish Spirits Report' for 2021 “shows significant growth not just in the traditional cream liqueur markets, such as the US and the UK, but also in new markets in Asia and Latin America”. In Ireland, 2021 saw cream liqueurs achieve 25% growth versus 2020 - this, she adds, was “twice the growth rate of gin”.
According to IWSR data, continues Sadlier, in the four years to the end of 2020, premium-and-above cream liqueurs (US$25-and-above) grew “much faster” than the rest of the segment in Europe and the US. “This trend it set to continue - premium-and-above spirits are forecast to increase their global volume market share from 9% to 13% by 2024, according to the IWSR,” she says.
Baileys’ stronghold forces entrants to find innovative ways in
Younger players appreciate the impossibility of trying to compete at the same level as the behemoth Baileys, which, of course, has the marketing and distribution weight of one of the world’s largest drinks groups behind it. So, various other factors come into play, as Miika Lipiäinen, co-founder & UK and Asia lead at Kyrö Distillery Co, explains: “It’s a hard category to get into. I don’t see price as a way to compete - Baileys is too big and too good at what it does. If you try to match or go under, they'll kill you. What you must do is establish a new position, a new crowd, maybe new occasions when you’d have a cream liqueur in order to compete.”
Sadlier concurs, adding that although Baileys is, in many ways, the face of the traditional category, there is certainly room for a sector revamp.
“There's a sameness about the category,” she says, which seems to be synonymous with brown bottles and images of rolling hills, along with the perennial issue of most of the volumes being sold around the festive season in a heavily price-promoted context.
“Retailers are looking at a category that has become dominated by branded price promos and own-label EDLP [everyday low pricing] and are looking for premiumisation to take the pressure off margins,” adds Sadlier. “Perhaps due to margin pressure, the category has lost sight of the importance of the taste profile. Cream liqueurs have lost relevance with today’s consumers and perhaps as a consequence have seen little focus in the on-trade.
“Consumers and trade are ready for a different take on creams with a focus on product quality and new, more relevant ways to enjoy them.”
Younger, urban consumers want an ‘elevated drink experience’
Coole Swan has identified a new generation of cream liqueur consumers who are “younger, urban-dwelling and focused on elevating their food and drink experiences”, according to Sadlier.
They are, she adds, “motivated by having great experiences but also by balance in their lives”. They want to drink less but better and “want no compromise” when they do choose to enjoy a drink. Sadlier says this trend is demonstrated by the growth of two key occasions that are “a long way from the festive tipple: sipping over ice and premium cocktails”.
Coole Swan, she adds, is “lighter, fresher and easier to mix than more traditional creams, which makes it much more versatile. By offering consumers fresh new takes on serves and cocktails Coole Swan is already benefiting from these trends.”
Coffee & ice cream serves prove popular in Finland and the UK
Finland’s Kyrö Dairy Cream is not yet widely available, but the distiller has also savvily pinpointed some niche categories in target markets. According to Lipiäinen, Finns are “in the top two in the world in per capita consumption of two things: coffee, which makes sense for a cold country, and ice cream, which makes no sense. Therefore, in Finland, both coffee and ice cream pairings have taken off for our product really quickly.” On the UK’s strong coffee scene, Kyrö sees “a lot of use with cold brew coffee”, reports Lipiäinen.
“In addition, we’ve started seeing shots pop up, such as Baby Finn which is 50% Kyrö and 50% coffee liqueur”, while in Taiwan there’s a tendency to use the liqueur “as a classic digestif. that works very well to balance out spicier food”.
Farm-to-table brand finds success in premium position
Johnny Harte, co-founder of Five Farms Irish Cream, praises Baileys as “an outstanding example of product innovation” and proclaims it to be “the greatest liqueur brand ever launched in the alcoholic beverage industry”.
Five Farms was only formally conceived in 2017, so it’s still early days, but Harte claims it is the only cream liqueur to have “succeeded in a premium position above Baileys”. This, of course, is the Holy Grail for any cream liqueur producer that is not set on competing with Diageo’s flagship on price alone. So, how did Five Farms pull this off?
“We set out to create the first farm-to-table Irish cream liqueur," says Harte. "We source our cream exclusively from five family-owned farms in west Cork. We use only triple-distilled Irish whiskey and whey alcohol derived from making the cheese from the same farms. We have the highest-possible butterfat content and use ten times the amount of Irish whiskey than the industry standard. Our cream is packaged in an authentic bespoke container that is inspired by traditional containers from the farm. In general, we retail at least 30% higher than Baileys.”
New pairings and ‘adult treating’ offer cross-seasonal opportunity
Despite its dominance, Baileys isn’t a brand to rest on its laurels, and in recent years has identified trends that it is certain will pull cream liqueurs out of its dusty festive niche and into a cross-seasonal role.
Looking at ‘adult treating’, Baileys global brand director Jennifer English says: “We’re inspiring consumers globally to get creative with Baileys all year round, from drizzling over ice cream in summer to adding a splash to hot chocolate in winter.”
While the fact that many consumers are concentrating on health & wellness, mindful drinking and lower ABV might suggest a move away from indulgent products, English says treating occasions are in no way counter to these trends.
“Treats are not the opposite of wellbeing,” she says. “They're part of a balanced, joyful lifestyle. Around the globe, the ‘adult treating’ category is in strong growth as consumers, more than ever before, look for moments of spontaneity and joy in their lives”. English believes this trend will continue, “whether it’s creating delicious serves and bakes at home, or catching up with friends for cocktails”.
The rise of vegan options and focus on environmental footprint
Another issue that has become a focus is consumers’ concerns around the health of the planet and subsequent moves to plant-based food and drink. Baileys responded to this in October by announcing B Corp certification.
“The rise of plant-based drinks is due to consumers wanting to live a life that is better for the planet,” says English. “Baileys has two significant responses to this: the first is to improve the environmental footprint of our brand; we power our factories with 100% renewable electricity and are supporting a change in farming culture with our 'Sustainable Farming Academy'. Secondly, we recognise there’s a growing demand for plant-based variants and have moved to this space. Baileys Almande is almond-based and available in a number of markets.”
Unsurprisingly, there have been other vegan cream liqueur entrants, including South Africa’s Amarula Vegan (owned by Distell), Spain’s Licor 43 Horchata (Zamora) and Estonia’s Vana Tallinn Coconut Cream (Liviko). These launches will inevitably lead to more plant-based NPD in the category.
Maybe that Goundhog Day feeling won’t be so strong next year.
This article was initially published in the December/January issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
