AUSTRALIA. Annual sales of full-strength and ready-to-drink Canadian Club have shot up from 80,000 cases to 430,000 cases over the past 19 months, largely thanks to a -20% price cut by domestic distributor Swift & Moore.
Swift & Moore chief Tony Gapes said the company was making a big investment in Canadian Club, devoting 20% of its 2002-03 advertising and promotions budget of A$25.5 million to a brand accounting for just 8% of its sales.
“We want Canadian Club to be the next Jim Beam [a huge brand in Australia, where it currently sells 4.6 million cases a year-Ed],” he said. “It’s a ballsy ambition, but you have to start somewhere.
“We need a power brand. When Canadian Club is our power brand, we will really be giving Diageo [Bundaberg] and Maxxium [Jim Beam] some competition. Today, we don’t really threaten them.”
Swift & Moore, owned by global liquor giants Allied Domecq and Brown-Forman, has posted strong sales and profit growth this year from brands such as Jack Daniel’s, Southern Comfort, Kahlua, Tia Maria and Canadian Club. Australia’s full-strength spirits market is flat this year, at 5.8 million cases, while the ready-to-drink market is up +18% to 28 million cases.
Gapes claimed that Swift & Moore is growing faster than the market. He said the company’s sales would rise +22% to A$210 million in the 12 months to August 31. That growth has been driven by ready-to-drink products and solid increases for big brands such as Jack Daniel’s, Southern Comfort, Kahlua and cream liqueur Tia Lusso.
Swift & Moore is spending A$25.5 million on advertising and promotions in 2002-03, up from A$21 million in 2001-02. Over the past year, it has run the first television advertising for Canadian Club and the first TV campaigns for Southern Comfort and Malibu in several years.
About 45% of the budget is spent on media advertising, with the rest devoted to promotions. Interestingly, Swift & Moore has a separate budget to fund price discounting.
The ready-to-drink category has been the fastest growing and most competitive part of the spirits market in recent years. But the category’s annual growth rate has slowed from +34% late last year to +18% in the 12 months to March 31. Gapes blamed the slowdown on the fading popularity of female-oriented ready-to-drink products such as Diageo’s Stoli Lemon Ruski and Bacardi Breezer.
Late last year, sales of vodka-based ready-to-drink products were growing at +44% a year. In the six months to March 31, they increased by just +6%.
Swift & Moore has a claimed 5% of the local ready-to-drink market, but its sales have boomed in recent months, jumping 68% in March and 57% in April. It will sell 1.6 million cases of ready-to-drink products this year, up from 200,000 two years ago, plus 900,000 cases of full-strength products (up from 850,000).
