Spirits producer Stellar Group plans to enter the cocktail market

Increasing competition among local whiskey brands may push drink producers to enter new segments. Thus, the owner of the second best-selling whiskey brand, Steersman Stellar Group, is thinking about launching cocktails of the same name with cola at 12% strength. Sales of such drinks are growing, but market participants fear a decline in demand after the indexation of excise taxes.

The producer of strong alcohol Stellar Group (brands Steersman, Old Barrel, etc.) plans to enter the cocktail market, according to data from Rospatent and RosAccreditation. In February 2024, the structure of the Stellar Spirits and Bottling group submitted an application to Rospatent to register an image of a bottle of Steersman whiskey-cola cocktail with a volume of 0.33 liters and a strength of 12%. The declaration for the production of such a drink was received by Salyut Alko LLC, which is also involved in contract bottling, according to the register of the Federal Accreditation Agency. Stellar Group and Salut Alco did not provide comments.

According to NielsenIQ, in 2023, the Steersman brand was the second largest selling whiskey in Russia in volume terms after William Lawson’s (owned by Bacardi), which is bottled by the Novabev Group. According to data from market participants available to Kommersant, in 2023 the Stellar Group structure increased whiskey production by 3%, to 758 thousand decaliters, and reduced cognac production by 9%, to 962 thousand decaliters.

In 2023, NielsenIQ estimates that cocktail sales grew 40.6% year-over-year in volume. In terms of growth rates in natural sales, the category ranks first in the alcohol market. As noted by NielsenIQ, about 70% of cocktails sold are made with gin and alcohol, but manufacturers are launching other options. Thus, according to analysts, in 2023, natural sales of cocktails with rum increased 12 times, with whiskey – six times year on year. In the structure of cocktail sales, drinks with rum accounted for 4.2%, with whiskey – 3.4%, calculated in NielsenIQ.

Director of CIFRRA Vadim Drobiz notes that last year’s whiskey production volume – more than 4 million decaliters – may already be close to peak values, competition in this market will become tougher and it is logical for companies to look for new niches. According to him, a drink with a strength of 12% cannot be classified as a classic low-alcohol cocktail with a strength of up to 9%, and it is unclear who could become the target group of consumers of the new product.

The head of WineRetail, Alexander Stavtsev, notes that in terms of strength, the Steersman drink with whiskey and cola can rather be classified as an aperitif, but a small bottle is not typical for this category. According to him, consumers in Russia are interested in alcohol in new formats, which is proven by the demand for sparkling wines in aluminum cans. But, Mr. Stavtsev points out, sales will also depend on the price. The ready-made Jack Daniel’s cocktail with cola was not successful in Russia precisely because of its relatively high cost, the expert notes. On the WineStyle online showcase, this drink cost 190 rubles. per can of 0.33 liters.

The Alcohol Siberian Group (ASG; Belaya Berezka, Husky) warns that the category will be affected by a new excise policy from May 2024, which could lead to an increase in average prices for ready-to-drink cocktails and a fall in demand. As noted in the materials available to Kommersant from the cocktail producers GC Rust, MPBK Ochakovo and Megapak, until May the excise tax for such drinks is calculated based on the alcohol content, and from May – based on the volume, regardless of the strength. According to calculations available to Kommersant, if today there is an excise tax of 17.99 rubles on a drink with a strength of 7% in a container of 0.5 liters, and 38.58 rubles with a strength of 12%, then from May the excise tax on both items will be 70. 5 rub.

In this regard, the ASG suspended the launch of cocktails based on vodka under the Husky brand with a strength of 12% and intend to develop a line of soju – a Korean drink usually with a strength of up to 20%. This category is less sensitive to price changes, the ACS notes. Ladoga (Tsarskaya, Barrister, Fowler’s) said that with the change in excise tax they focused on stronger drinks. Tatspirtprom (Tundra, Khanskaya) noted that they have supplemented the range of cocktails with whiskey-based liqueur with a strength of 30%.

Anatoly Kostyrev