Like a box of Red Hots candy, sales of cinnamon-flavored Fireball brand whiskey are on fire. Case volumes for distiller Sazerac's Fireball have grown from 450,000 in 2011 to 1.9 million last year with sales hitting $61 million. That puts it ahead of both Jameson Irish whiskey and Patron tequila, and in line to overtake Jaegermeister. Considering the market researchers at IRI say Fireball volumes are up another 173% for the 52-week period ending Oct. 5, it's likely it already burned through that marker.
That kind of scorching growth has attracted the attention of distillers both large and small. Although you can find brands like Bird Dog, Heaven Hill, Jeremiah Weed, and Revel Stoke all putting the equivalent of a pack of Big Red gum in their whiskey, it's the distillery giants Brown-Forman (NYSE:BF.B) and Beam Suntory weighing in with their own cinnamon-infused whiskeys that have people taking notice.
Jack Daniel's maker Brown-Forman tinkered with Tennessee Fire in a few test markets this year and is now ready to roll it out nationally early in 2015 while Beam Suntory already has its solution in Jim Beam Kentucky Fire.
Whiskey has been the top-performing spirits category over the past decade, growing at a 6% compounded annual rate, according to Brown-Forman, and the Distilled Spirits Council of the United States says 45% of whiskey's growth last year was the result of adding flavors.
Jack Daniel's Tennessee Honey, the honey-flavored whiskey Brown-Forman introduced in 2011, is the spirits maker's best-seller these days, registering 32% growth in underlying net sales over the first nine months of 2014. Beam introduced its own honey-flavored whiskey in 2012 and then began producing Jim Beam Maple last year.
The industry watchers at Technomic say honey- and maple-infused varieties are a large part of the reason you'll find more women drinking whiskey these days, and the latest data from Nielsen Research says women account for 27% of sales, though Beam says women make up 37% of whiskey drinkers. The Jack Daniel's maker says its Tennessee Honey attracts both women and millennials, as well as Hispanics and African-Americans.
Will cinnamon whiskey sales be too hot?
The cinnamon-flavored spirit appeals to drinkers across the board who are looking for a shot of something hot and sweet, and therein lies the risk.
The big distillers were able to introduce honey and maple varieties of whiskey without worry because they brought in new drinkers, which expanded the category and grew sales. But a new flavor that also appeals to men risks cannibalizing existing whiskey volumes. Brown-Forman in particular needs to be careful it doesn't undercut the growth of its premier Old No. 7 brand.
Jack Daniel's original whiskey has grown volumes at a 5% compounded rate for the past 10 years, and at 11.5 million cases in 2013 had almost double the volume of its nearest competitor, Johnny Walker Black from Diageo (NYSE:DEO), which notched 6 million cases. Brown-Forman needs to balance any new flavors it introduces with the need to preserve the base of Old No. 7's sales.
Even though Brown-Forman has a larger marketing budget than Sazerac, it might not easily displace Fireball, which has been on the U.S. market since 2007 and controls 80% of the cinnamon-flavored whiskey market, according to analysts at Stifel.
The decision to roll out Tennessee Fire nationally next year suggests the distiller believes it can walk that fine line of boosting sales of the one brand without cannibalizing the other. Jack Daniel's wasn't first to market with a honey-flavored whiskey but it quickly gained dominance over the niche. Now it has to prove it's cinnamon-infused whiskey can similarly quench Sazerac's fire without dousing its own growth.