Tennessee Whiskey Exports:
The New Old Reliable
One doesnt usually associate words like reliable and steady with whiskey. Yet whiskey has become one of the states most reliable exports. Steady, and steadily increasing, the foreign sales of whiskey have more than trebled in the past decade. Over that time, it has well out-performed most other exported goods. With 2007 exports valued at $478 million, it was Tennessees fourth largest export this past year. (It was ranked 11th back in 1997.) The evidence suggests that this will continue for some time. 2008 is just the latest in a string of very strong years. Through April, whiskey exports are up a full quarter from just a year earlier. Very few products have had such a successful run through a variety of economic climates.
The global demand for American whiskey has never been stronger. This certainly explains much of the states success. But not all. During the past 10 years, American whiskey exports have risen by more than 150 percent (not adjusting for inflation). But Tennessees exports are up over 360 percent. In the past decade, Tennessee has become the nations top exporter of whiskey (surpassing Kentucky in 1999) and has gone on to grab more than 60 percent of Americas total whiskey exports. It now exports more than twice as much whiskey as Kentucky, now the number-two state.
The reason for this performance of course is Jack Daniels. The number of American whiskey brands marketed abroad remains narrow. While most of those brands are rapidly gaining sales, U.S. exports are in fact still dominated by two brands: Jim Beam and Jack Daniels. And over the past decade, Jack Daniels has forged a huge lead over its Kentucky competitor. Brown Foreman, the owner of Jack Daniels, reports that more than 50 percent of its sales now come in international markets. Jim Beam exports in the neighborhood of 35 percent of its total sales. The dramatic success of Jack Daniels has rebounded to the states benefit. (Not all state whiskey exports are Jack Daniels, of course, though the vast majority is. Distributors and wholesalers export some Kentucky bourbon as well. George Dickel does not export, although its product is available through mail order and specialty stores in some European countries. Those sales, however, appear to go through distributors located in other states.)
The success of Jack Daniels has been linked to its ability to build an identity firmly rooted in rural Americana. Foreign consumers may not know exactly where Tennessee is, but they recognize its lifestyle as depicted in Jack Daniels ads. Bourbon makers are increasingly taking this same marketing tack, and we will see how Brown Foreman responds. next