Cookie dough with your bourbon? Over the past decade, flavored whiskey has evolved from a handful of value-priced cinnamon or apple flavored bottles to a hot segment driven by innovative flavors from craft and emerging brands. As the diversity of flavors expands, suppliers have lured in new whiskey drinkers and found a niche for their sweet, and sometimes savory, spirits.
The segment has emerged as one to watch. Flavored whiskey sales were up by 14.6% over the last two years, compared to unflavored at 8.4%, according to Nielsen IQ data released in October 2022. Flavored whiskey is also tracking better against other flavored spirits: After a brief upturn in Q3 last year, ending data placed flavored spirits down -5.0%, but flavored whiskey continues to be a category growth driver (+4.1%), according to SipSource data.
Flavored whiskeys now range across the U.S.-focused bourbon, rye, moonshine and blended categories but also Canadian, Irish and even a new flavored Scotch have been entering the fray. Analysts are keeping an eye on new entrants and brand extensions.
In 2021, SKUs from mainstream brands like Fireball, Crown Royal, and Jack Daniels were some of the top selling flavored whiskeys on Drizly, but a fast-growing newcomer, Skrewball, ascended to number three. The peanut butter whiskey has grown significantly, gaining national distribution within a year of launching in 2018 and since expanding to Canada and the Caribbean. Named one of the fastest growing spirits brands by Forbes, it achieved a consumer retail growth rate of +1,976% in 2021 with over one million cases sold in three years, according to the brand.
While others have used flavored spirits as a jumping off point for ready-to-drink cocktails, Skrewball stuck to a smaller, portable version of the straight spirit, and released a 100 ml can earlier this year.
The company has managed to reach a similar demographic to the patrons that cozied up to co-founder Steven Yeng’s Ocean Beach restaurant for a peanut butter whiskey cocktail. Flavored whiskey consumers tend to trend younger than the average share of people who use Drizly, according to BevAlc Insights, with Gen Z an especially notable group.
“There’s people that like whiskey that would try the cocktail and people that like whiskey that try Skrewball, and then there’s new whiskey drinkers that come into the category,” said co-founder Brittany Merrill Yeng.
By embracing both their inexperience within the beverage industry as well as Skrewball’s polarizing flavor profile, the Yengs’ found a way to stand out.
“Really the whole brand is about just owning what you are and not trying to be something else, so if we had positioned it to go after whiskey purism and compete on that level, I don’t think that would have been the right course for us,” Yeng said.
At Hotel Tango Distillery, ‘Shmallow, a toasted marshmallow flavored bourbon, was also born as a cocktail in the distillery tasting room, but has played well with whiskey aficionados and novices.
“We knew with the trends in flavored and in particular dessert-flavored whiskey that there could be a real market for it,” said Nick Ladig, chief commercial officer of Hotel Tango.
After a stressful few years, consumers are prioritizing fun and escapism in the form of nostalgic and decadent flavors inspired by comforting treats, according to a recent IWSR report. Brands like Stillhouse have gone all-in, announcing a peanut butter s’mores whiskey last month. Other recent debuts have come from flavor-focused brands like spice company, The Watkins Co, and Dough Ball, a cookie dough flavored whiskey. Den of Thieves, which recently was added to the Pronghorn portfolio, offers premium chocolate and ginger-vanilla flavored bottles from a former bartender who wanted a higher quality option for cocktails.
Hotel Tango launched ‘Shmallow in April 2022, and went to full distribution four months later. The first production run sold so quickly, the company produced three times what they had first set as their year one goal. Ladig doesn’t have conversion data, but has anecdotally seen many new consumers brought “to the aged side of spirits” through ‘Shmallow. Priced at $30, the bottle was intended to be approachable for a craft spirit, earning it greater distribution and velocity in more rural areas where some of the company’s premium bourbons have not yet developed.
Flavored whiskey growth has been primarily driven by volume, as bottles typically skew towards value retail prices. Cinnamon, apple, peanut butter and other dessert-leaning flavors have ranked the most popular. But at Sonoma Distilling Co, a Black Truffle Rye that retails for $99 sits at the opposite end of the price and flavor spectrum. The bottle came to market five years ago in smaller format, and has since grown into a 750 ml bottle. The distillery has made special editions including one specifically for a French distributor.
Unlike other flavored whiskeys, this one was born at the table rather than the bar.
“Rye actually has a lot of flavor affinities with truffles,” said Adam Spiegel, president and master distiller. “So as you go to a food pairing or a whiskey dinner in which we do a lot of talking about truffles and rye whiskey, physically putting them into each other is totally natural progression for the whiskey geeks and for foodies.”
The diversity of whiskey bases and styles allows distillers to play well with different flavors, Spiegel explained. The savory nature of this rye distilled with a delicacy gives it a different niche on-premise and with high-income consumers, perhaps in a top tier Manhattan or paired with a cheese plate.
The flavored whiskey category generally skews off-premise, so advances are expected to be made into restaurants and bars, according to Adam Rogers, research director of IWSR Drinks Market Analysis. Nuanced flavor profiles will continue to enter the market through line extensions as well as solely flavor-focused brands launching seeking differentiation, he added.
With premiumization fueling spirits trends, bar and store shelves might also see more high end flavored whiskeys.
“The general consumer trend is looking like people drinking less and higher quality, and because of that the premiumization of whiskey continues to rise,” said Spiegel. “And so there you have it – truffle whiskey.”