Lysholm Linie Aquavit: international marketing of the Norwegian Aquavit brand
Lysholm Linie Aquavit is marketed by the Norwegian spirits manufacturer Arcus Group (www.arcus.no), which has approximately 1.3 billion Norwegian Kroner (3150 million) sales (2008) and 480 employees. Around half of the Arcus sales is generated outside Norway. Aquavit, which translates as ‘water of life', a slightly yellow or colourless alcoholic liquor, is produced in the Scandinavian countries by redistilling neutral spirits such as grain or potatoes and flavouring them with caraway seeds. It is often consumed as an aperitif. The alcohol content in the various aquavits varies somewhat, but starts at 37.5 per cent.
Most brands contain about 40 per cent alcohol but Lysholm Linie Aquavit has an alcohol content of 41.5 per cent. (Lysholm is the name of the distillery in Trondheim where the aquavit is made, and from this point on the name ‘Linie Aquavit' is used.) The history of Aquavit Aquavit was originally used for medicinal purposes, but from the 1700s stills became commonplace in Scandinavian homes. The definition of aquavit becomes complicated when you try to distinguish it and other spirits popular in the northern climate. The term ‘schnapps', for instance, is widely used in Germany, Switzerland and Scandinavia (the Danish say ‘snaps') to mean any sort of neutral spirits, flavoured or otherwise. Then there's ‘brannvin' a term used similarly in Sweden. (Like the Dutch word ‘brandewijn' from which we derive the word ‘brandy': it means burnt wine.)
The famous Swedish vodka Absolut began life in 1879 as a product called ‘Absolut Renat Brannvin' which might be translated as ‘absolutely pure schnapps', said to have been distilled ten times. However, the Swedish government's alcohol monopoly launched Absolut's as an international brand in 1979, and labelled it vodka. Making Linie Aquavit Caraway is the most important herb in aquavit, but the mixture of herbs varies from brand to brand. Linie Aquavit is derived from Norwegian potato alcohol blended with spices and herbal infusions, and caraway and aniseed predominate.
After the alcohol and the herbs have been mixed the aquavit is poured into 500-litre oak barrels. Norwegian specialists travel to Spain for the express purpose of selecting the best barrels from those used in the production of Oloroso sherry for several years. Sherry casks are used because they remove the raw, more volatile aspects of the liquor; the aquavit takes on a golden hue, and the residual sherry imparts a gentle sweetness. Many theories have been put forward to explain how the man behind Linie Aquavit, Jørgen B. Lysholm, came up with the idea of sending aquavit around the world on sailboats in sherry casks in order to produce the special flavour.
In the early 1800s the family tried to export aquavit to the West Indies, but the ship, Trondheim's Prøve, returned with its cargo unsold. This is when they discovered the beneficial effects of the long ocean voyage and the special storage had on the aquavit: the length of the journey, the constant gentle rocking of the boat and the variation in temperature on deck all helped give Linie Aquavit its characteristic taste. Lysholm subsequently commercialized his maturation method and this is still how things are done today. Linie Aquavit has one of Norway's long-established shipping companies as its steady travel partner. The first Wilhelmsen liner vessel carrying Linie Aquavit set sail in 1927. Since that time, Wilhelmsen has been the sole carrier of this distinguished product.
The barrels are tightly secured in specially designed cribs before being loaded onto containers, which remain on deck during the entire journey. The journey from Norway to Australia and back again takes four-and-ahalf months and crosses the equator (or the line, as sailors prefer to call it) twice. In fact, this is where Linie Aquavit gets its name. On the back of each bottle is the name of the ship and the date that it first crossed the equator. International sales of Linie Aquavit and Vikingfjord vodka Arcus AS is Norway's sole manufacturer of hard liquor and it is this company which produces Linie Aquavit. The company also taps (i.e. bottles) wine from wine producers all over the world and imports a select range of bottled wines. With a market share of about 30 per cent, Arcus AS is the leading player in the Norwegian wine and spirits market. The international aquavit markets (primarily Sweden, Norway, Denmark, Germany and the United States) are dominated (except the last) by local aquavit brands.
At present Linie Aquavit is the market leader in Norway with a 20 per cent market share. In Denmark and Sweden the market share is 5 per cent. Germany is the most important export market and Linie Aqavit holds 10 per cent of the aquavit market in competition with brands like Malteserkreutz and Bommerlunde. Arcus has established a subsidiary in Sweden, but elsewhere is only using export modes (foreign-based intermediaries). Until 2009 Linie Aquavit was distributed by the Berentzen Group in Germany. From April 2009 Arcus has transferred its German distribution to Racke Eggers & Franke (located in Bremen/Germany), which is a subsidiary of Racke GmbH + Co. KG, Mainz. Racke offers a broad assortment of spirit brands, especially for retailers and the restaurant, hotel and catering industry, not only for Germany, but also for the rest of Europe.
The volume for Linie Aquavit in Germany is expected to reach 750,000 bottles in 2009 and the ambition is to sell 1 million bottles within 3 years. With Racke as its distribution partner, Arcus hopes that Linie Aquavit can strengthen its market position in the southern part of Germany, and in the general on-trade segment (bars, restaurants and hotels), where Linie Aquavit has until now been relatively weak. Linie Aquavit has long been the national spirit of Norway and among the flagships in the portfolio of Arcus.
However, with more than 80 years of experience as supplier and producer of spirits and wine, Arcus has a widely diverse portfolio including international premium brands such Vikingfjord Vodka. Vikingfjord Vodka has - despite the fact that the US market is usually described as the toughest vodka market in the world - become one of the eightlargest imported vodka brands in the space of a few years with a volume growth of approximately 30 per cent in 2008.
QUESTIONS
1. What are the main advantages and disadvantages for Arcus of using export modes, compared to other entry modes, for its Linie Aquavit?
2. What should be Arcus' main criteria for selecting new distributors, or cooperation partners, for Linie Aquavit in new markets?
3. Would it be possible to pursue an international branding strategy for Linie Aquavit?
4. Which brand should be the major brand for the US market: Linie Aquavit or Vikingfjord Vodka?