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CASE STUDY 9.1 Lysholm Linie Aquavit: international marketing of the Norwegian aquavit brand Lysholm Linie Aquavit is marketed by the Norwegian from brand to brand. Linie Aquavit is derived from spirits manufacturer Arcus Group (www.arcus.no). In Norwegian potato alcohol blended with spices and herbal 2010, it had approximately 1.6 billion Norwegian kroner infusions, and caraway and aniseed predominate. After - NOK (212 million) in sales, NOK 132 million in net the alcohol and the herbs have been mixed, the aquavit is profit and 450 employees. Around half of the Arcus sales poured into 500-litre oak barrels. Norwegian specialists are generated outside Norway. travel to Spain for the express purpose of selecting the Aquavit, which translates as 'water of life', a slightly best barrels from those used in the production of Oloroso yellow or colourless alcoholic liquor, is produced in the sherry for several years. Sherry casks are used because Scandinavian countries by redistilling neutral spirits such they remove the raw, more volatile aspects of the liquor; as grain or potatoes and flavouring them with caraway the aquavit takes on a golden hue, and the residual sherry seeds. It is often consumed as an aperitif. imparts a gentle sweetness. The alcohol content in the various aquavits varies Many theories have been put forward to explain how somewhat, but starts at 37.5 per cent. Most brands contain the man behind Linie Aquavit, Jrgen B. Lysholm, came about 40 per cent alcohol but Lysholm Linie Aquavit has up with the idea of sending aquavit around the world an alcohol content of 41.5 per cent. (Lysholm is the name on sailboats in sherry casks in order to produce the of the distillery in Trondheim where the aquavit is made, special flavour. In the early 1800s, the family tried and from this point on the name 'Linie Aquavit is used.) to export aquavit to the West Indies, but the ship, Trondheim's Prve, returned with its cargo unsold. This The history of aquavit is when they discovered the beneficial effects that the Aquavit was originally used for medicinal purposes, long ocean voyage and the special storage had on the but from the 1700s, stills became commonplace in aquavit: the length of the journey, the constant gentle Scandinavian homes. rocking of the boat and the variation in The definition of aquavit becomes temperature on deck all helped give complicated when you try to distinguish it THE CONTENT OF THIS Linie Aquavit its characteristic taste. BOTTLE HAS BEEN TO SEA and other spirits popular in the northern FOR 146 DAYS. Lysholm subsequently commercialized his TU LATERACE climate. The term 'schnapps', for instance, maturation method and this is still how is widely used in Germany, Switzerland and things are done today. Scandinavia (the Danish say 'snaps') to mean any sort of neutral spirits, flavoured established shipping companies as its or otherwise. Then there's 'brannvin', a term steady travel partner. The first Wilhelmsen used similarly in Sweden. (Like the Dutch liner vessel carrying Linie Aquavit set word 'brandewijn', from which we derive the sail in 1927. Since that time, Wilhelmsen word 'brandy', it means burnt wine.) The has been the sole carrier of this distin- famous Swedish vodka Absolut began guished product. The barrels are tightly life in 1879 as a product called 'Absolut secured in specially designed cribs before Renat Brannvin' which might be translated being loaded onto containers, which as 'absolutely pure schnapps', said to have LINIE remain on deck during the entire journey. been distilled 10 times. However, the The journey from Norway to Australia Swedish government's alcohol monopoly and back again takes four-and-a-half launched Absolut as an international months and crosses the equator (or the brand in 1979, and labelled it vodka. line, as sailors prefer to call it) twice. In fact, this is where Linie Aquavit gets its Making Linie Aquavit Ara name. On the back of each bottle is the HARI INI Caraway is the most important herb in name of the ship and the date that it first aquavit, but the mixture of herbs varies crossed the equator. Linie Aquavit has one of Norway's long- MOLED www sen LA by S. International sales of Linie Aquavit and Vikingfjord Vodka 1 million bottles within three years. With Racke as its distribution partner, Arcus hopes that Linie Aquavit can strengthen its market position in the southern part of Arcus AS is Norway's sole manufacturer of hard liquor and it is this company which produces Linie Aquavit. Germany, and in the general on-trade segment (bars, The company also taps (.e. bottles) wine from wine pro- restaurants and hotels) , where Linie Aquavit has until ducers all over the world and imports a select range of now been relatively weak. bottled wines. With a market share of about 30 per cent, Norway and among the flagships in the portfolio of spirits market Linie Aquavit has long been the national spirit of Arcus AS is the leading player in the Norwegian wine and 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 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 with a 20 per cent market share. In Denmark and Sweden as the toughest vodka market in the world - become one the market share is 5 per cent. Germany is the most of the eight largest imported vodka brands in the space important export market and Linie Agavit holds 10 per of a few years with a volume growth of approximately cent of the aquavit market in competition with brands like 30 per cent in 2008. 'Malteserkreutz' and 'Bommerlunde'. Sources: www.arcus.no; Arcus Financial Report 2010. Arcus has established a subsidiary in Sweden, but elsewhere is only using export modes (foreign-based QUESTIONS intermediaries). Until 2009, Linie Aquavit was distributed by the Berentzen Group in Germany. From April 2009, Arcus 1 What are the main advantages and disadvantages for Arcus of using export modes, compared to other entry modes, for its Linie Aquavit? has transferred its German distribution to Racke Eggers 2 What should be Arcus' main criteria for selecting new & Franke (located in Bremen/Germany), which is a sub- distributors, or cooperation partners, for Linie Aquavit sidiary of Racke GmbH + Co. KG, Mainz. Racke offers a in new markets? broad assortment of spirit brands, especially for retailers and the restaurant, hotel and catering industry, not only 3 Would it be possible to pursue an international for Germany, but also for the rest of Europe. The volume branding strategy for Linie Aquavit? for Linie Aquavit in Germany is expected to reach 4 Which brand should be the major brand for the US 750,000 bottles in 2009 and the ambition is to sell market: Linie Aquavit or Vikingfjord Vodka