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Discus review of US spirits industry
The Distilled Spirits Council (Discus), which represents the spirits industry in the US, revealed its 2012 findings in New York this week.
From 2011 to 2012 volume grew by 3%, revenue by 4.5% and there were record exports of US$1.5 billion.
Discus highlighted contributing factors to the growth as:
• Growth driven by product innovations and sophisticated line extensions
• Premiumisation trend continues to captivate consumers;
• Modernisation drive expands consumer access and premiumisation opportunities;
• Successful policymaker education avoids most tax increases;
• Global fascination with American Whiskey drives third year of record exports;
• Trade agreements with Colombia, Brazil, Korea, Panama and Russia add momentum;
• Market share gains edge upward;
The organisation boasts that since 2002, 16 states have agreed to Sunday sales of liquor and 17 US states have allowed tastings to take place in liquor stores. Also, elections across the south and west have increasingly voted to “go wet” and allow spirits to be sold.
Discus says that from 2003 to 2012 sales of super premium spirits have “sky-rocketed” while the ‘value’ category has grown steadily.
The value category in terms of gross revenue has gone from $3,752m in 2003 to $4,078m while super premium has gone from a modest $1,474 to a staggering $3,902m.
Spirits’ revenue share of the total US liquor market has increased by 5.6 points from 2000 to 34.3% in 2012. By volume it is up 4.5 points to 31.9%.
The super premium category in 2012, by volume, represents 7.9%, with high end at 18%, premium 36%, and value 38.1%.
On flavoured spirits Discus says:
• Cocktail/culinary trends drive experimentation – This drives product innovation and new flavours;
• Flavoured products continue successful line extensions;
• More than 40% of products have flavour component beyond traditional category – All categories (Vodka, Rum, Tequila, cordials, etc.);
• 220 flavours – from citrus to wasabi exist;
• New successful flavoured expressions of iconic brands;
• Discus said the industry’s strength long been based upon ability to offer product for every taste, budget and occasion.
The top flavours are:
Orange (163), Cherry (98), Coffee (87), Peach (85), Apple (84), Chocolate (82), Raspberry (82), Lemon (77), Anise (75), Lime (67), Coconut (59), Grape (57), Strawberry (54), Vanilla (50), Tea (47), Citrus (43), Blackberry (38), Mango (38), Peppermint (38) and Amaretto (34).
Discus says 739 new products brought to the US market in 2012, 353 flavoured, 386 traditional. These accounted for 2.4m cases - 41% volume growth – 2.2 million flavored – 240,000 traditional.
Looking at the individual spirits categories:
Vodka
Vodka accounts for 32% of all volume, 26% revenue – volume up 4.0% to 65m, revenue up 5.1% to $5.5bn
Price category growth:
– Value 1.7% to 26.6m, largest price/product segment
– Premium up 5.7% to 19.8m, revenue up 5.4% to $1.5bn
– High End up 3.5% to 12.5m, revenue up 4.0% to $1.6bn
– Super Premium up 10.0% to 6.3m, revenue up 9.5% to $1.3bn.
New products – 171 new products in 2012: 122 flavoured. New flavored products accounted for nearly 1m cases
Bourbon & Tennessee Whiskey
The largest whiskey category 16.9M cases, $2.2B revenue – volume up 5.2%, revenue up 7.3%, 46 new bourbons/three flavoured whiskeys. Recent growth shows consumer’s willingness to experiment
Performance by price segment:
–Value, volume up 2.9% to 2.8m, revenue up 4.8% to $157m
– Premium, volume up 7.5% to 5m, revenue up 9.4% to $499m
– High End, volume up 3.8% to 8.1m, revenue up 5.7% to $1.3bn
– Super Premium, volume up 12.4% to 1m, revenue up 14.4% to $222m.
Category growth has spurred interest in other American Whiskeys – Rye volume up 50%+ to 275,000 (22 new Ryes). There are several white whiskeys now on market
Scotch & Irish whiskey
Single malt Scotch continues rapid growth – concentrated in High End and Super Premium – Volume up 13.0% to 1.6m, revenue up 16.4% to $515m – 53 new product introductions.
Blended Scotch strong growth in High End & Super Premium – Volume -0.4% to 7.6m, but revenue up 3.9% to $1.3bn
Irish whiskey is the fastest-growing category – Volume up 22.5% to 2.2m, revenue up 23.7% to $415m
Cordials
The original flavored category. Volume up 4.7% to 21.2m, revenue up 3.1% to $2.5bn.
Performance by price segments:
– Value, volume up 9.8% to 8.1m, revenue up 9.8% to $481m
– Premium, volume 0.4% to 11.3m, revenue -0.6 to $1.6bn
– High End, volume up 10.7% to 1.8m, revenue up 10.9% to $421m
– Super Premium, volume up double digits, less than 100,000 cases
163 new products introduced, 143 flavoured
Tequila
Tequila volume grew 2.9% to 12.3m cases. Tequila revenue up 4.6% to $1.9bn
Performance by price segments:
– Value, volume up 1.8% to 2.9m, revenue up 1.8% to $221m
– Premium, volume 1.0% to 6.4m, revenue flat $749m
– High End, volume up 7.0% to 1.1m, revenue up 6.4% to $205m
– Super Premium volume up 9.1% to 1.9m, revenue up 10.3% to $707m.
There were 40 new tequilas introduced.
Rum & gin
Rum volume up 1.5% to 25.5m, revenue up 1.9% to $2.3bn – rum is the second largest product category after vodka – Strong growth in Value, volume up 3.3%
– Super Premium up 8.1%, but small segment;
– 63 new rums, 22 flavoured gin volume up 1.5% to 10.7m, revenue up 2.7% to $873m;
The category volume is concentrated in the Value segment, 7.4m
– Growth driven by Premium segment, 19.2%;
– 36 new gins introduced, 4 flavoured – Popular product with craft distillers.
Summary
• Volume/revenue – Revenue up 4.5% to $21.3bn – Volume up 3.0% to 202m 9-litre cases;
• Premium+ products driving revenue growth – Super Premium volumes up 8.9%;
• Maintained and grew recent market share gains – 34.3% revenue market share, 31.9% volume market share;
• Strong product development meeting consumer demand.
Finally, US spirits exports hit new record with $1.5bn, according to the U.S. Department of Commerce, compiled by the US International Trade Commission, with wine at $1.28bn and beer at $447m. American whiskeys account for 68% of US total spirits exports.
The US’s top export markets are: Canada, Australia, UK, Germany, France, Japan, Netherlands, Spain, Mexico and Italy.
Of emerging markets the largest growths from 2000 to 2012 have come from: Vietnam (7,520% from a negligible base) Singapore (918%, the largest overall), Latvia 2,907%, Poland (2,691%) and Romania (1,387%).
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