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E-Malt.com News article: USA: Distilled spirits continue on upward trend in 2015

The US distilled spirits industry continued on an upward trend in 2015 with a 4.1% increase in supplier sales and 2.3% uptick in volumes, according to the Distilled Spirits Council.

The spirits segment also reported 2015 as its sixth consecutive year of squeaking by the beer industry in terms of market share gains, having seen 6.7 points in total market share gains compared to beer since 2000.

Delivering the most spirited sales growth performances in 2015 were Irish whiskey (19.9%), cognac (16.2%), single-malt scotch (13.5%), tequila (9.4%), and American whiskey (7.8%).

One reason is that younger drinkers aren't drinking as much beer today, according to a Gallup survey, and light beer's decline is particularly dragging down beer's market share. The growth of whiskey and tequila, increased spirits exports, and innovative products across categories have also contributed to the improvement in spirits' market share.

Demand for American whiskey, which includes Tennessee, bourbon, and rye, is soaring both in the U.S. and abroad as global consumer interest in this segment continues to increase. In 2015, American whiskeys led export volumes at 4% growth compared to 3.4% for overall spirits exports. Rye whiskey volumes have grown 536% since 2009. Bourbon production in Kentucky hit its highest level since 1970 last year, plus another 40-year high reached for bourbon inventory in 2014, according to the Kentucky Distillers’ Association.

The rise of whiskey has come at the expense of vodka, which has seen growth tank in recent years. This is in part due to an explosion of flavored vodkas that were wildly popular but then fell out of favor with consumers — though they do seem to be gravitating toward flavored whiskeys for now. Companies are revamping their vodka strategies to revive the category, including Diageo and its Smirnoff brand by reducing flavor varieties and luring back millennials. Pernod Ricard has had similar issues with Absolut, especially as smaller spirits makers like Deep Eddy Vodka and Tito's Handmade Vodka report fast growth.

Millennials are pushing two key trends on spirits manufacturers: premiumization and innovation. This demographic is looking beyond price and instead to quality when it comes to spirits, which has bolstered sales for premium brands in various categories, such as Diageo's Bulleit whiskey and Don Julio tequila.

Brown-Forman recently announced the sale of Southern Comfort and Tuaca to Sazerac for $543.5 million after Southern Comfort reported sluggish sales in the face of stiff flavored whiskey competition.


03 February, 2016

   
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