DSC: 2019 Spirits Trends to Watch


Dear Client:

US spirits supplier sales were up just over 5% for the year to $27.5 billion in 2018, a $1.3 billion increase over 2017. What factors are driving growth?

Distilled Spirits Council svp economics & strategic analysis David Ozgo outlined the top factors contributing to spirits growth in 2018 during The Council’s recent annual economic briefing. To wit:

  • Social currency of brand authenticity and heritage
  • Modern consumers seeking unique and personalized experiences
  • Millennials drawn to the cache of luxury brands including super premium spirits
  • Improved consumer access to spirits products, such as Sunday sales and tasting rooms
  • Growth of craft distillers across country help to modernize laws, build excitement and increase spirits consumer base
  • Diversity of spirits categories and cocktails meet wide-ranging consumer preferences

2019 TRENDS TO WATCH. David also dug into what trends we can expect to see in 2019 from consumer tastes to innovations.

1) Accelerating interest in American-made whiskey, namely rye and single malt. There are a lot of American single malts entering the marketplace right now and “that’ll be interesting to follow,” he said.

2) Expect to see more unique innovations as distillers continue to experiment with different cask finishes, hybrid crossovers, as well as unusual base ingredients and botanicals.

3) Bitter appreciation. Consumer palettes are embracing bitter flavor profiles more and bartenders are experimenting with new/unique bitters to create different flavor experiences.

4) Rare spirits as investments. There’s a rising interest in rare spirits, particularly whiskey, in terms of auctioning off bottles of Scotch or Cognac. “They drive a lot of interest,” said David.

5) Brands with a cause. Millennials seek out brands that share their same values. As such, David said we’ll see increasing brand involvement with social causes and charitable giving.

6) Mindful drinking. This trend encompasses session cocktails, sustainability, locally grown ingredients etc. Purchasing decisions “go beyond just taste,” according to David.

EMPIRE MERCHANTS FORMS NEW CRAFT SPIRITS DIVISION

New York-based Empire Merchants has created a new division dedicated to craft spirits, called Independent Spirits, according to an internal announcement, reports SevenFifty Daily. The new division will focus on about 40 suppliers including The 86 Company, St. George Spirits, Royal Dutch Distillers, Buffalo Trace Distillery and Compass Box Whiskey.  

“We believe that having dedicated and commissioned salespeople will lead to the greatest focus and accountability to our craft suppliers,” says Ari Rubenstein, the new division’s director of sales, adding “And that, in turn, will accelerate growth.”

The distributor has hired 18 new sales reps and three sales managers as part of the new division.  The majority of the new hires hail from the on-premise, including former beverage directors, bar managers and other hospitality professionals.

The creation of Independent Spirits also frees up current sales reps to focus on Empire’s larger brands in its portfolio such as Brown-Forman and William Grant & Sons.

“By pulling these [smaller] brands out of the larger selling division, we clear up space for sales reps to focus on those larger brands…and at the same time, we allow these smaller brands room to grow without having to share that focus and attention,” says Ari.

Independent Spirits will formally launch on April 1.

CUERVO SALES UP 6.1% IN 2018

Grupo Cuervo ended 2018 with sales up 6.1% and volumes up 1.4% in the US and Canada, driven by volume growth and favorable sales mix. The company reported “strong depletion trends” in the region for the third consecutive quarter.

Jose Cuervo volumes were down 0.3% globally and sales eked out 1% growth for the year. Other tequila brands (Maestro Dobel, Gran Centenario) grew volumes by 6.3% and sales by 11.1%, and other spirits brands (Pendleton, Tincup, Bushmills, The Sexton, Three Olives etc.) volumes were up 13% and sales were up a whopping 27% in 2018.

Here’s how the portfolio breaks down: Jose Cuervo represented just over 34% of total net sales for the company in 2018; other tequila brands and other spirits brands each represented around 23% of overall sales; and non-alc and RTD accounts for the other about 20%.

“The company remains well positioned in the global spirits industry, with significant capital and low debt leverage to execute our long-term growth strategy,” per a release.

More color from the call in tomorrow’s issue.  

DRIZLY SALES PICK BACK UP AFTER DRY JANUARY

Bev alc ordering picked up once Dry January was over on the Drizly platform. Sales during the first two weekends in February were 14% higher than the average weekend sales throughout January.  

Dry January observance varies “dramatically” by age, according to Drizly. Spending from 21-30 year olds increased 18% in February compared to January. Comparatively, spending among 31-40 year olds grew 12%, 41-50 was up 10% and 51-60 was up just 2%.

A few spirits categories experienced a major uptick in sales in February compared to January. On a per day ordering basis, gin is up a whopping 87% and tequila is up 28%.

Similarly, sales in Boston and New York City were 20% higher in February.

WSD BRIEFS:

PGA TOUR OPENS UP SPIRITS SPONSORSHIPS. The PGA Tour announced that it will now allow distilled spirits sponsorships. Under the new policy, broadcasters can sir spirits ads, show in-program exposure during network telecasts and players can wear the names/logos of spirits companies. “This is welcome news for distilled spirits, as the PGA becomes the last major professional sports league to equalize the treatment of marketing and promotions with beer,” says Distilled Spirits Council chief Chris Swonger.

BREAD & BUTTER WINES RELEASES ROSE. WX Brands’ Bread & Butter Wines has released Bread & Butter Rose. It will be available nationwide at a suggested retail price of $16 a 750 ml.

CONSTELLATION BRANDS PROMOTES TIFFANIE DE LIBERTY. Constellation Brands has promoted Tiffanie De Liberty to svp, general counsel and chief compliance officer. As general counsel for the wine and spirits division, she will contribute to the division’s business strategy and direction. As chief compliance officer, she will chair the corporate compliance committee and report the company’s compliance activities to the audit committee of the board of directors. Her responsibilities will expand to include oversight of legal teams across beer, wine and spirits as well as being a part of Constellation’s legal leadership team, reporting directly to Jim Bordeau, evp and general counsel.

Until tomorrow,
Sarah

“Luck is great, but most of life is hard work.” – Iain Duncan Smith  

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