American & Irish whiskey, tequila and Cognac drive spirits industry growth

distilled-spiritsIt’s always a bit like Christmas morning when the Distilled Spirits Council hosts its annual media and analyst briefing in New York. And the haul of goodies was just as bountiful this year as in past years—well, if you’re like me and you consider a year’s worth of category-specific spirits sales figures “goodies.”

U.S. spirits volume grew 2.6 percent in 2017—a slight acceleration over 2016’s 2.4 percent increase and 2015’s 2.3 percent increase—to 226.1 million 9-liter cases, while supplier revenue grew 4 percent to $26.2 billion.

Here are some other highlights of the data that the trade organization released on Thursday, Feb. 1:

• The total gin category could have had a positive growth year, had it not been for the low-priced value segment, which accounts for nearly 60 percent of all gin volume in the U.S. Value gin volume fell 3 percent, pulling the total category down by 0.6 percent. However, high-end premium and super-premium posted significant gains—3.9 percent and 11.2 percent, respectively. Unfortunately, those segments represent only a respective 26.6 percent and 1.6 percent—28.2 percent combined—of the total category, not enough to pull overall gin volume into the black. However, given their higher price points, their growth enabled total gin supplier revenue to grow 2.2 percent. As more U.S. craft spirits producers start to focus on gin and importers bring in more brands from the exploding U.K. craft gin scene, we should start seeing consistent, positive growth in both gin revenue and volume.

• Total whiskey volume grew 3.6 percent, which is a bit on the low side of what it’s been. But you can really blame blended value and premium blended Scotch, as well as premium single malt whisky for that modest bump. Value Scotch blend volume dropped 4.5 percent, while premium blends fell nearly 10 percent. But super-premium blended Scotch,  small sliver of the segment, grew nearly 12 percent. Premium single malt Scotch volume (there is no Value segment for single malts) fell nearly 13 percent, but super-premium single malts jumped 9.3 percent. The MVPs were American whiskey, with total category volume growth up 6.4 percent—18.3 percent on the super-premium tier—and Irish, with total category volume up 11.3 percent—and a whopping 46.5 percent on the super-premium tier. Canadian whisky had another good year, up 2.4 percent, with a super-premium increase of nearly 5 percent. Within American whiskey, bourbon/Tennessee was up 6.7 percent (to 20 million cases) and rye surged 16.2 percent (to 900,000 cases). Rye volume has grown about 900 percent since 2009.

• The Distilled Spirits Council for the first time broke out some mezcal numbers; it’s traditionally been measured as part of tequila, though it’s a different spirit. It’s still relatively tiny. Mezcal accounts for only about 360,000 percent of the 17.2 million cases of all agave spirits sold in the U.S. or 2 percent of the total. But mezcal volume grew about 12 percent, versus 8.5 percent for total agave spirits.

• Cognac’s still on fire, growing 11.6 percent to 5.7 million cases.

• While overall rum volume was down 0.4 percent in 2017, the same premiumization dynamic is at work there as it is in whiskey, gin and agave spirits. Super-premium rum was up more than 10 percent as more consumers trade up to sipping rums and mixologists put higher-quality spirits in tiki drinks.

• I’d be remiss if I didn’t mention vodka, which is nearly 1/3 of all spirits volume sold in the United States. The category had another positive year, up 2.2 percent to 71.3 million cases. Volumetrically, it’s still ahead of whiskey, more than 64 million cases of which were shipped last year. However, if you look at revenue, whiskey is far ahead of vodka, generating $9.1 billion in supplier revenue, versus vodka’s $6.2 billion. It didn’t help that super-premium vodka is no longer the juggernaut it once was. Super-premium vodka volume fell more than 10 percent last year.

• Distilled spirits now command 34.6 percent volume share and 36.6 percent revenue share of the alcohol market, a respective increase of 0.8 share points and 0.7 share points.




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