DISTILLED SPIRITS COUNCIL’S
ECONOMIC ECONOMIC BRIEFING WR WRITTEN BY MIATRTGEANRB EY T TC H WRAITSE L RO BZ UIREYR
declines were observed in several categories, including lower cost Scotch, Irish, and blended whiskey as well as value vodka, rum, and gin. This indicates the continued push towards premiumization, for the American spirits industry, with growth across virtually every where consumers are opting to buy fewer, more expensive products major spirits category and excellent performance in exports. rather than higher quantities of low-cost products. The factors that have contributed to the current spirits boom— Notably for the craft industry, American whiskey volumes were increasing premiumization, curiosity-driven consumers, and up by 6.4% to 23.2 million cases, while revenue grew even more, the ongoing incremental modernization of the post-Prohibition up 8.1% to $3.4 billion. Every value segment within the American regulatory landscape—are continuing to drive major growth whiskey category grew, but super premium (defined for the across the industry. When coupled with recent national legislative Council’s purposes as $30+ at retail, a category that includes most successes in federal excise tax reduction, a rosy picture emerges craft spirits) saw the most robust growth: 18.3% volume growth, for the current state of the American spirits industry. Fortunately and 18% revenue growth. When asked if he thought this growth for the craft community, the trends driving growth are directly rate was sustainable, Ozgo replied optimistically: “When you look aligned with what small producers do best. at where the North American whiskey market once was, it used to In early February, the Distilled Spirits Council of the United be 80 million cases. Right now, we’re only at 53 million cases, States reported in its annual economic briefing that sales volumes with almost double the adult population. As a result, I see plenty and revenue were up nearly across the board in the American spirits of room for growth still in the brown spirits.” industry. In 2017, total supplier revenues grew 4%, reaching Within the American whiskey category, rye whiskey saw a $26.2 billion, up from $25.2 billion during 2016. Nine-liter case particularly remarkable performance, with volumes up 16.2% to volumes grew 2.6% during the same time period, from about 220 900,000 cases. “That’s really exceptional when you consider back million cases to 226 million cases. in 2009, rye was just 100,000 cases,” said Ozgo. “The growth we The industry also grew relative to other types of beverage alcohol. see in rye is a natural extension of the rapid growth we’ve seen in In terms of revenue, wine’s market share remained relatively flat bourbon and Tennessee whiskey.” and beer’s market share declined during 2017. At the same time, Another point of interest for craft distillers was the remarkable spirits’ market share grew by 0.7%, reaching 36.6%. “To put success of American exports, especially whiskey. The global that into perspective, each point of market share is worth around popularity of cocktails coupled with a weak dollar helped American $720 million, so we added around $500 million in revenue just by spirits exports grow 14.3%, gains in market share,” said David Ozgo, reaching a record value of $1.63 senior vice president of economics and billion. Whiskey represented the strategic analysis at the Council, during lion’s share of that growth: 68% the annual economics call. The growth we see in rye of total export value and 48% of While there was good news in is a natural extension of export volume. most categories, growth was not the rapid growth we’ve “We are exporting cocktail spread evenly over every spirits type. culture,” said council senior vice Performance was exceptionally strong seen in bourbon and president for international affairs in American whiskey, Irish whiskey, Tennessee whiskey.” Christine LoCascio. “International adult tequila and mezcal, and Cognac. consumers are exploring more expensive The only major categories that saw — DAVID OZGO SENIOR VICE PRESIDENT, U.S. spirits driven by their fascination with declines in revenue at the supplier DISTILLED SPIRITS COUNCIL American whiskey’s heritage, as well as its level were rum (-0.3%) and cordials mixability and versatility in cocktails.” The (-0.2%), even though volume
2017 marked yet another banner year
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