September 21, 2008
Style and Substance Strengthen Wine and Spirits Sales
Wine and spirits sales are being driven by seemingly opposite demographics, baby boomers and consumers who have recently reached legal drinking age. They likewise are popular due to two seemingly divergent trends, health consciousness and the search for status. "Consumers continue to be interested in trading up in nearly every [spirits] category," Brian Morgan, senior research analyst for Euromonitor International, Chicago, told Beverage Industry earlier this year. "It's a desire to portray a certain image of luxury and it's a status symbol, which is helped by popular culture and music videos."
Small-batch bourbons, limited-edition cask releases, Irish whiskey and premium vodka, gin and rum all benefited from the trend, he said. In addition, flavored spirits expanded their reach from vodka to rum, gin and tequila.
According to the Distilled Spirits Council of the United States (DISCUS), based in Washington, D.C., spirits volumes grew 2.4 percent in 2007, and have averaged 2.9 percent annual growth since 2000. By price category, super-premium offerings led sales by far, growing 11.3 percent, while "high-end" products gained 4.5 percent, "premium" 2.2 percent and value-priced products only 0.3 percent.
Vodka accounts for 28 percent of U.S. spirits industry volume, and generated 31 percent of revenue growth, DISCUS says. Superpremium vodkas generated $155 million in sales last year, nearly $100 million more than "high-end" vodkas.
Rum represents 18 percent of spirits industry growth, and was up 4.1 percent in 2007. Like vodka, the vast majority of growth in 2007 - 43 percent - was in the super-premium segment. Tequila accounts for 14 percent of spirits industry revenue growth, and 14 percent of that can be attributed to the super-premium segment.
One of spirits' biggest brands, Absolut Vodka, could become an even more formidable global player, thanks to its acquisition by France's Pernod Ricard this spring. The United States currently is Absolut's biggest market, where it sold about half of its 11 million cases in 2007. In announcing the purchase, Pernod Ricard said the potential to take the brand into other parts of the world, including developing markets, was one of the motivations behind the acquisition.
TOP TABLE WINES
U.S. WINE AND SPIRITS SALES BY VOLUME
Like spirits, wine sales are growing as consumers become more acquainted with new brands, countries of origin and packaging options. Once a special occasion product, wine is becoming an everyday beverage, and both younger and older consumers are partaking in the trend. New packaging and lower price points have drawn in the younger set, while wine's reported health benefits have special appeal to older consumers.
The U.S. wine market grew to 314 million cases in 2007 and is worth about $30 billion to the U.S. economy, according to Gomberg, Fredrikson & Associates, Woodside, Calif.
Much of wine's appeal stems from reports about its heart healthy qualities, particularly red wine. That is perhaps the reason red wine sales surpassed white wine for the first time last year, reports the Wine Institute, San Francisco. Red wine now accounts for 43 percent of table wines sold through U.S. supermarkets, and white wine 42 percent. In 1991, white wine held roughly half of U.S. table wine sales, blush varieties 34 percent and red only 17 percent.
At the same time as wine's appeal grows, packaging advancements are creating new intrigue for wine brands. Screw-cap closures are becoming more popular and boxed wines are losing their lowbrow image as more upscale brands show up in this format. Aseptic packaging was up 55 percent in 2007 vs. 2006 based on dollar share, and 3-liter boxed wines increased 32 percent based on dollar share, according to Information Resources Inc.
* 80 new spirits and liqueurs have been introduced so far this year vs. 30 for the same period last year.
* 32 new wines have hit the market during the first part of 2008 vs. 10 during the same time last year.
* "Unfavored" accounts for almost half of spirits flavors this year.
* 25 new wines were considered "new products" as opposed to line extensions.
* 51 new spirits were new products; 18 represented new packaging formats.
* U.S. spirits-makers exported more than $1 billion worth of product last year.
* The United Kingdom is the No. 1 country to which U.S. spirits are exported, followed by Canada, Germany, Australia and Japan.
* Wine sales in the United States grew 4 percent in 2007, making it the largest retail wine market in the world by value.
* Table wines are the largest U.S. wine segment, at 650 million gallons.
* California wine sales to U.S. markets increased to a record 457 million gallons, or 2 percent, in 2007. Total sales to the United States and abroad increased 3 percent to 554 million gallons.
Sources: Mintel International, Chicago; Wine Institute, San Francisco; Distilled Spirits Council of the United States
Copyright BNP Media Jul 2008
(c) 2008 Beverage Industry. Provided by ProQuest LLC. All rights Reserved.