Posts Tagged ‘DISCUS’

Latest DISCUS Numbers Confirm Whiskey Growth Still Strong

Friday, February 6th, 2015

Author - Liza Weisstuch

Partisanship nearly defines America today. But on Tuesday morning, the Distilled Spirits Council of the US offered some information that all parties can applaud: the American whiskey can claim a banner year. Again. The total whiskey category was flat for years, then in 2011 it picked up steam and it hasn’t shown signs of flagging.

This year’s industry review, which the trade organization presents each February, revealed that the total supplier sales in the US were worth $23.1 billion. With American whiskey, it’s the same happy story: the category is booming and it’s the high-end and super premium brands that are driving the growth. Supplier sales of bourbon and Tennessee whiskey across price segments grew 7.4% over 2013 to approximately 19.4 million cases, a jump of 1.3 million cases. That increase accounts for a massive chunk of the 4.4 million cases by which the overall industry grew in 2014.

The revenue growth for American whiskey tells its own story. Last year, supplier sales rose 9.6% to $2.7 billion, up $230 million over 2013. Breaking it down by price segment proves DISCUS’s oft-repeated dogma: premiumization, which is shorthand for “people aren’t drinking more, they’re drinking better,” drives the industry. Revenue on value products ($12 or less at retail) grew a mere 5.5%, about $181 million on 3.1 million cases. Revenue on high-end ($18-$30 per bottle) products, were up 8.1% to $1.6 billion (yes, billion). But the truly jaw-dropping growth quotient comes in the realm of the super-premium brands ($30+/bottle). These sales leaped 19.2% to $325 million.
Combined whiskey sales growth is accelerating (numbers include imported and flavored whiskeys; CAGR = Compound Annual Growth Rate)

Whiskey category growth accelerates (totals include flavored and imported whiskeys; CAGR = Compound Annual Growth Rate)

Whiskey category growth accelerates (totals include flavored and imported whiskeys; CAGR = Compound Annual Growth Rate)

Flavored whiskey was a factor in the surge. Sales of an increasing selection of flavored American whiskey products grew by 140,000 cases. But a more significant is the thriving export market. Christine LoCascio, DISCUS senior vice president for international trade, apologized for being repetitive year after year as she reported more record-shattering stats: the $1.12 billion revenue that bourbon and Tennessee whiskey bring home to producers accounts for 70% of the $1.56 billion spirit exports market.

The top export markets are Canada—which, with $212.6 million of sales, marked a colossal growth of 111% over the past ten years—and the UK ($177.6 million). Germany and Australia pretty much tie with their spending of $136.7 million and $131.2 million, respectively. Then there’s the bureaucratic activity (or mumbo-jumbo, depending on your appetite for granular examination of international relations.) Trade agreements in recent years have reduced or eliminated tariffs in countries like Korea and Australia, which open up more export opportunities.

All this American whiskey talk, however, didn’t drown out the news about Scotch.

“When you listen to single malt Scotch drinkers talk, it’s almost like they’re having a religious experience,” said David Ozgo, DISCUS chief economist. He proceeded to explain that, as with bourbon, high-end and super premium brands are propelling the whole category. While revenues from “premium” single malts (the least expensive brands), fell by 13.4%, high-end and super premium rose by 6.8% and 6.3%. respectively. This came as little surprise just days after the Scotch Whisky Association announced that the Scotch industry is worth more than £5 billion in the UK, which outpaces two of the UK’s giant industries: computers, and iron and steel.

A small but increasing role is played by America’s boutique brands. In 2010, there were 109 independent distilleries operating; today there are more than 700. With sales of about 3.5 million cases last year, these producers account for 1.7% share of the spirits market’s volume. Ozgo noted that estimated supplier revenues was between $400 and $450 million, a sum he calculated based on data from the Alcohol and Tobacco Tax and Trade Bureau, which indicates taxes paid.

The information presented at the briefing skirted the ongoing debate around the increasingly contentious terms “craft” and “handcrafted,” which have generated class action lawsuits against false claims. DISCUS uses the term “small distillers,” which it defines as the 712 producers turning out less than 50,000 cases (the average in that group being an astonishingly small 3,000 cases). The data, however, also takes into account seventeen distilleries that produce an average of 80,000 cases.

When, after the presentation, this reporter asked about the “handcrafted” debate, Frank Coleman, DISCUS senior vice president of public affairs, noted, “Let them fight about it. Some of the finest craft products in the world are made by large companies. [Glenmorangie master distiller] Bill Lumsden is making handcrafted whisky.” It is a distinction almost unique to whisky that makes the category even more intriguing.

 

DISCUS Briefing Confirms Surging Growth of American Whiskey

Thursday, February 6th, 2014

Author - Lew BrysonAt the annual Distilled Spirits Council of the United States (DISCUS) industry review on Tuesday, February 4, the usual graphs and numbers on domestic sales of distilled spirits and export sales of American spirits were presented, and they told a great story about American whiskey producers. American whiskey is solidly on its way back, after thirty years of steeply declining sales. (see graphs 1 and 2). I started writing about whiskey in the mid-1990s, and much of what there was to write about back then was how the decline in whiskey sales was slowing down (I referred to it as “the glide path” to emphasize that it was a gradual decline, but I must have forgotten that glide paths always end on the ground!), and optimistically noting that there were some small niches in the overall category that were showing growth: single malt Scotch whisky, and small batch bourbon. Everything else was dropping.

Graph 1 shows a 30 year drop of over 50% in U.S. whiskey sales.

Graph 1 shows a 30 year drop of over 50% in U.S. whiskey sales.

Now things have turned around, and the DISCUS numbers were rosy indeed, especially in the export market for American whiskey. Exports of bourbon and Tennessee whiskey topped $1 billion for the first time, and represented 2/3 of total U.S. spirits exports. The top six markets for export growth (by dollar sales) were Japan, Germany, France, the UK, Spain, and Panama, while Canada remained the single largest export market by far. DISCUS attributed this export growth to economic recovery, a recognition of American quality, a drop in tariff barriers in key markets, and a continuing strong interest in classic cocktails. They also noted the Department of Agriculture’s promotion of American spirits overseas.

Graph 2: 13 years of accelerating growth in U.S. whiskey sales

Graph 2: 13 years of accelerating growth in U.S. whiskey sales

Here at home, total spirits sales were up 4.4%, to $22.2 billion, and a lot of that stemmed from the growth in sales in the “High End” and “Super Premium” categories, the most
expensive bottles. It was noted that whiskey provides substantially higher revenues per standard 9-liter case (an average of $133, compared to $85 for vodka), and the whiskey category’s growth of 6.2%. In volume, total spirits cases sold were up 3.9 million cases, and whiskey’s 3.1 million case increase was 80% of that growth. It’s not all American whiskey, either. While total whiskey volume was up 6.2%, Irish was up 17.5%, “Blended” (which includes flavored whiskey; more on that shortly) was up 14.3%, single malt scotch up 11.6%, bourbon/Tennessee/rye was up 6.8%, Canadian up 2.9%, and blended Scotch whisky was up 2.0%.

Flavored whiskey continued to grow strongly, with 1.4 million additional cases sold, accounting for 45% of the total whiskey category growth. Straight whiskeys, however, accounted for 80% of the revenue growth, so you can bet that the distillers won’t abandon them in a rush to flavors. There was talk of how distillers are being cautious about introducing the rainbow of flavors that has typified vodka sales, and open speculation over whether vodka has gone too far with flavors, jumped the shark; it seems doubtful to me that the bottom of that well has yet been plumbed, but whiskey is going to be a different case. Don’t expect birthday cake bourbon anytime soon.

Where is all this growth coming from? It appears that a good chunk of it is coming from the decline in sales of beer, particularly traditional major brands. The folks from DISCUS saw this as a triumph of their focus on increasing accessibility (by encouraging Sunday sales where restricted and urging modernization of control state systems) and encouraging cultural acceptance of spirits. As spirits become easier to buy, as people don’t have to make a special trip out of their way to buy them, people are choosing them more often than they have in the past. But a lot of it, clearly, is coming from the increased appreciation for whiskey, and the increased innovation and choice presented by whiskey makers, both from the traditional regions and from the increasing number of craft distillers.

You can see the full report at the DISCUS website here.