Data Driven: American Whiskey Fueling Spirits Industry Growth

The distilled spirits industry is still struggling to build momentum as it comes out of the recession, growing 1.6% in 2014, according to preliminary data from the Beverage Information & Insights Group (BIIG). The research group’s recently released Handbook Advance shows that more than 213.4 million cases of distilled spirits were sold during calendar year 2014, compared to 210.1 million in 2013.

“The industry shouldn’t be excited about a 1.6 percent growth rate,” says Adam Rogers, BIIG’s Manager of Information Services. “But what’s important to remember is that today’s consumers are drinking less, but they’re also drinking better, which bodes well from a revenue perspective.”

Looking at what’s driving spirits sales growth, the biggest winner in 2014 was American Whiskey, which increased 4.9 percent over 2013 with more than 23.6 million cases sold (compared to 22.5 million a year earlier). American Whiskey also increased its share of the overall spirits category, from 10.7% in 2013 to 11.1% in 2014.

“Straight whiskey’s growth of 6.5 percent last year puts it only a year or two away from reaching its apex of 20 million cases, which it last posted two decades ago,”
Rogers says. “But what’s really impressive are the current offerings from suppliers, which are high quality and experimental. They’re truly works of art.”

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American Whiskey’s increase came at the expense of Canadian Whisky, Scotch, Gin, Vodka and rum, which all saw their share of the industry decline. Except for vodka, which increased by 1.5%, all those categories also experienced a decline in sales during 2014.

“I believe vodka’s share of market will continue to erode in the short term, 
but the category will stabilize over the long term,” Rogers says. “There was a 42% decrease in new vodka products entering the 
market this year compared to 2013, but there will be brands that continue to achieve success by providing differentiation in the consumers’ eyes.”

Thanks to domestic whiskey sales, the total whiskey category was up 1.9% in 2014, ahead of the 1.5% increase in all non-whiskey sales. Categories with notable growth include Tequila (up 5.2%), Cordials/Liqueurs (up 6.2%) and Brandy/Cognac (up 3.3%). The largest decline during 2014 was in Prepared Cocktails, which decreased by 7.9% to less than 5 million cases sold. What’s in store for 2015?

“I expect to see more small-batch and barrel-aged products across all categories, from suppliers large and small,” Rogers says. “Today’s consumer wants to feel special, and purchasing a product that they feel is ‘crafted’ for them achieves that. On the retail side, on-demand home delivery services will continue to make inroads as convenience speaks volumes (pun intended).”

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