The distilled spirits industry saw its 22nd consecutive year of volume growth in 2019, ending the year up 2.4% to 238.7 million 9-liter cases, according to the Beverage Information Group’s 2020 Liquor Handbook. Innovation in new products and line extensions that resonate with consumers were key factors boosting the spirits in the past year.
Brown spirits, especially straight whiskeys and bourbons, helped drive the growth. The straight American whiskey category increased 6.1% in 2019, reaching 24.9 million 9-liter cases. Many domestic whiskey brands have successfully expanded their core customer base while also attracting new consumers to the category via gentler flavored offerings.
Tequila, with a 6.6% increase, Cognac (which rose 4.7%) and Irish & Other whiskey (up 8.8%) were other categories that posted gains in 2019. Suppliers have had to adapt to the fast-changing nature of the beverage alcohol business and strive to position brands that resonate as authentic to succeed and win consumers’ drinking occasions. Stories and uniqueness are key elements that help brands appeal to Millennial customers in particular and stand out on today’s overcrowded shelves.
Tito’s Handmade Vodka, for one, continues to attract consumers. The authentic Texas brand posted average growth of 45.3% from 2013 to 2018—more than doubling in size in the past three years and showing no sign of slowing. With a 19.1% increase in 2019, Tito’s is on track to surpass Smirnoff to become the best-selling spirit in the U.S. by the end of 2020.
The vodka category overall increased 1.2% in 2019 to reach a whopping 77.57 million 9-liter cases. Several of the major brands, including Ketel One, Absolut and Smirnoff, have launched botanical-inspired expressions highlighting natural flavors, no artificial ingredients and lower-calorie offerings to tap into the better-for-you products trend.
Rum has been decreasing for seven consecutive years, though the category’s decline slowed in 2019. But after many years ranking as the third-largest spirits category—behind vodka and cordials/liqueurs—the rum segment slipped to fourth place, now that American straight whiskey grew its share of spirits to 10.5% and advanced into the third spot.
Total gin volume in the U.S. was nearly flat in 2019, posting a scant decline of .07% to just under 9.89 million 9-liter cases. But that’s a slight improvement from 2018 when it fell 1.1%. There has been considerable interest and innovation in the gin category, with New World styles emerging in recent years that offer citrus, floral and other botanical notes that downplay the juniper flavor.
The premiumization trend continued in 2019. Interest in drinking high-end products at home and at on-premise establishments benefitted the spirits, wine and even beer categories as general confidence in the U.S. economy increased last year. Premium and above offerings now make up more than 30% of the spirits category.
While interest in higher-end beverage alcohol brands is expected to keep up, the coronavirus pandemic and ensuing economic fallout may cause consumers to trade down. And if the tariff wars are not soon resolved and prices on imports rise, that will likely suppress demand as well.
The Beverage Information Group is the research partner of Beverage Dynamics magazine.