September 11-15, 2017

U.S. Spirits Volume and Revenue Post Healthy Gains

The U.S. distilled spirits market continued its upward trend in 2012, with total volume growth of 3 percent and revenue growth of 4.5 percent, the Distilled Spirits Council (DISCUS) reported at the trade group's annual briefing of Wall Street analysts and business media Wednesday.

Volume grew to 202 million cases and revenue rose to $21.3 billion in the last calendar year and spirits' share of the alcohol market edged up to 34.3 percent from 34.1 percent, grabbing it from both beer and wine. Overall, DISCUS reported that the spirits market in 2012 saw $900 million in additional revenue over 2011.

Much of the revenue growth can be attributed to the premiumization trend as a significant amount came from gains in the top two price tiers, high-end and super-premium. High-end volume grew by 4.8 percent, while super-premium, the highest tier, jumped by 8.9 percent. The value and premium segments grew more modestly at 1.8 percent and 2.1 percent, respectively. Respectively, high-end and super-premium account for just 18.0 percent and 7.9 percent of overall spirits volume, but each takes a larger chunk of revenue given their higher price points, with high-end taking 28.2 percent and super-premium getting 18.3 percent of the revenue share.

The 10-year premiumization trend—despite a bit of a lull at the height of the recession—paints a more striking picture. In 2003 the value segment's total revenue was just shy of $3.8 billion, while the super-premium was just under $1.5 billion. In 2012 value revenue was just under $4.1 billion, but super-premium wasn't far behind at $3.9 billion.

"The revenue value of value has crept up, but the revenue value of super-premium has skyrocketed," DISCUS president and CEO Peter Cressy pointed out.

The annual briefing also included an extensive economic and category performance report by chief economist David Ozgo. It showcased a number of 2012 highlights from the different distilled spirits categories:

  • Flavor trend: More than 40 percent of all spirits products in the U.S. have a flavor component beyond the traditional category – as many as 220 different expressions, from citrus to wasabi. 
  • Vodka, the largest spirits category, saw volumes increase 4.0 percent to 65 million 9-liter cases, with super premium vodkas up 10.0 percent. Vodka supplier revenues grew to $5.5 billion.
  • Bourbon and Tennessee whiskey volumes, the largest whiskey category, climbed 5.2 percent, with super premium products up 12.4 percent.
  • Irish Whiskey continued its rapid growth with volumes shooting up 22.5 percent.
  • Single Malt Scotch also grew at double digit rates with volumes up 13.0 percent.

Ozgo noted that 2011 and 2012 were "the strongest back-to-back years we've had since 2003 and 2004."

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