“In 2009, everything was about trading down.”
“There was a noticeable increase in sales of lower-priced domestic products, particularly among spirits. In 2010, however, this dynamic began to shift again. Though value-priced products are still doing well overall, consumers are beginning to trade up to above-premium and superpremium brands again. The on-premise business, which suffered tremendously throughout 2008 to 2009, started picking up in 2010, though it has not reached pre-recessionary levels,” states Eric Schmidt, research director for the Beverage Information Group, Cheers’ parent company.
As the herky-jerky economy moves two steps ahead and one step back, it appears as if the wine and spirits industry, at least, has found its bearings. Indeed, overall wine and spirits sales volume still increased in 2010, according to the latest statistics just released in the Handbook Advance 2011, published by the Beverage Information Group. U.S. distilled spirits sales volume rose to approximately 192.7 million 9-liter cases, representing a 2.1 percent gain versus 2009 (which saw an increase of 1.6 percent sales volume over 2008). Spirits revenue growth (the combined dollar total of off- and on-premise sales) actually outpaced volume gains in 2010, increasing 2.7 percent to $65.8 billion. This is an important indicator, which underlines the renewed interest in higher-margin, higher-priced products among spirits consumers.
In fact, the latest DISCUS report notes that sales of high-end spirits in the U.S. rose 10.9 percent in 2010, a vast improvement over the previous two years, but is still not approaching sales levels seen before the financial crisis.
The same holds true in the wine segment. Total U.S. wine consumption increased by 1.7 percent in 2010, to just under 302 million 9-liter cases. This is more than double 2009’s .8 percent volume gains. However, the real momentum in the wine segment in 2010 can be seen in the overall revenue figures, which show a 2.4 percent increase to $26.8 billion. These results contrast sharply with 2009 overall wine revenue, which declined by 3.2 percent. Once again, this reflects a growing momentum toward consumption of higher-priced wines in 2010. Still, there remains a vibrant market in large-size box wines (3-, 4- and 5-liter sizes) as well as wines priced in the $6 to $10 range. And while sales of above-$10 price point have been increasing, superpremium wine sales still have a long way to go to recovery.
For beverage alcohol professionals, vodka is the gift that keeps on giving. This huge spirit category rose another 5.8 percent in 2010, following a 5.7 percent increase in 2009. Overall, the vodka segment added almost 3.5 million 9-liter cases to its total of approximately 61.9 million cases. Indeed, vodka now represents 32.1 percent of all spirits consumed in the U.S. New vodka expressions abound, with flavors and brands from around the world still proliferating. The reasons remain primarily the easy mixability of the spirit and the continued popularity of cocktails made with vodka. We’ve asked this question before: Where are retailers and bar operators putting all these bottles? Obviously, they are making space because there seems to be little slowing the category down.
The second-largest spirits category, rum, also saw consumption rise in 2010. Still riding the popularity of the Mojito, the category activity also includes new spiced and flavored rums as well as a variety of aged expressions. Overall, rum gained 2.2 percent to more than 25.5 million 9-liter cases. Tequila also increased last year, with consumption up a respectable 3.7 percent to about 11.6 million cases. Largely driven by the Margarita, the category’s consumption trends also take into account the various levels—from premium to superpremium to ultra-premium—of a brand’s portfolio. American whiskey is another category that saw sales volume rise in 2010, both for blends and straights.
American straight whiskey, the higher-profile, higher-priced segment, gained 2.2 percent to reach more than 15.2 million 9-liter cases; the smaller blends segment moved ahead by one percent to more than 5.2 million cases. Total American whiskey was up 1.9 percent to more than 20.5 million cases. Other good news comes from the smallest imported whiskey category: Irish and Other whiskies. They jumped ahead by 21.7 percent, but to a very modest total of 1.43 million cases, driven primarily by the ongoing success of Jameson Irish Whiskey. For their part, overall Scotch whisky declined 1.5 percent in 2010 to 8.7 million cases; and Canadian whisky decreased by a slight .4 percent to more than 15.5 million cases.
The third-largest spirits category, cordials and liqueurs, saw total consumption fall 1.8 percent to 19.7 million cases. Also losing ground were the brandy and Cognac categories. The higher-end Cognac segment actually eked out a small gain, while domestic brandies declined in a reversal of recent trends. Overall, the category fell a modest .5 percent to 10.35 million cases. The gin category likewise saw a sales decrease in 2010, down 1.9 percent to 11.15 million cases. The good news here is that the higher-margin imported gins gained slightly, while the domestic gins took a larger hit. Finally, prepared cocktails fell another 2.1 percent to just over 6.2 million cases; however, there have been several successful launches of prepared cocktail lines in the past year, which will hopefully bode well for the future of the segment.
Table wine now comprises about 91.8 percent of all wine consumed in the U.S., and it continued growing in 2010, rising 1.8 percent in 2010 to reach 277 million 9-liter cases. Interestingly, domestic brands outperformed imports, gaining 2.8 percent, while imported table wines declined one percent overall. Domestic table wines now represent more than two-thirds of the overall U.S. wine market, and a significant majority of the sales of these wines are for under $10 per bottle, sometimes considerably less. As the economy continues to recover, premium and superpremium wine sales will undoubtedly pick up, though for now, value table wine brands are still the major players.
Though relatively small, Champagne and sparkling wine increased by three percent last year, to just over 14.6 million 9-liter cases. This is the ninth straight year of gains for this segment, though it still lags behind its highpoint of more than 17 million cases in sales in the 1980s. Even smaller in size is the dessert and fortified wine category, which declined another four percent in 2010, while vermouth dropped 4.8 percent.
Brands Maintaining Growth
So, what is the rationale for publishing our Growth Brands lists? To quote what we’ve said here before, “There are beverage alcohol products in every category and at every price point that, for any number of reasons, have either lagged behind or outpaced their respective competitors. Often, a combination of elements—among them solid distribution and retail support, supplier resources, marketing creativity, product heritage and brand equity, the right economic environment, a solid product in the bottle, advantageous price positioning and sometimes just plain luck—help lead to product success.”
In the past few years, the tough economic environment has clearly played a role, cutting down brands that have regularly grown their business in “normal” times. And a significant percentage of high-image, high-priced brands also suffered in the wake of the recession, particularly after the jet-fueled years that preceded it. But there are other brands that have thrived, and many others that adjusted to new market realities and maintained some growth, as well as a variety of additional brands that continue to make positive strides with consumers and retailers alike. Those are the brands that appear on the following pages. And though evaluating category consumption trends can provide the big picture, drilling down to actual brand performance provides the details which are the reason for our annual Growth Brands report, which uses the most up-to-date industry results to highlight the wine and spirits brands with noteworthy growth over the past several years. [The September/October 2011 issue of Cheers will publish the Beer Growth Brand results.]
Identifying the Growth Brands
The four Growth Brand categories are designed to organize the wine and spirits brands that have demonstrated notable growth so that operators and the industry at large can discern the existing and emerging trends and tap the opportunities available. Our Growth Brand criteria remain the same as last year for distilled spirits and wine.
Fast Track Brands
The brand must have exceeded 100,000 9-liter cases in 2010, with double-digit growth in each of the past four years. All brands must be at least five years old.
The brand must be less than five full years old, and must have exhibited notable growth in the past few years.
Established Growth Brands
The brand must be a top seller, moving a minimum of 400,000 9-liter cases annually. It must also have grown moderately or substantially in each of the past four years.
Comeback Growth Brands
Brands that have rebounded in sales to at least the previous level after a recent decline.
Spirits: Fast Track Brands
The Fast Track Growth Brands category represents the top-performing brands, percentage-wise, during the past four years. The criteria are demanding: a wine or spirit must have maintained double-digit growth over each of those four years while selling at least 100,000 9-liter cases this past year. Based on the Beverage Information Group’s 2010 statistics, 19 spirits brands made the Fast Track list, outpacing last year’s total of 14. There are eight new Fast Track spirits members this year and five of them vodkas. Overall, there are 12 vodkas numbered among the 19 Fast Track brands, reflecting the continuing dominant position of this spirit in the marketplace.
In fact, the top four brands in sales volume are all vodkas that were in the Fast Track category last year, led by Svedka, the Swedish import, which is priced lower than most other well-known imported vodkas. With five flavors joining the original brand, Svedka maintained its healthy performance, growing 2010 sales by about 500,000 cases to just under 3.3 million cases, which represents an 18.2 percent increase over 2009. For its part, Burnett’s Vodka reached sales of more than 1.4 million cases in 2010, a 10 percent jump from the previous year. The value-priced brand has succeeded in the challenging economy, but its growth is also the result of the popularity of its wide array of flavor offerings. Indeed, Burnett’s just released two new flavors—Limeade and Orange Cream—for a total of 23 flavors in its portfolio. Imported from France, the Pinnacle Vodka line is competitively priced and also features a wide array of flavors, with its Whipped Cream entry producing significant sales activity. Its latest addition is Pinnacle Chocolate Whipped Vodka. The brand had a wonderful 2010, gaining almost 400,000 9-liter cases for a sales total of more than 1.4 million, a 37.7 percent increase over 2009. Another value-priced vodka, UV, broke into the one million case club, notching a 24.9 percent increase. UV Vodka also features a wide range of flavored versions.
Perennial Fast Track member Jameson Irish Whiskey is the only whiskey to be represented here. Jameson continues to impress, gaining more than 200,000 9-liter cases last year, breaking the one million case barrier, for a 25.9 percent increase. The brand continues to dominate the Irish whiskey category and is still the fastest-growing whiskey product with significant sales, percentage-wise, in the U.S. market. The superpremium grape-based vodka Cîroc, imported from France, more than doubled its case sales last year to 750,000. The brand continues to benefit from the marketing support of hip hop star and entrepreneur Sean “P. Diddy” Combs, as well as from last year’s release of Cîroc’s Coconut flavor.
Three flavored rums are once again members of the Fast Track, beginning with Admiral Nelson Spiced Rum. Imported from the Caribbean, the Admiral’s competitive pricing for a spiced rum product helped propel the brand to a 22.5 percent gain in 2010, reaching just under 700,000 9-liter cases. The premium-priced Sailor Jerry Spiced Navy Rum garnered sales of 575,000 9-liter cases, a 21.1 percent gain. And Sailor Jerry is increasing its brand visibility with three new just-released limited-edition bottles. Jack Flavored Rums is the third rum brand represented here. The mid-priced brand gained 12.2 percent in 2010, to 230,000 9-liter cases.
Five vodka brands are new to the Fast Track this year, including mid-priced Platinum 7X Vodka, which saw a sales increase of 20 percent last year, to 450,000 cases. Tito’s Handmade, the above-premium-priced vodka from Texas, grew 28.2 percent to 364,000 cases, while the competitively priced import from Denmark, Frïs Vodka, joined the list with sales of 360,000 cases (a 37.9 percent jump). Indeed, the brand added to its portfolio last year with three new flavors: Frïs Cherry, Blueberry and Grape. Also attaining Fast Track status last year was Russian Standard Vodka, which saw sales reach just shy of 200,000 cases, a 34.2 percent gain. The premium-priced Russian Standard also boasts a higher-priced companion vodka, Russian Standard Platinum. Finally, Ruskova, the unabashedly value-priced vodka, which also accents its pot still production, moved from a Rising Star last year to the Fast Track this year. The brand notched 110,000 case sales in 2010, a 20.9 percent increase. For its part, Pearl Vodka, from Canada, returned to the Fast Track after another top-selling year. The premium-priced brand more than doubled its sales in 2010 (113,000 cases).
The sole tequila brand noted here is Milagro, a first time Fast Track member. The brand gained 25.6 percent in 2010 to 113,000 cases. The above premium-priced tequila includes silver, reposado and añejo versions as well as the same higher-end Select Barrel Reserve expressions. Also new to the Fast Track is Patrón XO Café, a luxury coffee flavored-liqueur with a tequila base, which gained an impressive 64.6 percent to 107,000 cases. Another Patrón brand, Citronge Orange, is a returning Fast Track member, which gained 10 percent last year (110,000 cases). The above premium priced orange and citrus flavored liqueur is produced in Mexico, and made with Jamaican and Haitian oranges.
And finally, the only gin to make the Fast Track is Hendrick’s Gin, the superpremium brand with subtle, not forward, juniper characteristics. The brand grew to 101,000 cases in 2010, a 34.7 percent increase.
Spirits: Rising Star Brands
Rising Star brands have been on the market four years or less and are represented here for a few reasons: They have demonstrated significant growth over a short time; they have made a notable impression in the market; or they are still relatively small but show promise. Last year the list included 26 Rising Stars; this year there are 29, with 14 returning members. Interestingly, suggested retail prices for these Rising Stars span the range from a lineup of value-priced brands to a number of superpremium-priced products. This year, there are eight vodkas numbered among the Rising Stars, followed by six liqueurs, six rums, three tequilas, three prepared cocktails, and one each of Bourbon, Cognac and Irish whiskey.
The accepted wisdom in the beverage alcohol industry is that new product releases keep the industry vibrant and moving forward, whether it be flavored line extensions or completely new formulas in any number of categories. And distillers continue to play their part, last year launching several promising new products cited among the Rising Stars. Among 2010 launches, Skinnygirl, the Margarita prepared cocktail, exploded with sales of 120,000 cases. The brainchild of Bethenny Frankel, who gained fame as one of the Real Housewives of New York (though she wasn’t a housewife at the time), the brand boasts 100-calorie per serving Margaritas made with natural ingredients. Three new vodkas launched in the fall by Diageo are showing potential in the marketplace. The first, Rokk Vodka, is imported from Sweden and very competitively priced for an import; it comes in an original version and four flavors. Rokk sales are an estimated 76,000 cases since its launch. Godiva Chocolate Infused Vodka is a 60 proof superpremium-priced offering, which nevertheless hit 73,000 cases in less than six months on the market. Finally, Ursus Vodka, an 80-proof value-priced brand, features an original version and three flavors. The bottles feature bright colors and come with a cold-activated label. The brand hit 40,000 cases, also in less than six months on the market.
New Mix el Jimidor is another early success story. This trio of Margarita pre-mixed cocktails that come in cans, and in three flavors, use el Jimador Tequila as their base. The brand reached sales of 75,000 cases in a short time in 2010. It’s been sold in Mexico for years and is, in fact, the best-selling premixed cocktail there by far.
Familia Camarena Tequila also rolled out into the U.S. last year for the first time. Both the Silver and Reposado versions are made with 100 percent blue agave and produced using a small batch, pot still distillation process. The brand is created as a superpremium product, but sells at more consumer-friendly prices. It sold 75,000 cases during its first year and is expanding distribution across the U.S. throughout 2011. Also notching 75,000 cases in its launch year was The Kraken Spiced Rum. The tar-colored black rum sells for above-premium prices and boasts a rich, spicy character. Two other spiced rums made their first appearance last year, including Blackheart Premium Spiced Rum and Blackbeard Spiced Rum. Blackheart, a 93-proof brand is premium-priced that features a unique “sultry seductress” on the label, sold 30,000 cases last year, while Blackbeard, also premium-priced, sold 15,000 cases. That brand is made by the same folks that produce Don Q Rum, and say the Caribbean rum is made with nutmeg, cinnamon, vanilla and a blend of fruits.
Evan Williams Honey Reserve hit the shelves for the first time last year to the tune of 55,000 cases. The 70 proof liqueur, a mixture of Bourbon and honey, comes in 1.75-liter, 750-ml. and 50-ml. packages and sells at premium price levels. Vesica Vodka, also in its first year on the market, is a Polish, triple-distilled potato vodka. The value-priced brand reached 16,000 cases. And the final initiate into the U.S. to make the Rising Star list is Paddy Irish Whiskey, a U.S. addition to the impressive Pernod Ricard Irish whiskey portfolio, which sold 10,000 cases in 2010.
Three other brands attained Rising Star status for the first time. Conjure Cognac, a superpremium-priced French import, jumped to 37,000 cases in 2010, perhaps partly on the strength of its famous backer, the rapper Chris “Ludacris” Bridges; VeeV, a super-premium Açaí-infused liqueur, is a wheat grain-based spirit made in Idaho that hit 18,000 cases last year; and the above-premium-priced Rum Chata, on the market for just over a year. It is, the company says, made with cream, vanilla, sugar and cinnamon, and it comes in an unusually shaped bottle. It sold 17,000 cases last year.
Topping the list of returning Rising Stars is Sobieski, the value-priced Polish rye vodka, which has had a fantastic three years. In 2010, the brand added another 225,000 cases total of 740,000. Its “Truth in Vodka” and “Not Every Vodka is Expensive” campaigns struck a chord, emphasizing the brand’s value proposition. Now, they’ve signed Bruce Willis to represent the brand, as well as launching more flavor line extensions this past October, including an Orange and Karamel and Raspberry.
Just on the market for two years, Red Stag by Jim Beam more than doubled its sales in 2010. The premium-priced black cherry flavored Bourbon notched sales of 192,000 cases, proving that a flavored Bourbon can be successful. For its part, Don Q Rum was relaunched in the U.S. a few years ago, and is continuing to find success: it scored 190,000 9-liter cases in 2010. The rum line includes the mid-priced Cristal, Gold and Añejo expressions, as well as flavored versions of Lime, Coconut and Mojito. Last year, the brand debuted an ultra-premium priced Grand Añejo rum. And in its third year on the market, Wild Turkey’s line extension, the 71 proof Wild Turkey American Honey Liqueur, reached sales of 179,000 9-liter cases.
Another brand only in its second year on the market is the ultra-premium Crystal Head Vodka, being actively promoted by actor Dan Aykroyd. Selling for about $45, the brand is triple-filtered through Herkimer diamond crystals; it reached an impressive 100,000 cases in 2010. Meanwhile, the above-premium priced 42 Below Vodka, reached 65,000 9-liter cases last year. Using a distinctive distillation process, 42 Below hails from New Zealand and boasts of the purity of the water used in its production. The brand also has Honey and Passion fruit-flavored line extensions. And 360 Vodka, made from organic wheat, has been positioning itself as a product with an environmentally sustainable approach to production. It has also just debuted six new flavors, hoping to add to its 2010 case total of 61,000 cases.
Azul Tequila, from the well-known Gran Centenario tequila enterprise, totaled 80,000 cases in its second year in the market. The premium Reposado tequila is made from 100 percent agave. Another 100 percent agave tequila, Lunazul, also repeated its success as a Rising Star. The above-premium priced brand, made at the La Certeza distillery, notched 61,000 case sales in 2010.
Southern Comfort introduced two ready-to-drink cocktails in 2009 made with the famous spirit: Southern Comfort Sweet Tea Cocktail and Sothern Comfort Hurricane Cocktail. Both new brands are 30 proof and come in 1.75 liter bottles ($20 suggested retail). In 2010, the brand reached sales of 55,000 cases and added to the line of pre-mixed cocktails with Southern Comfort Lime.
The superpremium French elderflower liqueur, St.-Germain, continues to gain customers, hitting 40,000 cases last year. Meanwhile the superpremium TY KU—made from a blend of Asian pears, melon, tea, citrus, ginger, soju and other ingredients—saw 2010 sales increase to 38,000 cases. The Cognac-based Domaine de Canton Ginger Liqueur continues to grow from a small base (22,000 cases), as does the value-priced, Spiced Jack 94, which hit 20,000 cases last year. The spiced rum is 94 proof and is presented as the concoction of legendary Navy pilot Jack Butler, supposedly stationed in Bermuda in the 1950s and whose visage is on the label.
Spirits: Established Growth Brands
The Spirits Established Growth Brand category represents large-volume brands (sales of more than 400,000 cases) that increased sales over each of the last four years. Clearly, the challenging economic environment of 2008 to 2009 resulted in a number of top brands losing their sales momentum during those years. Top brands such as Bacardi and Jose Cuervo, among others, have fallen from the list because of recent sales declines. At the same time, the brands cited here, mostly mature brands, should be commended for having managed to continue their sales gains. And, to a degree, they reflect the tenor of the spirits marketplace. Though there are a number of premium and above-premium priced brands here, many brands on the list are value-priced products. And, as many retailers point out, these brands are selling a lot of 1.75-liter packages. Of the 19 Established Growth Brands in 2010 (one more than in 2009), 15 return to the list from last year.
Of the four brands that are new to the list, three can be considered in the value-priced segment.
Seagram’s Vodka, which up until this year had been included in the Fast Track category, grew a respectable six percent in 2010 (but not the double-digit percentage increase necessary to make the Fast Track). With a portfolio that includes Extra Smooth, Platinum Select, Apple Flavored Extra Smooth and Sweet Tea Flavored Vodka, the brand reached sales of 1.15 million cases last year. Juarez Tequila also moved to this category from the Fast Track following 2010 results that saw the brand grow 3.6 percent to 778,000 cases. Another value-priced brand, Old Crow Bourbon, is new to the category, notching sales of 432,000 cases in 2010, a 6.1 percent increase. The final new member is the above-premium priced Three Olives line of vodka, imported from England, which also had been a recent member of the Fast Track. In 2010, the brand, which features an array of interesting flavors, grew a hefty 8.8 percent last year to 1.36 million cases. The brand’s latest portfolio addition is Three-O Purple, a grape juice flavored vodka.
Diageo claimed the top three brands among the returning Established Growth Brands. First, Smirnoff topped the list once again, with 2010 sales of more than 9.5 million cases, a two percent gain, and maintained its position as the best-selling spirit in the U.S. Captain Morgan Spiced Rum followed, garnering more than 6.25 million cases, a 1.3 percent increase. During the year, the brand debuted a line extension, Captain Morgan Lime Bite. And Crown Royal, the superpremium Canadian whisky that just keeps growing its business, jumped another four percent in 2010 (up 3.8 percent) to almost 4.2 million cases. The company also launched the 90-proof Crown Royal Black during the year, highlighting it as an “extra bold” whisky.
For its part, Skyy Vodka also continued its successful run, reaching 2.7 million cases (up 1.7 percent). And the brand just released two more line extensions to its portfolio of Infusions natural flavored vodkas, with Infusions Blood Orange and Infusions Dragon Fruit.
There are two additional tequilas in the category, both of them featuring super- and ultra-premium expressions. Patrón continued its positive sales momentum in 2010, with a 1.1 percent gain to hit 1.76 million cases, while 1800 Tequila totaled 688,000 cases, representing a remarkable 28.1 percent increase.
The remaining returning vodkas are all so-called value-priced brands. Barton grew a respectable five percent, to reach just under 1.9 million cases last year; Skol was close by with a total of 1.6 million case sales (up six percent); Kamchatka broke the one million case barrier (up 3.5 percent); Aristocrat Vodka edged ahead by .5 percent to just over the 1 million case mark; and Taaka Vodka grew by 5.7 percent to 460,000 cases.
Two Bourbons continued to thrive in the marketplace. The first, Evan Williams, climbed by four percent to just under 1.3 million cases. The Bourbon’s base brand is competitively priced; however, it also features an ultra-premium single barrel expression, which just released its 2001 vintage edition. Meanwhile, the iconic Maker’s Mark Bourbon is another superpremium product that has maintained its growth status, jumping an eye-opening 14.6 percent in 21010, for a total of 920,000 cases. And the brand debuted its first ever line extension last year, with Maker’s 46, tabbed as a “bolder” Maker’s Mark.
Two value-priced Canadian whiskies, both from Sazerac, also returned to the Established Growth Brand category. Rich & Rare reached to 785,000 cases, a 2.6 percent increase, while Canadian LTD rose 3.6 percent to 725,000 cases.
Spirits: Comeback Brands
This category recognizes those brands of significant volume that saw sales decline two years ago, in 2009, but which rebounded in 2010. The increase, however, must result in sales totals that are at least equal to or greater than the 2008 sales totals.