Though we had an uneven economy overall in 2011, the wine and spirits industry apparently stabilized compared to the weakness of 2008 to 2009 and the modest growth of 2010. Indeed, the American economy itself appears to be headed in a sustained positive direction, as most economic indicators have shown in early 2012, and wine and spirits sales are likely to pick up along with the economy, particularly among higher-end products. (Of course, as all economists point out, any exogenous events–such as dangerous political crises or wars, huge natural disasters, etc.—could easily change all that).
Still, overall wine and spirits sales volume increased nicely in 2011, according to the latest statistics, just released in the Handbook Advance 2012, published by the Beverage Information Group, Cheers’ parent company. U.S. distilled spirits sales volume rose to approximately 197.1 million 9-liter cases, representing a 2.6 percent gain versus 2010 (which saw an increase of 1.9 percent sales volume over 2009). And overall spirits retail revenue growth (the combined dollar total of off- and on-premise sales) also increased, by three percent to $67.66 billion, a two billion dollar jump over 2010. It turns out that a large part of that increase is the result of more sales activity at the premium and above-premium price segments.
In fact, the latest statistics from The Nielsen Company note that sales of “ultra-premium” spirits in the U.S. (at an average selling price of $35.92) rose 10.6 percent in 2011, and so-called “premium” spirits (at an average selling price of $17.64), gained 5.4 percent. Both these numbers show a significant ongoing improvement over recent years, but in absolute numbers are still not at pre-Recessionary levels. Still, they reflect an important psychological shift among consumers, particularly the more affluent.
The same holds true in the wine segment. Total U.S. wine consumption increased by 2.5 percent in 2011, to 310.7 million 9-liter cases (compared to an overall 1.7 percent wine volume increase in 2010), the eighteenth consecutive year of wine sales volume increases, according to Beverage Information Group research. Similar to spirits, the move toward high-end purchases continued in the wine segment. According to Nielsen, in 2011 sales of table wine priced $20 and above increased by 11 percent; sales of wines priced $15 to $19.99 gained 7.8 percent; those priced $12 to $14.99 saw sales rise by seven percent; and sales of table wine priced at $9 to $11.99 gained 9.9 percent. Indeed, overall 2011 wine revenue figures show an increase of 2.9 percent to $27.69 billion, nearly $800 million more than in 2010.
For beverage alcohol professionals, vodka remains the engine that drives the business. The huge spirits category rose another six percent in 2011, following a 6.1 percent increase in 2010. Overall, the vodka segment added almost 3.5 million 9-liter cases to its total of approximately 65.85 million 9-liter cases. Indeed, vodka now represents almost a third of all spirits consumed in the U.S. New vodka expressions abound, with flavors and brands from around the world still proliferating. Indeed, vodka flavors are getting even more prolific and edgier. Still, the reasons for vodka’s huge popularity remain primarily the easy mixability of the spirit and the continued popularity of cocktails made with vodka.
The second-largest spirits category, rum, also saw consumption rise in 2011, up 1.3 percent to 25.88 million 9-liter cases. Still riding the popularity of the Mojito, the category activity continues to benefit from new spiced and flavored rums as well as a variety of new aged expressions. Tequila also increased last year, with consumption up a healthy 3.8 percent to just over 12 million 9-liter 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. Straight American whiskey is another category that saw sales volume rise in 2011, gaining a respectable 3.7 percent to more than 15.85 million 9-liter cases. The segment has been energized by superpremium product introductions as well as successful flavored Bourbon debuts. The smaller American blends segment decreased by 1.3 percent to just more than five million cases. Other good news comes from the smallest imported whiskey category: Irish and Other whiskies. They jumped ahead by 23.9 percent, but to relatively modest total of 1.76 million 9-liter cases, driven primarily by the ongoing success of Jameson Irish Whiskey. For its part, overall Scotch whisky declined 1.4 percent in 2011 to almost 8.5 million cases, while Canadian whisky decreased by a slight 0.6 percent to more than 15.3 million cases.
The third-largest spirits category, cordials and liqueurs, saw total consumption fall 1.2 percent to 19.42 million cases. Also losing ground was the gin category, which declined by two percent to 10.87 million cases. Brandy and Cognac were both just above flat, at 10.37 million cases. Finally, prepared cocktails reversed a recent downward trend, increasing 3.8 percent to 6.24 million cases, a result of the success of a wide range of branded cocktail lines.
Table wine now comprises about 91.9 percent of all wine consumed in the U.S. and it continued growing in 2011, rising 2.6 percent in 2011 to reach 285.5 million 9-liter cases. Interestingly, domestic brands outperformed, gaining 3.5 percent, while imported table wines declined 0.2 percent overall. Domestic table wines now represent 70.4 percent of the overall U.S. wine market, and a significant majority of the sales of these wines are for under $10 per bottle, though, as previously shown, the greatest percentage growth is in the higher-end price segments. As the economy continues to recover, premium and superpremium wine sales will continue pick up.
Though relatively small, Champagne and sparkling wine sales increased by 3.7 percent last year, to just over 15.1 million 9-liter cases. This is the tenth 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. Clearly, what’s driving much of this growth is the recent popularity of prosecco. Even smaller in size is the dessert and fortified wine category, which declined another 1 percent in 2011, while vermouth dropped 6.3 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 2008, 2009 and even 2010, the tenuous economic environment has clearly played a role, affecting brands that have regularly grown their business in “normal” times. And numerous high-image, high-priced brands also suffered in the wake of the Recession, particularly following the profligate 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, as we’ve said in the past, though evaluating category consumption trends can provide the big picture, drilling down to actual brand performance provides the details. Thus, 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 2012 issue of Cheers will feature the Beer Growth Brand results.
Spirits: Fast Track Brands
The Fast Track Growth Brands category includes the top-performing brands, percentage-wise, during the past four years. The criteria are demanding: a wine or spirit must have maintained double-digit percentage 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 2011 statistics, 18 spirits brands made the Fast Track list, one less than last year’s total of 19. This year there are three new Fast Track spirits members (four brands from last year fell off the list). Overall, there are nine vodkas numbered among the 18 Fast Track brands, continuing to reflect the dominant position of vodka in the marketplace, particularly the ongoing influx of new flavors.
In fact, eight out of the top ten brands in sales volume are all vodkas, once again led by Svedka, the Swedish import, which is priced lower than most other well-known imported vodkas. With several flavors joining the original brand, Svedka maintained its solid growth, increasing 2011 sales by almost 400,000 cases to just less than 3.7 million cases, which represents an 11.8 percent increase over 2010. By far, the most impressive performance came from Pinnacle Vodka, which exploded in 2011, increasing sales by 92.9 percent to 2.7 million cases. Its array of offbeat flavors—particularly the wildly successful Whipped Cream—struck a chord with consumers; indeed, the brand just launched two new ones: Key Lime Whipped and Atomic Hots.
For its part, Burnett’s Vodka attained sales of more than 1.67 million cases in 2011, a 10.2 percent jump from the previous year. The value-priced brand is also growing as a result of the popularity of its wide array of flavor offerings. Not to be outdone, Burnett’s just released its 26th flavor: Blue Raspberry. Another value-priced vodka, UV, gained 13.7 percent to reach 1.2 million cases last year. UV Vodka also features a wide range of flavored versions. The superpremium grape-based vodka Cîroc, imported from France, increased sales by more than 300,000 cases last year (up 38.4 percent), breaking the one million case mark for the first time to 1.1 million cases. The brand’s flavor additions of Red Berry, Coconut and Peach have added to its popularity, which has benefitted from the early marketing support of hip hop star and entrepreneur Sean “P. Diddy” Combs.
The first new member of the Fast Track category to appear here is Sobieski Vodka, which has been on the Rising Star list for several years. Sobieski, the value-priced Polish rye vodka, ended 2011 with sales of 950,000 cases, a 24.2 percent increase. Bruce Willis has been representing the brand, which also features flavor line extensions such as Orange, Karamel and Raspberry. Tito’s Handmade, the above-premium-priced vodka from Texas, returned to the Fast Track, showing phenomenal growth of 59.9 percent to 582,000 cases last year. Another Fast Track repeater, mid-priced Platinum 7X Vodka, distilled seven times, saw sales increase 16.1 percent last year, to 548,000 cases. The brand has just debuted new packaging, and is supporting the new look with a retail merchandising program. The final vodka listed here is Pearl Vodka, from Canada, which also returned to the Fast Track after another stellar year. The premium-priced brand increased its sales in 2011 by 50.4 percent to 170,000 cases.
The two whiskey brands noted here include perennial Fast Track member Jameson Irish Whiskey, which continued its amazing sales performance last year, gaining about than 300,000 9-liter cases, a 28.7 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 second whiskey is Pendleton, new to the Fast Track. The superpremium-priced Canadian whisky grew a respectable 32 percent to 134,000 cases in 2011.
The three rums cited here include two returning members of the Fast Track, beginning with the premium-priced Sailor Jerry Spiced Navy Rum, which garnered sales of 667,000 9-liter cases, a 16 percent gain. The brand has also been featuring limited-edition bottles. Jack Flavored Rums also had a notable year. The mid-priced brand gained 30.4 percent in 2011, reaching sales of 300,000 cases. The third rum, Don Q, is new to the Fast Track but not new to Growth Brands, having been a Rising Star brand for the past few years following its re-launch in the U.S. The rum line includes the mid-priced Cristal, Gold and Añejo expressions, flavored versions of Lime, Coconut and Mojito; and an ultra-premium priced Grand Añejo rum. Now, it joins the Fast Track, boasting 2011 sales of 219,000 cases, a 15.3 percent increase.
The Patrón Spirits Company features two liqueurs in the Fast Track: Patrón XO Café, a luxury coffee flavored-liqueur with a tequila base, which gained 38.3 percent to 148,000 cases; and Citronge Orange, which grew 10.0 percent last year (128,000 cases). The above-premium priced orange and citrus flavored liqueur is produced in Mexico, and made with Jamaican and Haitian oranges. The only tequila brand noted here is Milagro, returning to the Fast Track. The brand gained 18.6 percent in 2011 to 134,000 cases. The above-premium-priced tequila includes silver, reposado and añejo versions as well as the same higher-end Select Barrel Reserve expressions. Once again the only gin to make the Fast Track is Henrick’s Gin, the superpremium brand with subtle, not forward, juniper characteristics. The brand grew to 134,000 cases in 2011, a 32.7 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 29 Rising Stars; this year there are 37, with 14 returning members and the rest new brands. As always, suggested retail prices for these Rising Stars span the range from a lineup of value-priced brands to a number of superpremium-priced products.
As we’ve said here before, 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 2011 launches cited as Rising Stars are several brands that had a significant, immediate impact on the market. Jack Daniel’s Tennessee Honey Liqueur, which had a phenomenal 2011 debut, moved 320,000 cases in its first year on the market. Made from a blend of Jack Daniel’s Old No. 7 Tennessee Whiskey and a proprietary honey liqueur, the new above-premium-priced brand is 70 proof and features notes of honey, cinnamon and spice. New Amsterdam Vodka also exploded onto the market in 2011, with sales of 300,000 cases. The competitively priced vodka from
E. & J. Gallo is a companion to the successful New Amsterdam Gin. Another new successful vodka is Cupcake, from Underdog Wine & Spirits, a division of The Wine Group. Cupcake had healthy 2011 sales of 150,000 cases, on the strength of its Devil’s Food Cake, Chiffon and Cupcake flavors. From Bacardi comes the new Bacardi Oakheart, which notched sales of 140,000 cases in 2011. The originator of flavored rum (with Limón), Bacardi debuted Oakheart as its first mainstream spiced rum product, joining a host of other spiced rum brands in the category’s most vibrant niche.
Other first-time Rising Stars include Southern Comfort Flavors (71,000 cases), which debuted with Southern Comfort Lime and the more recently released Southern Comfort Fiery Pepper; and Jim Beam’s Devil’s Cut (55,000 cases), a line extension of the famous A Bourbon, which uses a proprietary process to reclaim the whiskey that has been absorbed into the barrel, resulting in a unique taste.
Topping the list of returning Rising Stars is the Skinnygirl line of prepared cocktails, which was purchased by Beam last year. In 2010, the Margarita prepared cocktail notched 120,000 cases, but then exploded last year to 586,000 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. In addition, Skinnygirl introduced two additional prepared cocktails last year: White Cranberry Cosmo and Sangria.
On the market for three years, Red Stag by Jim Beam grew to sales of 251,000 cases, an increase of 31.4 percent. The premium-priced black cherry-flavored Bourbon, the first of its kind, proved that a flavored Bourbon can be successful in the marketplace. The brand recently debuted two new flavors: Red Stag Honey Tea and Red Stag Spiced. And Wild Turkey’s line extension, the 71 proof Wild Turkey American Honey Liqueur, reached sales of 228,000 9-liter cases in its fourth year on the market.
Familia Camarena Tequila is repeating as a Rising Star after it sold 75,000 cases in 2010. Last year, it exploded in the marketplace, more than tripling its sales to 250,000 cases. 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. The four vodkas launched in 2010 by Diageo continue to show potential. The first, Rökk Vodka, is imported from Sweden and very competitively priced for an import; it comes in an original version and four flavors. Rökk sales more than doubled to 200,000 cases in 2011. Godiva Chocolate Infused Vodka is a 60 proof superpremium-priced offering, which nevertheless hit sales of 140,000 cases last year. Then there is 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 grew 71.4 percent to 120,000 cases. Finally, Moon Mountain Vodka, made from organic grain in small batches and copper pot stills, reached a more modest 14,000 cases. The brand also features Coastal Citrus and Wild Raspberry flavors.
Notching 150,000 cases in its second year on the market was The Kraken Spiced Rum, from Proximo. The tar-colored black rum sells for above-premium prices and boasts a rich, spicy character. Blackheart Premium Spiced Rum also repeated as a Rising Star. Blackheart, a 93-proof brand is premium-priced that features a unique “sultry seductress” on the label, sold 45,000 cases last year.
Evan Williams Honey Reserve Liqueur reached 70,000 cases in its second year on the market. 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. The brand boasts a line extension launched last year, Evan Williams Cherry Reserve Liqueur, which itself produced sales of 30,000 cases. Now, there is a new Evan Williams Cinnamon Reserve Liqueur just hitting the market. Another well-known whiskey brand, in this case the blended Seagram’s 7 Crown, has joined the niche segment of flavored whiskies with its Seagram’s 7 Crown Dark Honey (51,000 cases), made with a combination of aged American whiskey, with hints of spice and honey. In 2011, the brand debuted Seagram’s 7 Crown Stone Cherry (15,000 cases).
The above-premium-priced Rum Chata, on the market for two years, more than tripled its sales in 2011 to 57,000 cases. The liqueur is made with cream, vanilla, sugar and cinnamon, and it comes in a uniquely shaped bottle.
The 100 percent agave tequila, Lunazul, also repeated as a Rising Star. The above-premium priced brand, made at the La Certeza distillery, notched 75,000 case sales in 2011. Its first line extension, Lunazul Añejo 100 percent Agave Tequila, joined the brand last year. Other tequilas included here are El Charro (30,000 cases), from White Rock Distilleries, and a new Rising Star Old Mexico, from MS Walker, with sales of 12,000 cases.
Vesica Vodka, also a Rising Star last year, is a Polish, triple-distilled potato vodka. The value-priced brand reached 38,000 cases in its second year on the market. Other vodkas include the suprepremium priced Chambord, which comes in the brand’s signature orb-shaped bottle, and is flavored with a combination of French black raspberry liqueur and French vodka; and two organic vodkas including Prarie Organic Vodka, from Phillips Distilling, and American Harvest Organic Spirit, from Sidney Frank Importing.
Other brands making the list include three Canadian whiskies: Spice Box, a spiced Canadian whisky, Revel Stoke, and the high-end brand Collingwood. Other brands include Irishman Irish whiskey; Redcup Vodka and Rum; and Adult Chocolate Milk, a liqueur made from chocolate milk, fruit punch, limeade and orange cream.
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. As a result of the challenging economic environment of recent, a number of leading spirits brands, such as Bacardi or Jose Cuervo, saw sales decrease in at least one of the previous four years, thus disqualifying them from the Established Growth Brand category. At the same time, the brands cited here, mostly mature brands, should be commended for having managed to continue their sales gains. There are a number of premium and above-premium priced brands here, as well as several value-priced products. And, as many retailers point out, once again, the value-priced brands are moving a lot of larger size packages. Of the 18 Established Growth Brands in 2011 (one less than in 2010), 17 return to the list from last year.
The one brand new to the list is Admiral Nelson Spiced Rum, which moved from LUXCO to Heaven Hill Distilleries in the middle of last year. In fact, the Admiral has been a Fast Track spirits brands for several years, but is listed here because its growth did not reach double digit percentages in 2011. Still, the spiced rum grew a respectable 3.9 percent, reaching sales of 725,000 cases.
Once again, Diageo claimed the top three brands among the returning Established Growth Brands. First, Smirnoff topped the list once again, with 2011 sales of more than 9.6 million cases, a 0.6 percent gain, and maintained its position as the best-selling spirit in the U.S., with flavor introductions continuing to help generate interest. Captain Morgan Spiced Rum followed, garnering almost 6.3 million cases, a 0.5 percent increase. The brand injected some extra excitement to its portfolio when it debuted Captain Morgan Lime Bite in 2010. And Crown Royal, the superpremium Canadian whisky that just keeps growing its business, jumped another 1.4 percent in 2011 to 4.15 million cases. The company is also seeing some success with the 2010-launched, 90-proof Crown Royal Black, highlighting it as an “extra bold” whisky.
For its part, Skyy Vodka also continued its successful run, gaining 1.5 percent to more than 2.7 million cases. The above-premium-priced brand just released another line extension to its portfolio of Infusions natural flavored vodkas, with Infusions Coconut, made with real coconuts. Another above-premium priced vodka noted here is Three Olives, which notched a healthy 8.5 percent increase in 2011, to just under 1.48 million cases. Imported from England, the brand boasts about 20 flavors, with one of its 2011 intros being Dude, a lemon-lime flavored vodka. The premium-priced line of Seagram’s vodkas also features several flavors, including Seagram’s Sweet Tea and Seagram’s Grape Moscato Vodka. The brand hit a respectable 1.2 million cases last year, a 4.3 percent increase. The remaining returning vodkas are all so-called value-priced brands. Barton grew 4.9 percent, registering sales of more than 1.9 million cases last year; Skol neared sales of 1.85 million case (up 7.9 percent); Kamchatka inched up by 0.2 percent; and Taaka Vodka notched to 480,000 cases.
There are three tequilas in the category, with two of
them featuring super- and ultra-premium expressions. Patrón continued its positive sales momentum in 2010, with a notable 6.5 percent gain, with sales of just under 1.88 million cases, while the line of 1800 Tequila totaled 805,000 cases, representing a fantastic 17 percent increase, the highest percentage gain among all the Established Growth brands. Juarez Tequila, a value brand, closed the year with sales of 810,000 cases, a 4.1 percent gain.
A value-priced Canadian whisky also returned to the Established Growth Brand category. Rich & Rare reached sales 795,000 cases, and recently launched its R&R Reserve line extension.
Three Bourbons continued to thrive in the marketplace. The first, Evan Williams, climbed to sales of 1.3 million cases. The Bourbon’s base brand is competitively priced; however, it also features an ultra-premium single barrel expression, which recently released its 2002 vintage edition. Meanwhile, the superpremium Maker’s Mark Bourbon is another high-end product that has maintained its growth status, jumping another 13.2 percent in 2011, and breaking theone1 million case mark in sales for the first time. The brand debuted its first-ever line extension late in 2010, with Maker’s 46, identified as a “bolder” Maker’s Mark. And finally, Old Crow Bourbon returned to the list. The value-priced brand attained sales of 435,000 cases in 2011.
Wine: Fast Track Brands
As we’ve said here before, the adage of offering good-tasting, fun, affordable wines is the obvious recipe for succeeding in the wine market these days. And based on the statistics, the Wine Fast Track reflects the popularity of approachable, easygoing wines with clear imagery that generally sell for under $10 at retail. Of course, there are several Fast Trackers that sell for above $10 and a couple that retail above $15 (including a few that feature lower-priced labels while also offering higher-priced reserve and single vineyard wines in their portfolio, for example). There are even one or two superpremium-and-above wine brands that are included here.
This year, Wine Fast Track brands number 36, compared to 31 from last year. Twelve new brands were added this year, including seven that were previously noted as Wine Rising Stars.
E. & J. Gallo’s knack for building fast-growing, successful wine brands is again showcased here. For example, Barefoot Cellars, with its expanding portfolio of varietal and other wines, usually selling for below $10, added an additional three million case sales in 2011, pushing its overall sales to 13 million cases, a phenomenal 30 percent gain. Another high-volume E. & J. Gallo brand, Liberty Creek’s low-priced, fast-moving 1.5 liter varietals, registered a healthy 1.9 million cases, a heady 58.3 percent increase, while Gallo’s Tisdale wines gained 16.7 percent to 1.4 million cases. New to the Fast Track is Gallo’s Canyon Road line of white and red varietals, which notched sales of 600,000 cases last year, a hefty 33.3 percent increase. Gallo’s Red Rock, which features a Reserve Merlot and Reserve Malbec at about $10 per bottle, garnered 250,000 cases in 2011, a notable 42.9 percent gain. The three remaining E. & J. Gallo wines were all tabbed as Rising Star Wine brands last year and continued their significant growth to make the Fast Track this year. The first, Don Miguel Gascon, is a competitively priced Malbec from Argentina that attained sales of 225,000 cases in 2011; next, Martin Codax is the Spanish Albariño, usually selling for above $10, which saw an eye-opening 66.7 percent jump to 200,000 cases in 2011; finally, Gallo’s California-produced Ghost Pines line of varietals, also regularly selling for just above $10, likewise reached sales of 200,000 cases, for a 66.7 percent gain.
Other high-volume Fast Tracks wines also hail from California. These include Constellation’s Black Box bag-in-box offerings, ranked second in the Fast Track, which scored a 10.2 percent sales increase to more than two million cases. At a higher price point than many value proposition wines is Trinchero Family Estate’s Ménage à Trois, usually sold for about $10 and up. Featuring a Red Table Wine, White Table Wine, Rose and Chardonnay, Ménage à Trois gained an impressive 12.5 percent last year to break the two million case mark. As last year, Trinchero’s second Fast Track entry is Three Thieves Bandit, whi