Spirits: The Market - US - September 2010

About this report

In this report, the second part of a two-part report on spirits, Mintel takes an in-depth market-centric view of the market. The consumer-centric view is covered in Mintel’s Spirits: The Consumer—U.S., August 2010.

The year 2009 was a challenging one for many segments of the spirits industry. On-premise consumption continued to decline, as did overall sales of certain high end spirits. At the same time, retailers in the growing off-premise sector took advantage of the at-home consumption trend by finding new ways to introduce and educate shoppers about products that they may have only been exposed to on-premise. Retailers—along with spirits suppliers—also took greater advantage of electronic media as a low cost means of directly interacting with consumers.

In order to provide purveyors with a clear picture of this multi-faceted market, Mintel conducted a comprehensive analysis of distilled spirits performance in the spirit market and included brand new sections on control state stores and digital marketing. The core themes explored in this report include, but are not limited to:

• How the market has performed in the last five years, as well as the growth outlook for the next five years
  
• How the current recession has affected the consumer brand choices
  
• The consumer movement from on-premise to off-premise channels
  
• Major trends in new spirits products
  
• A detailed analysis of advertising strategy, including digialt marketing
  
• Which segments promise growth and which ones will find it challenging to find growth in the next five years.

Table of contents

Scope and Themes
What you need to know
Definition
Data sources
Sales data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
Executive Summary
Off-premise continues to grow
Trading down
Market drivers and drawbacks
White spirits outperform dark
White spirits
Rum and vodka
Gin and tequila
Dark spirits
Whiskey
Other dark spirits
Dominant brands
Advertising and promotion
At retail
Mobile and online ads & promos
Television
Market Size and Forecast
Key points
Sales and forecast of spirits
Figure 1: Total U.S. retail sales and forecast of spirits, at current prices, 2005-15
Figure 2: Total U.S. retail sales and forecast of spirits, at inflation-adjusted prices, 2005-15
When(ever) the economy improves
General economic indicators
Figure 3: Total U.S. volume sales of spirits, 2005-10
Competitive Context
Consumer interest in spirits outpaces wine, beer
Figure 4: Trends in drinking distilled spirits, prepared cocktail, and other alcoholic beverages, January 2005-December 2009
Segment Performance
Key points
Total volume sales of spirits, by segment
Figure 5: U.S. volume sales of spirits, by segment, 2005-10
Figure 6: U.S. sales of spirits, by segment and sub-segment, 2008 and 2010 (est)
Segment Performance—White Spirits
Key points
Total volume sales of white spirits
Figure 7: U.S. volume sales of white spirits, 2005-10
White spirits—Vodka
Key points
Flavor innovation and cocktail mixability help vodka thrive
Figure 8: New spirits products, by segment, 2009
The recession promotes price promotion in premium brands
Total volume sales of vodka
Figure 9: U.S. volume sales of vodka, 2005-10
White spirits—Rum
Flavored rums and rum-based cocktails keep the segment viable
Recession slows down growth; aged rum offers opportunity
Total volume sales of rum
Figure 10: U.S. volume sales of rum, 2005-10
White spirits—Gin
Gin’s resurgence can help drive growth
Total volume sales of gin
Figure 11: U.S. volume sales of gin, 2005-10
White spirits—Tequila
Key points
Fluctuations in supply and a sour economy hamper sales
Figure 12: Percentage of tequila production by case in different price tiers, 2008 and 2009
Blue agave shortages predicted; prices may go up in the next five years
Tequila offers dual drinking options; still remains unexplored by many
Total volume sales of tequila
Figure 13: U.S. volume sales of tequila, 2005-10
Segment Performance—Dark Spirits
Key points
Total volume sales of dark spirits
Figure 14: U.S. volume sales of dark spirits, 2005-10
Dark spirits—Whiskey/Whisky
Key points
Whiskey/Whisky sales by sub-segment
Figure 15: U.S. volume sales of whiskey/whisky, by type of whiskey/whisky, 2005-10
Figure 16: U.S. volume sales of whiskey/whisky, by type, 2005-10
Declining on-premise consumption hits whiskey hard
Total volume sales of whiskey/whisky
Figure 17: U.S. volume sales of whiskey/whisky, 2005-10
Dark spirits—Brandy and cognac
African-Americans and Cognac
You can mix them; Cognac in cocktails can attract the young adults
Total volume sales of brandy and Cognac
Figure 18: U.S. volume sales of brandy and Cognac, 2005-10
Dark spirits—Cordials and liqueurs
Key points
Cordial and liqueurs suffer from stodgy reputation; shift away from on-premise
A mixology treasure trove, consumers need more education
Total volume sales of cordials and liqueurs
Figure 19: U.S. volume sales of cordials and liqueurs, 2005-10
Segment Performance—Prepared Cocktails
Key point
Segment capitalizes on decline in on-premise trends, but only barely
Lousy taste; lousier appearance
Total volume sales of prepared cocktails
Figure 20: U.S. volume sales of cordials and liqueurs, 2005-10
Retail Channels
Key points
Figure 21: U.S. sales of spirits, by retail channel, 2008 and 2010
Retail Channels—On-premise
Key points
On-premise sales most severely impacted
Store keeping unit management & discounts
Other creative promotions
On-premise targets off-premise trend
Figure 22: Total U.S. on-premise* dollar sales of spirits, at current prices, 2005-10
Figure 23: Total U.S. on-premise volume sales of spirits, 2005-10
Retail Channels—Off-premise
Key points
Figure 24: Total U.S. off-premise dollar sales of spirits, at current prices, 2005-10
Figure 25: Total U.S. off-premise volume sales of spirits, 2005-10
Retail Channels—Liquor/Packaged Stores
Key points
Luring shoppers
Beyond price promotions
Web site education
Figure 26: U.S. liquor/packaged stores dollar sales of spirits, 2005-10
Retail Channels—Supermarkets
Key points
A limited but viable channel
Figure 27: U.S. sales of spirits at supermarkets, 2005-10
Retail Channels—Other
Key point
More than economic factors
Figure 28: U.S. sales of spirits at other* stores, 2005-10
Retail Channels—Control States
Figure 29: Control States, 2010
Figure 30: Consumption of distilled spirits by volume, by license and control states, 2008 and 2009
Store and warehouse improvements
Privatization
Market Drivers
Key points
Per capita consumption increases slightly in 2009
Figure 31: Number of gallons of distilled spirits consumed annually, 1978-2009
Recession continues to impede consumer spending
Figure 32: Employment status of the civilian non-institutional population 16 years and over, 2000-10
At-home consumption on the rise due to the recession; on-premise consumption declines
Figure 33: Influence of the recession on drinking behavior, by age, March 2010
Figure 34: Alcoholic beverage consumption at bars/restaurants compared to last year, by age, January 2010
… but net at-home consumption lower than a year before; drinkers trading down to cheaper brands of spirits
Figure 35: Alcoholic beverage consumption at home compared to last year, by beverage type, March 2010
Figure 36: Alcoholic beverage consumption at bars/restaurants compared to last year, by age, January 2010
Young adults aged 21-34 continue to be the biggest consumer
Figure 37: Incidence of consumption of distilled spirits relative to a year ago, by age, March 2010
Population growth trends favor adults ages 55-74
Figure 38: Population aged 21 or older, by age, 2005-15
Asians, blacks, and Hispanics offer growth potential
Tequila and Mexicans
Figure 39: Population, by race and Hispanic origin, 2005-15
Companies and Brands
Key points
Market leaders & shakers
Figure 40: U.S. spirits sales of leading companies, by volume, 2008 and 2009
Brand Share—Vodka
Key points
Value brands lead, but Grey Goose holds its own
Higher-end vodkas attract club goers
Smaller imports; bigger growth
Figure 41: Smaller imported Vodka Brands (under 1,500 million 9-liter cases), 2008 and 2009
Manufacturer and brand shares
Figure 42: U.S. brand sales by volume of vodka, 2008 and 2009
Brand Share—Rum
Key points
Captain Morgan and Bacardi continue to lead
Manufacturer and brand shares
Figure 43: U.S. brand sales of rum, by volume, 2008 and 2009
Brand Share—Gin
Key points
Premium sales decline, value segment thrives
Manufacturer and brand shares
Figure 44: U.S. brand sales of gin, by volume, 2008 and 2009
Brand Share—Tequila
Key points
Value brands gain in tequila
Manufacturer and brand shares
Figure 45: U.S. brand sales of tequila, by volume, 2008 and 2009
Brand Share—American Whiskey
Key points
Brown-Forman’s Gentleman Jack, value brands drive momentum
Manufacturer and brand shares
Figure 46: U.S. brand sales of straight whiskey, by volume, 2008 and 2009
Brand Share—Blended Whiskey
Key points
Flat sales, affordable price tags
Manufacturer and brand shares
Figure 47: U.S. brand sales of blended whiskey, by volume, 2008 and 2009
Brand Share—Canadian Whisky
Key points
Perfect for young adults
Manufacturer and brand shares
Figure 48: U.S. brand sales of Canadian whisky, by volume, 2008 and 2009
Brand Share—Scotch Whisky
Key points
Diageo dominates
Manufacturer and brand shares
Figure 49: U.S. brand sales of Scotch whisky, by volume, 2008 and 2009
Brand Share—Cordials and Liquors
Key points
On-premise consumption decline impacts liquors
Manufacturer and brand shares
Figure 50: U.S. brand sales of cordials and liquors, 2008 and 2009
Brand Share—Brandy and Cognac
Key points
Recession hurts brandy and cognac
Manufacturer and brand shares
Figure 51: U.S. brand sales of brandy and cognac, 2008 and 2009
Brand Share—Prepared Cocktails
Key points
Prepared for the worst
The few bright spots
Manufacturer and brand shares
Figure 52: U.S. brand sales of prepared cocktails, by volume, 2008 and 2009
Brand Qualities
Fun promotions
Green consumerism
Innovation and Innovators
Unusual and user-friendly packaging
Tequila makers underscore “100% agave” factor
Vodka becomes more innovative—cola, tea, caffeine and more
New twists on favorite cordials
Distillation and aging emphasized in new products
Marketing Strategies
A targeted media world
Major player activity
Brown-Forman
Diageo
Pernod Ricard
TV and other advertising by spirits segment
Vodka
Figure 53: Advertising expenditure for major vodka brands, 2008 and 2009
Feathers in Grey Goose’s Cap
Figure 54: Grey Goose vodka, TV ad Friends rooftop terrace after midnight, 2010
Vodka and niche marketing
Rum
Figure 55: Advertising expenditure for major rum brands, 2008 and 2009
What recession?
Figure 56: Bacardi, TV ad People on boats make an island, December 2009
Figure 57: Captain Morgan, TV ad, September 2009
Tequila
Figure 58: Advertising expenditure for major tequila brands, 2008 and 2009
Agave issues and cut in spending
Figure 59: José Cuervo Especial Silver, TV ad, 2010
Gin
Figure 60: Advertising expenditure for major gin brands, 2008 and 2009
Tanqueray and New Amsterdam are biggest TV spenders
Figure 61: Tanqueray Gin, TV ad, August 2009
Whiskey/Whisky
Straight whiskey
Figure 62: Advertising expenditure for major straight whiskey brands, 2008 and 2009
NASCAR no more
Canadian whisky
Figure 63: Advertising expenditure for major Canadian whisky brands, 2008 and 2009
Motor sports and Yuppiedom
Figure 64: Crown Royal Whiskey, TV ad, September 2009
Other brands
Scotch whisky
Figure 65: Advertising expenditure for major Scotch whisky brands, 2008 and 2009
The sophisticated spirit
Appendix: Trade Associations

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Related research categories

By sector: Spirits

By market: United States (in North America)