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The march towards premium brown spirits - Research in Focus

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In an interesting transition that summarises many of the changes brought on by Millennials, the alcohol industry has been changing rapidly in the last few years. Quality is indeed more important than quantity, particularly in spirits.

Brown spirits offer drinks companies the best opportunity to premiumise

Brown spirits offer drinks companies the best opportunity to premiumise

For years, the vodka segment experienced healthy growth in the US, maintaining historical market share of 40% of overall spirits in volume terms, according to Euromonitor International. Even today, vodka retains one-third share of the US spirits market in a highly-evolving market. However, since 2012, that majority share has begun yielding to the high-growth spirits of today in accordance with the changing tastes of US consumers.

This transition explains the switch from white to brown spirits.

Whiskies introduce a successful model for premium spirits

The whisk(e)y boom is in some part responsible for the deflated interest in white spirits. Around the same time that vodka began to decline, whisk(e)y started to pick up. Currently, there is a collection of other spirit types like Cognac and Tequila that in the last few years has joined the race contributing to the increased decline of vodka.

The commonality between these burgeoning categories is the combination of brand premiumisation and a dedication to the origin story.

Most spirits drinkers are interested in the experience of imbibing a particular drink because of the origin or the particular tasting notes, rather than choosing the cheapest option. The rise of buzzwords like 'craft-distilled' and 'hand-made' have been effective at targeting curious consumers. In addition, the rising purchasing power of the Millennial base has been paramount to this transition.

The classification of a brand as a 'sipping spirit' has benefited all kinds of categories from single-malt Scotch whiskies to Cognac, with the most recent additions spanning from Tequila.

Rum begins to switch competition

Another category may be on the move to join the growing number of premium brown spirit brands. For years, staple rum brands such as Bacardi and Captain Morgan directly competed with top vodka brands, particularly when comparing the white rum variants. Everything from the colour to the mixability was in direct comparison.

Much of vodka's unique selling point stemmed from its economic price point. However, given the current over-saturation within vodka, it appears many rum brands are beginning to divert their branding to associate their brown expressions with the premium brown spirit segment.

There is a number of 'sipping rums' beginning to enter the market from Diplomatico to Flor de Cana; a clear effort to add value to an otherwise stagnating category.

We are approaching a juncture where the rest of the spirits category decides to follow suit, positioning itself in a similar premium light. The success of this transition will depend on spirits' ability to control its branding in the origin story that it has constructed for itself.

Global Spirits: Recovering and Plenty of Opportunities

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Sectors: Spirits

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