Analysis

What do US wholesalers think of your spirits category? - Focus

Most popular

Diageo/LVMH move for Pernod won't wash

just-drinks speaks to Pernod CEO Alex Ricard

How to win the marketing war in spirits

From cannabis to carbs - top innovation trends

The just-drinks Analyst returns

MORE

Morgan Stanley last week released a report based on a survey of US wholesalers that found increased confidence is the country's spirits market. The financial firm said the report, its first to directly survey wholesalers, is more forward-looking that traditional channel data and attempts to "identify key trends before they appear in Nielsen data and sell-side forecasts". The survey also quizzed wholesalers on future category performance. Here's a run-down of the key findings:

US whiskey was among the categories expected to grow

US whiskey was among the categories expected to grow

  • Vodka

Vodka remains the biggest category in US spirits but has lost value and volume share since 2012, Morgan Stanley said. In the survey, wholesalers suggested that flavours will continue to drag on the vodka category - almost three quarters said flavoured vodka volumes will decline over the next six months, the highest percentage expecting a decline for any category "by a considerable margin", the firm said. None expected flavoured vodka volumes to increase, the only category where this was the case.

Unflavoured trends were more positive. More than 40% expected volumes growth.

On brands, Absolut, which has struggled to turnaround declines over the past two years, was the only vodka in the survey for which a majority expected volumes declines. The outlook will likely come as a surprise to Pernod, which told just-drinks in March that a recent improvement in sales have come from a stronger focus on Absolut's original flavour expression.

Morgan Stanley remained optimistic about Absolut, forecasting organic sales to climb by 4% in 2016, assuming stabilisation for the brand.

The report said Ketel One vodka remained the clear leader in Diageo's premium vodka portfolio. More than 50% of wholesalers expected an increase in volumes over the next six months, compared to less than 20% for Ciroc.

Meanwhile, growth in 2015 for Tito's Handmade Vodka is expected to continue. "We were struck by the number of respondents highlighting Tito's in the qualitative section [of the survey]," Morgan Stanley said.

  • Whisk(e)y

The report found that whisk(e)y was the "overwhelming favourite" among wholesalers. Everyone predicted volumes growth for US whiskey over the next six months. However, it said Canadian whisky was the "relative underperformer" with less than half of respondents expecting growth over the next six months.

Pernod Ricard's Irish whiskey Jameson was the only brand that all wholesalers expected to increase volumes. Morgan Stanley praised Jameson's growth, which is coming from the core brand and innovations such as Caskmates

"Secondly, Pernod has no plans to launch flavours, which we take as positive, as we believe doing so could otherwise weigh on brand equity in the long term," it said.

  • Rum

Less than one-tenth of wholesalers forecast volumes growth from rum over the next six months, and more than 40% expected a decline. "Only flavoured vodka elicited a more negative response," Morgan Stanley said.

Wholesalers were also down on a prospective recovery for Diageo's Captain Morgan brand. Morgan Stanley said Nielsen figures were pointing to an inflection point for the rum, but in the survey more than half of wholesalers predicted a volumes fall in the next six months.

  • Cognac

The US has emerged as the new battleground for Cognac in the wake of Asia's decline. Last month, Remy Cointreau's CFO said he is ready to fight it out with Pernod and Gruppo Campari as investment floods into the competitive category.

According to Morgan Stanley, US Cognac is not as premiumised as other markets, but in the survey distributors expressed a preference for LVMH's Hennessy, with more than 60% expecting growth in the next six months.

"A key challenge for Cognac producers in the US is whether growth can be sustained by growing the category outside of the core demographics," Morgan Stanley said.

  • Tequila

Tequila is strong in the US, and looks set to continue to be so. More than 70% of wholesalers predicted growth in the category.

  • Gin

Wholesalers forecast better news for gin in the US, where the spirit last year dropped below 10m cases for the first time in many years, according to DISCUS figures. Gin ranked fifth out of Morgan Stanley's 12 categories in the survey and more than half of wholesalers forecast volumes growth in the next six months, driven by the premium segment.


Related Content

What do US wholesalers think of your spirits category? - Focus

What do US wholesalers think of your spirits category? - Focus...

US wholesalers point to Absolut volumes drop - report

US wholesalers point to Absolut volumes drop - report...

Will Constellation Brands outpace the US beer category in 2018? - survey

Will Constellation Brands outpace the US beer category in 2018? - survey...

What the on-premise can teach us about the future - Consumer Trends

What the on-premise can teach us about the future - Consumer Trends...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?