Is Pernod Ricards Absolut vodka heading for a fall in the US?

Is Pernod Ricard's Absolut vodka heading for a fall in the US?

Morgan Stanley this week released its second survey of US wholesalers, which found increased confidence is the country's spirits market. The financial firm claims the report is more forward-looking than 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:

Vodka

Wholesalers' overall attitude to vodka hasn't changed much since Morgan Stanley's first survey in April, with respondents more positive about unflavoured vodka that flavoured (pessimism over flavoured expressions increased from 70% in April to 90% in the latest poll).

However, when it comes to brands there has been a significant shift regarding the categories top two names.

US distributors were fairly down on the prospects of both Pernod Ricard's Absolut and Diageo's Smirnoff back in April, with only about 20% expecting growth from the two vodka powerhouses over the following six months. But the latest poll shows more than 40% of respondents forecast gains for Smirnoff, while just 10% are bullish over Absolut's six-month performance. This is despite Absolut having outperformed Diageo's Smirnoff in the US since December last year, according to Nielsen and Morgan Stanley data.

Are we on course for a role reversal?

The outlook for premium brands in the market (Ketel One and Cîroc) is more positive. For Cîroc, the proportion of people expecting growth has increased from about 20% to 45%.

Whisk(e)y

The category was again top pick for growth among wholesalers, with 94% expecting volumes growth in US whiskey and Irish whiskey over the next six months. Canadian whisky was also positive, however prospects for Scotch were less bright.

There was a small increase in the proportion of respondents expecting a decline in volumes for Scotch over the next six months, from 7% to 19%, though more than 50% still expect growth. Morgan Stanley said it had "confidence that the good momentum for Scotch is likely to persist".

Only 55% of wholesalers expected growth for Diageo's flagship Scotch, Johnnie Walker, compared to 75% in April. But optimism over Bourbon brand Bulleit increased to 90% from just under 80%.

In comparison, 100% of those surveyed said Pernod's Jameson Irish whiskey will grow over the next six months.

Rum

Morgan Stanley said respondents were "fairly cautious" over rum for the next six months, with just over 40% of respondents expecting the category to decline, the same percentage as in April.

But there were improving trends for Diageo's Captain Morgan, which is recovering after a big on-trade investment

Cognac

According to Morgan Stanley, Cognac is "booming" in the US. No wholesalers forecast declines for Remy Cointreau brand Remy Martin compared to about 20% in the previous survey. About 80% expected growth for LVMH's Hennessy, up from just over 70% in April.

Tequila

The spirit is expected to remain a "dynamic category" in the coming six months, Morgan Stanley said. Almost 90% of US wholesalers expect an increase, up from 70% previously.

Gin

About 50% of respondents said they expect volume growth in the next six months, down from just under 60% in the previous survey.