By Brenda Owen

Predicting trends for alcohol beverage sales can be tricky, but industry experts agree that the best way to forecast the future is to look at the present — specifically current sales of the most popular spirits and the cocktails they inspire.

At the top of the current hot sellers list is flavored vodkas, says Perry Luntz, national editor for The Beverage Network Publications, although he predicts the demise of many of the new products that have flooded the market in the past couple of years.

“It's a very imitative industry. Somebody comes up with a great idea and 400 people are right behind them imitating them, some better and some not as well,” he says. “I wish I had a dollar for every vodka that comes on the market. There's a new one every other day. But vodka will stay; I can't see vodka changing. Vodka has been on top for as long as I can remember.”

Eventually, the premium brands will win out, taking the category to even greater heights, he says. “I don't think it's a flash in the pan. I think flavored vodkas — as well as flavored spirits in general — are becoming the most important part of the industry right now.”

Luntz credits the success of the flavored spirits to a general trend he calls a “flavor revolution.” In addition to improved flavor technology, he says, the force driving that trend is the acquired taste preferences of the newest generation of drinkers. “The young people are brought up on high-flavored sodas, Kool-Aid, Snapple and Arizona Tea,” he says.

Luntz also sees rums and tequilas as major players in the spirits market in the coming year. “I have had rums that are so wonderful, I drank them for dessert. They're rich, they're heavy, they're aged and they've got a little complexity and a sweet taste,” he says. “And tequilas are now more refined since the Mexican government has changed the standards to meet a certain quality level.”

Adding to the field of profitable players, David Pursglove, a demographic profiler at the TrendsAnalytics Group, says Cognac sales will rise in the coming year despite the product's currently “politically incorrect” French origin, with American brandies also reaping escalating profits.

 
“Cognac will continue heading upward,” Pursglove says. “Trendsetters by definition are people who make trends, don't follow trends, don't follow political and social fads – certainly are above the fatuous, imbecilic boycott of French products. They're enjoying more Cognac than ever; the delineator curve is sharply upward. No reason to lump American brandy with Cognac, but some consumer classes feel domestic brandy is just a cheaper, inferior Cognac. I have tasted a few American brandies that have been superlative — not resembling Cognac, but outstanding, well-crafted spirits. In the marketplace, American brandy is doing all right: Gallo is not crying, Korbel manages a smile, Christian Brothers seems to be saying OK, Paul Masson is not about to slice wrists.”

Sales on the Rise

Across the board, the future looks bright for distilled spirits in 2004, says Patrick MacElroy, director of communications for the Distilled Spirits Council of the United States (DISCUS). According to the organization's sales statistics, distilled spirits account for more than $95 billion in economic activity annually in this country.

And that figure is expected to rise with the tallying of the 2003 numbers. Figures from the Adams Liquor Handbook 2003 show sales of the Top 10 best selling spirits in 2002 increased an average of 4 percent over 2001 totals with an average increase of 2 percent across all categories.

“That 2.0 percent increase in sales volume in 2002 reflects a broad national trend,” MacElroy says. “Literally, states throughout the nation saw increases in distilled spirits consumption, versus concentration in one particular area, which is good.   It shows that the cocktail culture is moving away from being a more urban phenomenon and is catching on with people across the nation.”

For example, in the mid-1990s if you went into a bar in New York City, Los Angeles, Miami or Chicago, you might find a cocktail menu.   Now, you'd be surprised not to.   But, the same can be said for suburban and even rural bars and restaurants now as well.”

With these trends carrying over into 2003, industry predictions suggest this past year's sales will show an even higher increase.

“It's going to be a good year,” Luntz says. “So far everything I'm hearing about 2003 is surprising me, There is a surge in spirits business that I did not anticipate and I think even the spirits people are a little surprised.”

According to the DISCUS data, vodka was the runaway category leader for 2002 and — judging from estimated sales figures — is expected to stage a repeat performance for 2003, MacElroy says. With a 25.7 percent market share, vodka sales were double those of its closest spirits competitor — rum — that pulled a 12.1 percent market share in 2002, followed closely by cordials and liqueurs with an 11.8 percent share of the market. Other top categories include: Canadian whiskies with a 10 percent market share; straight whiskies, 8.6 percent; gin, 7.2 percent; brandy and Cognac, 6.3 percent; Scotch, 5.9 percent; and tequila, 4.7 percent.   In all, these 12 categories represent more than 126 million nine-liter cases of distilled spirits sold within the United States annually.

Within the categories, specific brands that were at the top of the list in 2002 are expected to retain their market share or make an even better showing for 2003. Smirnoff Vodka led the pack in 2002 with a 10.1 percent increase over 2001, followed closely by Captain Morgan Rum with a 10 percent increase.   Coming in third was Crown Royal Canadian Whiskey with a 7.6 percent increase and Jose Cuervo Tequila marking up a 4 percent increase over the previous year's sales. Other top contenders included: Bacardi Rum, 1.8 percent; Absolut Vodka, 2.2 percent; Jack Daniel's Straight Whiskey, 1.9 percent; Jim Beam bourbon, .3 percent; Seagram's Gin and DeKuyper Cordial, both at 1.1 percent.

Chart-Topping Cocktails

High on the list of forces that sent vodka and rum sales soaring in 2003 are the highly flavored cocktails preferred by younger drinkers. High-powered marketing focusing on packaging and brand image has resulted in the use of the products in trendy new cocktails and updated version of classics, such as the Cosmopolitan, Luntz says. “There is a vast difference in what people are ordering in bars than what was happening just three years ago,” he says. “Today it's all call brands, premium spirits, very little well stuff.”

MacElroy at DISCUS says quality and variety also are driving sales of the top brands. “As consumer palates have shifted toward premium and super-premium spirits, a look at the top-sellers shows some of the industry's most highly respected brands for both reputation and taste.   I think this is a trend that's going to continue as new products are introduced under these labels and the move to upscale spirits continues,” he says.  

For example, he says, drinkers will be loyal to brands and willing to try other spirits within that brand family.   Consumers may be familiar with the original spirit, in fact, they may have moved up to the original expression, and then are willing to try a new flavor because they like the original so much,” he says.

In a recent poll of more than 100,000 respondents, Richard Leslie, CEO of Trend Influence Inc., an Atlanta-based marketing agency that specializes in reaching GenX/Y trendsetters, confirmed that premium and super premium vodka leads all other alcoholic beverages and continues as the clear favorite for trendsetting GenX/Yers.   “Ketel One took the top spot among vodka brands polled,” Leslie says.

Pursglove says a resurgence of the popularity of gin also is influencing the rise in Martini sales. “That interest (in Martinis) among trendsetters will soar for at least seven years. Pushing it is the return to gin. We see gin not only continuing to draw the interest of trendsetters, but also beginning to boom. This does not necessarily mean vodka will be abandoned. The hullabaloo … over the reappearance of Plymouth Gin keeps rekindling interest in the Martini. It's said Plymouth was the original gin in the earliest Martinis,” he says. “A gin from Scotland, Hendrick's, is getting a lot of hype, and we expect it to generate a number of new variations on the Martini.”

The experimentation with different premium spirits as bases for Martinis has resulted in some pretty wild combinations — some successful, some not — Pursglove says, but the trend also has set the stage for some veterans to make a comeback — or not.

“Some of the ‘new' Martinis are really old,” he says. “For a decade the Sherry-tini has used sherry instead of vermouth. A Martini substituting Cognac for vermouth has floundered for several years, as has the Crantini which substitutes cranberry juice. The Martequa brings another hot spirit — tequila — to join gin or vodka. The dirty Martini that adds copious amounts of olive juice is becoming so hot that a Baltimore firm plans to offer olive juice in gallon jugs to bars and restaurants.”

The plethora of new Martinis playing on the craze for colorful and flavorful bar drinks often have little in common with the original cocktail other than the shape of the glass, Pursglove says. “This corruption of the Martini is not a trend, but only a fad or less, a craze, to be gone in three to five years or less,” he says.

DISCUS has no formal statistics for cocktail sales, MacElroy says, but any cocktails containing premium and super premium spirits across all categories are a pretty good bet to pull in the profits in the coming year. “The Margarita (and its variations), Vodka/Tonic and Gin/Tonic cocktails, Martinis, Cosmopolitans, Mojitos. Whiskey (scotch, bourbon, etc.) and Coke will probably be near the top as well,” he says.

Far Eastern Flair

While the influence of the Latino/Hispanic culture was felt in 2003 with the explosion of new and innovative cocktails featuring rum and tequila, cocktails with an Asian influence are set to make their mark on drink menus in 2004.

In one of Leslie's Trend Influence polls, sake showed up as a drink of choice with the GenX/Yers — a fact that doesn't surprise Pursglove.  

“Sake's alive in the United States, if not in Japan where the rice beer is too expensive. American sake producers are on a roll, eclipsing Japanese exporters who have to work with increasingly expensive ingredients. In Japan, sake is viewed as your old man's brew; in America sake is viewed as the brew of with-it and hip young drinkers who say it's OK to drink it chilled, rather than warm, as is the Japanese tradition.”

And the Asian influence doesn't end with simple sake. A recent article in the New York Times stated that the popularity of Asian accents in international cooking is cracking open cocktail menus, too. Created with Far Eastern flair, these cool cocktails forego the usual maraschino cherry garnish in favor of a shiso leaf and feature such exotic combinations as coconut-spiked Cosmos and ginger-spiced Martinis. The New York Times article also points to creative cocktails concocted with pickled lemons and calamansi limes, mangosteen purée, soursop and yuzu and other Asian-influenced ingredients mixed with sake or shochu, a Japanese sweet-potato spirit.