2014 U.S. Distilled Spirits Market Report
The distilled spirits industry faced another challenging year and succeeded in continuing its track record of steady sales growth, the Distilled Spirits Council reported at its annual industry briefing for media and Wall Street analysts.
The Council reported that supplier sales were up 4 percent in 2014 to $23.1 billion, and total U.S. volume growth increased 2.2% to 210 million cases. It is estimated that overall retail sales of distilled spirits in the U.S. market is nearly $70 billion, supporting hundreds of thousands of jobs in the hospitality industry and producing over $20 billion in tax revenues for all levels of government.
Additionally, the industry achieved a slight increase in market share versus beer for the fifth straight year. Total market share gains versus beer since 2000 totaled 6.4 points with each point of market share equaling approximately $650 million in supplier sales.
“Consumer interest in industry innovations and premium products from distilled spirits producers of all sizes contributed to another year of steady growth in 2014,” said Distilled Spirits Council President and CEO Peter H. Cressy. “In the U.S. market, strong consumer interest in cocktails, along with continuing market access and modernization improvements, is providing the industry with a solid base for future growth.”
Cressy cited several key factors contributing to the industry’s continued growth, including:
· A continued fascination with American Whiskeys in the U.S. and abroad
· Innovations in flavors – especially flavored whiskeys
· Premiumization across all spirits categories continued to interest consumers
· An improved regulatory and tax environment resulting in expanded market access and a relatively low number of state tax threats
· Growth of small distillers, which expanded grassroots and overall interest in the spirits category
American Whiskey Boom Continues to Benefit Producers Large and Small
In presenting the latest U.S. category data, Council Chief Economist David Ozgo highlighted the data showing that flavored whiskeys continued their strong growth, to some extent drawing consumers from other categories but also attracting adult consumers who are new to distilled spirits. In fact, flavored products, whether vodka, rum or whiskey, grew by 1.9 million cases.
“The breadth and range of quality spirits products now on the market make this an exciting time for the industry’s customers,” said Ozgo.
Among the other category highlights Ozgo reported: Bourbon and Tennessee Whiskey volumes were up 7.4% to over 19 million cases, generating $2.7 billion in industry revenue; both Irish Whiskey and Single Malt Scotch continued their rapid growth with volumes up 9.1% and 6.4% respectively; Cognac volumes were also up an impressive 11.4%; and Tequila volumes grew 5.0%. Ozgo also reported that while flavored vodka sales were off, traditional Vodka volumes were up 3.7%.
Spirits Exports up 3.7%; Predicted to Hit Fifth Year Record High
Council Senior Vice President for International Trade Christine LoCascio predicted that American spirits exports in 2014 would grow 3.7% to a total $1.56 billion (projected), for the fifth straight year of record exports.
“The industry anticipates its fifth straight year of record exports through a combination of market opening agreements, innovative marketing programs by individual companies and the spirits industry’s export promotion program,” LoCascio said. “Despite the strong dollar headwinds in the second half of the year, premium American spirits are finding new audiences globally, in both traditional and emerging markets.”
The projected top five 2014 export markets for all American distilled spirits by dollar value were: Canada ($212.6 million USD); UK ($177.6 million USD); Germany ($136.7 million USD); Australia ($131.2 million USD); and France ($111.6 million USD).
The top five markets by percentage growth were: Brazil (+208%), Dominican Republic (+76%), Bahamas (+50%), Israel (+43%) and United Arab Emirates (+42%).
2014 Industry Policy Achievements
2014 marked another year of market modernization in the policy arena. Among the highlights: the last Election Day alcohol sales ban in the nation was repealed in South Carolina; five states expanded spirits tasting laws; Six more off-premise Sunday sales elections passed in Georgia; and the trend of local alcohol elections in Texas continued with 64 wet-dry elections passing in 2014. On the hospitality tax front, 11 out of 11 major tax threats were defeated.
Continued Progress on Social Responsibility Indices
Cressy also underscored that an important highlight of 2014 was the continued progress in reducing underage drinking and drunk driving in the United States. According to the federally-funded 2014 Monitoring the Future survey, underage drinking and binge drinking continued their two-decade decline, once again hitting record lows in 2014. Additionally, alcohol-impaired driving fatalities decreased 2.5% from 2012 to 2013, according to the Department of Transportation.
Cressy stated that the spirits industry has been a part of this progress through the programs of the Foundation for Advancing Alcohol Responsibility and its support of other educational programs, including the Federal Trade Commission’s “We Don’t Serve Teens Program,” which provides parents with tools to talk to their teens about alcohol.
On the Horizon in 2015
Cressy cited a number of important trends in 2014 that will continue to develop this year. Among them are a continued emphasis on further market access improvements, including a renewed push for Sunday sales in Indiana, Minnesota and Texas; defending the industry from taxes at the state and local levels; a continued push by consumers for convenience and modernization through new alcohol delivery services; continued debates on privatization and grocery store sales; and further growth of the small distillers.