High-end and Super Premium Spirits Lead the Way to Growth

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American whiskies of all types drive growth, along with Cognac and Irish whiskey.

It was another good year for spirits, especially at the higher end. That should come as no surprise to bar, restaurant and nightclub operators who have been the focus for much of the higher-priced spirits in the last ten years, but the annual review of spirit sales from the Distilled Spirits Council of the United States (DISCUS) shows exactly where the strongest growth has been.

At its annual economic briefing, DISCUS reported record spirits sales and volumes as well as continued market share gains versus beer in 2017. Supplier sales (DISCUS counts only sales from spirit producers; distributor and on- and off-premise sales may differ) were up four percent, while volumes rose 2.6 percent to 226 million cases, up 5.8 million cases from 2016.

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We asked industry leaders to weigh in on what metrics they were tracking to ensure proper cash flow, increased profit margins, and operations setup for future growth.

These results reflect adult consumers’ ongoing taste for higher-end distilled spirits products across most categories. Council chief economist David Ozgo pointed to the strongest growth in high-end premium and super premium products across most categories. The revenue for those price points increased 7.1 percent and 6.1 percent respectively, and by 7.3 percent and 4.9 percent for volume.

For example, Irish whiskey once again grew in double digits: 11.3 in volume and 12.8 in value. The growth was even more significant (more than 46 percent) at the super premium end. Tequila grew about 8.5 percent in volume, and nearly 10 percent in value. The category saw its greatest growth in high-end premium (14.1 percent) and super premium (12.2 percent).

Spirits gained market share versus beer with sales rising seven-tenths of a point to 36.6 percent of the total beverage alcohol market. It is the eighth straight year of market share gains, where each point of market share is worth $720 million in supplier sales revenue.

Other key drivers of growth included: American Whiskey, up 8.1 percent in value; Cognac, up 13.8 percent; and Irish whiskey, up 12.8 percent.

Rye whiskey was up 16.2 percent by volume to 900,000 cases, now worth $175 million to suppliers, and mezcal has grown from less than 50,000 cases in 2009 to approximately 360,000 cases in 2017. Other noteworthy points in 2017 were the sales strength of super premium blended Scotch, up 13 percent; super premium gin, up 12.9 percent; and super premium rum, up 8.3 percent.

Vodka, the sector’s largest category and representing one-third of all volume, had another solid year with volumes up 2.2 percent and revenues up 3 percent. Vodka sales were paced by high-end premium products while flavored vodkas fell about 400,000 cases, and the highest end, super premium, dropped more than 10 percent.

On the down side, in volume terms, blended and single malt Scotch took hits (down 3.3 percent and 1.2 percent respectively) as did rum (down 0.4 percent), gin (0.6 percent) and cordials (0.1 percent). In value terms, only rum (down 0.3 percent overall) and cordials (down 0.2 percent overall) took hits.

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