Beer’s Continuing Slide Will End. But When?

Beer Institute estimates U.S. brewers shipped 14.6 million barrels in May, down 2.2% from the 14,926,000 barrels shipped a year earlier.  Year todate, beer shipments are down 3.3% from a year earlier.

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Who & What —

Beam Suntory promotes Dave Turo to U.S. Chief Commercial Officer.  He had been Regional General Manger, East Geographic Business Unit, the largest region in the U.S.   Beam Suntory also welcomes back Regan O’Kon as VP-On Premise, reporting to Turo.  She rejoins after nine years with Campari America.

Origins Organic Imports appoints Nick Shoults as Senior VP-Sales, a new position.  He had been senior vp-national sales at Frederick Wildman & Sons.

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Luxury Spirits Brands Continue Impressive Growth in 1Q

Luxury spirits brands grew 37% in the first quarter from a year earlier, according to the Distilled Spirits Council of the U.S.’s Luxury Brands Index.  “The gradual uptick in on-premise cocktail occasions continued to drive premiumization trends into the first quarter of 2022,” said Christine LoCascio, DISCUS chief of public policy. “Consumers who chose luxury brands when experimenting with at-home cocktails during the height of the pandemic have maintained their preference for these special brands while enjoying spirits at bars and restaurants.”

  • Consumer fascination with Tequila continues to soar with the Mexican spirit achieving a 63% annual growth rate followed by American Whiskey at 46%.
  • With the lifting of the retaliatory tariffs in June 2021, Scotch Whisky continues its strong rebound in the U.S. with a 34% growth rate after showing losses during the period when the tariffs were in effect.
  • Cognac growth slowed slightly with an annual growth rate of 18%, Irish Whiskey increased 15%, and Japanese Whisky remained nearly flat.

Over the five years between the first quarter of 2017 and 2022, all spirits categories included in the LBI increased annual growth ranging from 5% to 46%, with an average rate of 23%.  

The LBI tracks the volume sales of spirits brands that have a 750ml retail price of $50 or more. Retail prices were calculated by IRI Worldwide using retail scanner data. Volumes were derived from DISCUS’ proprietary brand data.

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What Are Gen-Xers Drinking?

Generation X – born between 1965 and 1980 – often gets overlooked by marketers in favor of larger age groups, but on Drizly, it’s the second-largest purchasing generation.  Gen X is smaller that both the millennial and baby boomer generations, but it comprises about 19% of the U.S. population, and has the highest average household income of all generations.  Marketers ignore this segment at their peril.

“This generation accounts for nearly one-third of shoppers on Drizly,” says Liz Paquette, Drizly’s head of consumer insights. “This makes them the second-largest purchasing generation on the platform, so retailers should not count them out when they think about their ecommerce strategy.”

On Drizly, Gen X share by top level category is currently 45% liquor, 40% wine and 13% beer. This generation over-indexes on wine compared to other generations and under-indexes on beer. For both liquor and extras, share is on par with other age groups.

Citing NielsenIQ data for the 52 weeks ending January 1, Nielsen notes beer had the highest penetration among consumers aged 45 to 54, with 53% of that population purchasing within the category. Wine had the next-highest penetration at 48%, followed by spirits at 39%.

Mariana Fletcher, the head of analytics and insights at IWSR Drinks Market Analysis, notes Gen X tends to behave similarly to millennials in its drinks-buying behaviors. However, she says, there are a few differences.

During the past two years, Gen X was more likely than other generations to report drinking more craft beer, gin, and sparkling wine. IWSR research also indicates that Gen X over-indexes on brandy.

“The trials among Gen X were significantly higher than among total beverage alcohol consumers,” says Fletcher. Forty-seven percent of those surveyed reported trying brandy during the last two years, and 58 percent said that they intend to try it. “The thirst for brandy is likely to continue in 2022,” she adds.

Gen X Thirsts for Still Red and White Wines

Within the wine category, Gen X buys a greater share of red and white still wine than other generations on Drizly.  Gen X accounts for 38% share of red wine sales on Drizly versus 37% for other age groups. Its share for white wine is 32% compared to 27% for other generations. Within red wine varieties, this generation over-indexes on Pinot Noir, Zinfandel, and Syrah/Shiraz.

Here are Drizly’s top-selling red wines among Gen X consumers:

  1. Josh Cellars Cabernet Sauvignon
  2. Meiomi Pinot Noir
  3. Caymus Napa Valley Cabernet Sauvignon
  4. Decoy Cabernet Sauvignon
  5. La Crema Sonoma Coast Pinot Noir
  6. The Prisoner Red Blend
  7. Stag’s Leap Wine Cellars Artemis Cabernet Sauvignon
  8. 19 Crimes Cali Red Snoop Dogg
  9. Justin Cabernet Sauvignon
  10. Bota Box Cabernet Sauvignon

Among Gen X’s top-selling red wines, The Prisoner Red Blend and Stag’s Leap Wine Cellars Artemis Cabernet Sauvignon outperform with this generation relative to other age groups.

Within the white wine category, Gen X over-indexes on Chardonnay compared to other generations (33% share versus 29%), and tends to prefer California offerings.   Here are Drizly’s top-selling white wines among Gen X consumers:

  1. Kim Crawford Sauvignon Blanc
  2. Oyster Bay Sauvignon Blanc
  3. Santa Margherita Pinot Grigio DOC
  4. Cavit Pinot Grigio
  5. Whitehaven Sauvignon Blanc
  6. Matua Marlborough Sauvignon Blanc
  7. Kendall-Jackson Vintner’s Reserve Chardonnay
  8. Josh Cellars Chardonnay
  9. Bota Box Pinot Grigio
  10. La Crema Sonoma Coast Chardonnay

Among the generation’s top-selling white wines, Gen X over-indexes on Whitehaven Sauvignon Blanc, Kendall-Jackson Vintner’s Reserve Chardonnay, Josh Cellars Chardonnay, Bota Box Pinot Grigio, and La Crema Sonoma Coast Chardonnay.

Spirits

Gen X accounts for a greater share of whiskey and vodka sales compared to other generations. It under-indexes on tequila and ready-to-drink cocktails, both of which are popular with younger generations.

Relative to other generations, Gen X over-indexes within the whiskey category on bourbon (39% share versus 38% for other generations) and Canadian whisky (4% share versus 3%).

Here are Drizly’s top-selling whiskey SKUs among Gen X consumers:

  1. Jameson Irish Whiskey
  2. Jack Daniel’s Old No. 7 Tennessee Whiskey
  3. Maker’s Mark Bourbon Whisky
  4. Bulleit Bourbon
  5. Woodford Reserve Kentucky Straight Bourbon Whiskey
  6. Fireball Cinnamon Whisky
  7. Johnnie Walker Black Label Blended Scotch Whisky
  8. Crown Royal Fine Deluxe Blended Canadian Whisky
  9. Jim Beam Bourbon Whiskey
  10. Basil Hayden Kentucky Straight Bourbon Whiskey

Among the top-selling whiskey SKUs, Gen X over-indexes on Jack Daniel’s Old No. 7 Tennessee Whiskey, Fireball Cinnamon Whisky, Crown Royal Fine Deluxe Blended Canadian Whisky, and Basil Hayden Kentucky Straight Bourbon Whiskey.

Vodka is also popular with Gen X. The share of vodka sales within the liquor category for this generation on Drizly is 26%, compared to just 21% for other generations. Within the top 10 vodka SKUs, Gen X over-indexes on Ketel One, Belvedere, and Platinum 7X.

Here are Drizly’s top-selling vodka SKUs among Gen X consumers:

  1. Tito’s Handmade Vodka
  2. Grey Goose Vodka
  3. Ketel One Vodka
  4. Smirnoff No. 21 Vodka
  5. Svedka Vodka
  6. Absolut Vodka
  7. SKYY Vodka
  8. Belvedere Vodka
  9. New Amsterdam Vodka
  10. Platinum 7X Vodka

When purchasing beer, Gen X leans toward the light lager and American-style lager categories. Light lager holds 22% share of the beer category for this generation compared to only 16% for other generations. For American-style lager, the share is 7% among Gen X consumers versus six percent for other age groups.

This trend reflects an overall preference for familiar drinks and categories, Paquette notes. “At the category level, we see this generation sticking with more traditional categories and being less inclined than younger generations to try newer categories,” she says. “For example, in beer, Gen X over-indexes on lager but under-indexes on hard seltzer.”

Gen X Spending

While future financial stability became more of a concern for Gen X than for other generations over the last couple of years, says Fletcher, their spending habits did not deviate significantly from the norm.

“Twenty-seven percent [of Gen X consumers] reported that in the past two years they had been buying more expensive beer and wine than normal,” she says, noting that this is in line with millennials’ behavior. However, about the same proportion reported buying slightly less expensive sparkling wine, which was not the case among millennials.

When it comes to per-unit spending across categories, Gen X is on par with other generations, averaging $19.70 per unit on Drizly. While Gen Xers buy more wine on Drizly than other age groups, they appear to seek out lower-priced bottles.

“With an average unit price of $18.70 compared to $19.30,” Paquette says, “this generation spends slightly less on wine than other generations.”

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Consumers Curtailing Wine Consumption: Survey

Wine prices have started to surge across the US as inflation and supply-chain issues impact the liquor and wine market.

A new survey of more than 500 wine enthusiasts found that two-thirds of consumers are feeling the pinch and are making changes to save money. Almost half said they had reduced their wine consumption at home or dining out, and others were opting for cheaper bottles or boxed wine.

“This July 4th, we are pivoting to boxed wine,” said one respondent of the survey conducted by Bevinars, a leading company for virtual wine classes.

“I hate that our favorite $15 wine is now $20.”

Says Bevinars founder Mark Oldman: “While the price of wine had been relatively stable compared to surging cost of fuel and groceries, we are now seeing wine in the crosshairs of massive inflationary pressures.”

He says some of the largest price hikes were at restaurants.

“Restaurants have been much more aggressive in their price hikes, with increases of up to 20% at some high-end restaurants,” Oldman said.

“To cut costs, I’ve started going to restaurants with attractive BYOB policies,” said one respondent.

But consumers of luxury wines were accepting the higher costs, albeit with exasperation. “In our post-pandemic world, I’m not going to stop drinking my favorite labels,” said one respondent.

The higher cost of glass, gas, and labor is fueling the increases, explains Oldman.

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Splash Gets Save A Lot Placement for TapouT

Splash Beverage Group, Inc. said it will be distributing TapouT through Save A Lot grocery stores.

Save A Lot is one the nation’s largest grocery store chains, with more than 850 stores supplied by 13 distribution centers in 32 states.  Founded in 1977 and headquartered in St. Louis, Save A Lot leverages the strength of a large national chain with the very localized approach of a hometown grocer.  Most stores are independently owned and operated, and tend to be smaller with wider aisles, making it easy to find the items customers are seeking.  Save A Lot prides itself on carrying the everyday items families need and providing the ability to get in and out of stores quicker than large supermarkets.

Robert Nistico, Splash Beverage Group’s chairman/CEO, “This latest agreement is another significant milestone in our grocery market strategy.  Save A Lot has a nationwide presence and generates more than $4 billion in sales.  Save A Lot decided to add TapouT after tasting the product at an industry trade show, so we are very excited by their enthusiasm.  We believe TapouT will see an immediate distribution boost from this Phase 1 deployment, and the agreement holds out the potential for an even greater impact in Phase 2 as we begin to penetrate all 850 Save A Lot stores across the country.”

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