StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions
Issue link: http://read.dmtmag.com/i/128575
moods and occasions is clear in the on-premise, where the status of bartenders and mixologists has been elevated over the last few years. The resurgence of the cocktail culture is translating to home entertaining as well, which is good news for off-premise retailers. The power of innovation is especially apparent in vodka and North American whisky. Together, these categories are driving more than three-quarters of overall industry growth. Both have experienced a proliferation of new flavors – bringing new consumers and excitement into the categories. Confectionary vodkas are driving category sales by delivering more playful and decadent flavors. They move beyond fruit, and appeal to the female, flavoredvodka drinker. Kissed Caramel, Fluffed Marshmallow, Whipped Cream, Iced Cake and Root Beer Float are just a few of the vodka flavors that Diageo has launched in response to adult consumers' changing tastes. Our latest innovation, Smirnoff Sorbet Light, responds to consumers' desire for delicious, lower-calorie vodkas. And, in the ultra-premium space, Ciroc Peach is one of the top innovation success stories of all time. The innovation trend has also been strong in the North American whisky category. As consumers seek products rich in tradition, quality, craftsmanship and substance, they are creating something of a renaissance in the category, with North American whisky accounting for nearly $3.6 billion in retail sales in just the past two years. Growth has been especially strong in flavored whisky, which has become the fastest growing spirits category in the U.S. We have witnessed that strong growth with our own Crown Royal Maple Finished, which has evolved to meet consumer tastes for flavored whiskies and appeals to both loyal Crown drinkers and new consumers trying whisky for the first time. Premium Spirits as Affordable Luxury Consumers are not just looking for what's new in spirits – they want to treat themselves, too. Their desire for premium products is evident across both the beverage alcohol industry and the Diageo portfolio. The total industry has continued to grow in value over the past 12 months at retail between 5% and 6% with spirits as the most profitable and fastest-growing category. Spirits have steadily grown as a percentage of total beverage alcohol (TBA) consumption over the past 15 years, due to factors such as increased consumer access, more spirits choices and the current cocktail culture that brings focus to categories such as high-end bourbon, rye and gin. It is not surprising, then, that while the overall industry is growing, the sales growth has been coming chiefly from premium and super-premium brands. In the past calendar year, according to NABCA Sales Reports, premium brands grew sales value 7.1%, while value and popular brands trailed with only 1.9% growth – a clear indication that consumers are trading up to 52 top-shelf brands. While consumers might not be able to stay at the Ritz, they can still have a glass of Johnnie Walker Blue at the bar. Premium spirits are an affordable luxury and, as such, an opportunity for profits and revenues. Satisfying Consumer Desires Now that we've seen what consumers want, how can we satisfy them? The suppliers' role is to support existing brands with smart marketing campaigns designed to generate consumer awareness and excitement. At Diageo, we continue to invest in our brands with a significant increase this year in our consumer-facing marketing spend. Suppliers can also identify evolving consumer tastes and develop new products that satisfy those tastes and trends. Ciroc Peach, Captain Morgan Black and Crown Royal Maple Finished are just three examples of recent Diageo launches that meet changing consumer tastes and are supported with advertising and promotions in the marketplace. We ask control states to put consumers at the forefront of their business as well. You can do that, first, by having in place a simple, logical listing process that serves as a clear guideline for all suppliers. Second, increasing the frequency of listing opportunities will help capture limited windows of opportunity in this fast-moving industry. Finally, retailers play an important role in providing choices to consumers – by creating innovation sections in store fronts and by making sure that new products are available when ad campaigns are running in the market. These important steps ensure that suppliers that invest heavily in innovation and national advertising campaigns are able to reach consumers in your markets and to fulfill their demand without delay. With shared focus on the consumer, suppliers and control states can work in concert to meet the evolving tastes and trends in the marketplace. SCOTT OPPENHEIMER Senior Vice President, Control States Moët Hennessy USA N ABCA Chairman Insley's theme for this year's conference, "Progressive Control," addresses the ongoing efforts behind modernization, and the StateWays I www.stateways.com I May/June 2013