Beverage Dynamics

Beverage Dynamics July-August 2016

Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.

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www.beveragedynamics.com July/August 2016 • Beverage Dynamics 19 Consumers today want to know more about the history and production methods behind what they drink. And they enjoy ex- perimenting across categories and styles. As a result, they are less brand-loyal than ever before. Drinkers tried a little of everything last year, causing alcohol trends to cross multiple categories. Certain categories did stand out in 2015 for having strong performances, in particular craft beer (14.1% growth last year, up to 276.5 million 2.25-gallon cases) and whiskey (up 4.6%, to 52.8 million 9-liter cases). When we surveyed retailers on which categories need more shelf space, the top answers were craft beer and whiskey. This survey, sent out to our email newsletter subscribers, also asked which trends most impacted sales. Retailers reported whiskey and craft products above all others, once again. It's no wonder, since the last few years have seen an explosion in new microdistilleries and breweries opening across the coun- try. Modern drinkers have developed a diverse, discerning palate for brown spirits and craft beer. But two questions linger for craft beer. How much more can the category expand? And is it in or approaching a bubble? Whatever the answer, the craft beer boom has helped nurture interest in two other fl ourishing categories: hard ciders (up 9.6% to 30.8 million cases) and hard sodas (up 6.7%). After whiskey and craft beer, the retailers surveyed were most eager to expand shelf space for wine. Helping sustain the wine category has been the recent rise of sparkling and pre- mium bottles. White spirits were a mixed bag last year. Vodka was relatively fl at at +1.1% (to 72.8 million 9-liter cases), while rum dropped 1.5% to 24.7 million 9-liter cases. But tequila took off with a 4.4% gain in 2015. Consumers see tequila less as an inexpensive shot and more as an elegant sipper on par with whiskey. Consequently, pre- mium tequilas are coming to market in greater numbers. We've combined our survey results with consumption and sales data from the Beverage Information Group (Beverage Dy- namics' sister research company) to compile this list of category trends to keep a close eye on during the rest of 2016. WHISKEY DIVERSIFIES AND GROWS Millennials love Bourbon, and are now drinking rye and Scotch. Whether as sippers or in cocktails, this new and growing appre- ciation for brown spirits has helped jumpstart America's whiskey revival. And two newer trends have the category showing no signs of slowing down. The popularity of fl avored whiskeys has spread at a blazing pace thanks to the tremendous success of Sazerac's Fireball Cin- namon Whisky. This innovative, industry-altering spirit grew 65% in sales last year, to nearly 4 million cases. "Fireball has replaced Jägermeister as the preferred shot of younger LDA consumers," explains Marina Velez, senior product manager, data and insights, for The Beverage Information Group. Fireball's growth likely is capped by copycats. Jägermeister and Jack Daniel's have already responded with spiced variants, along with many other spirits producers, big and small. This rise in cinnamon/spicy fl avors has also coincided with the cooling off of sales for maple-fl avored whiskeys, and sweeter Canadian whiskies in general. Millennials in particular enjoy fl avored whiskeys, as consum- ers who experiment. "People who drink fl avored whiskey are statistically proven to be more adventurous in consuming other types of spirits as well," Velez says. The other red-hot trend right now in American whiskey hails from Ireland. Irish whiskey has risen in sales, (up 8.2% in 2015) thanks in part to a broad demographic of consumers. Perhaps more so than any other segment within brown spirits, it counts women among loyal drinkers. Approximately 40% of Irish whiskey con- sumers are female. Part of this owes to the spirit being sweeter and smoother than most other whiskeys. It's a natural ingredient for craft cocktails. Moreover, the category boasts one of the world's top alcohol brands. Long established as a global giant, Jameson gained 17% in sales last year. The spirit contributes 76.3% of Irish whiskey sales worldwide. Irish whiskey also possesses a strong and diverse premium segment that appeals to today's craft drinkers. This includes Jameson caskmates, which fi nishes whiskey in barrels for- merly used in aging craft beer. Millennials are the chief con- sumer target. "Irish whiskey drinkers tend to skew younger than with other spirits, and are showing openness to exploration beyond stan- dard entry-level blended Irish whiskies," reports Velez. WHISKEY CRAFT PRODUCTS STATE LEGISLATION/ REGULATION WHAT TREND IS MOST IMPACTING YOUR BUSINESS RIGHT NOW? Source: Beverage Dynamics 2016 State of the Industry Survey The modern drinker is changing. With that come new trends that have been disruptive, while also providing opportunity for beverage retailers.

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