Stateways March-April 2014

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

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9 StateWays Q Q March/April 2014 W hile job growth in U.S. continues to move forward in fi ts and starts, the overall U.S. economy is still in a modest recovery mode. Depending on which economist or pundit you read or lis- ten to, we are either on the verge of a sustained period of solid growth, in danger of slipping back into recession, or somewhere in between. But given the volatility of the mod- ern world, it could be unwise to accept the analyses of those who apparently speak with unwavering certainty. What is certain, however, is that overall distilled spirits sales volume increased in 2013 for the seventeenth consecutive year, while overall wine sales volume saw positive results in 2013 for the twentieth year in a row. According to the latest statistics, just released in the Handbook Advance 2014, published by the Beverage Informa- tion Group, total U.S. distilled spirits sales volume in 2013 rose to an estimated 210.6 million 9-liter cases, notching a 2.4% gain versus 2012. That represents a sales volume bump of nearly 5 million 9-liter cases over 2012. Importantly, over- all spirits retail revenue growth (the combined dollar total of off- and on-premise sales) also increased in 2013, by a healthy 4.2% to $75.82 billion, a gain of more than $3 billion over 2012. The higher percentage gain in spirits revenue (versus spirits sales volume) underlines the ongoing trend of recent years: the dynamic sales activity among premium- priced and above-premium-priced spirits products. The same holds true in the wine segment. Total U.S. wine sales volume increased by an estimated 2.2% in 2013, to ap- proximately 326.0 milliaon 9-liter cases. This represents a sales volume gain of more than 6.8 million 9-liter cases versus 2012 totals. And similar to spirits, the move toward high-end pur- chases continued in the wine segment, evidenced by the seg- ment's 3.6% revenue increase in 2013, to just under $30 billion. SPIRITS OVERVIEW T he huge vodka category now comprises 34.1% of all spirits consumed in the U.S. But following years of an- nual growth rates hovering around 6%, the category gained only 2.5% in 2013, to an estimated 71.8 million 9-liter cases, adding nearly 1.4 million cases to its sales total. One explanation for the declining growth rate is simply the law of large numbers: the category has become so dominant in the spirits landscape that even a large volume increase does not equal a large percentage increase. On the other hand, some observers believe that a bit of consumer fatigue with the wide array of fl avored vodkas is fi nally affecting the market. That may be true for some vodka brands, but for others, fl avors remain an essential element in their product mix. Indeed, last year, suppliers continued to introduce new vodka brands, line extensions and fl avors to the market- place. At the same time, the superpremium vodka segment remains an important and vibrant part of the industry. Rum, the second-largest spirits category, also saw growth in 2013, though up a very modest 0.3% to an estimated 26.83 million 9-liter cases. A variety of popular rum-based cocktails continues to aid category sales (the Mojito, etc). In addition, the category is also benefi ting from new spiced and fl avored rum product introductions, as well as a growing niche of afi - cionados drawn to higher-end rum offerings. Straight American whiskey had a stellar year in 2013, with sales volume rising 5.6% to 17.45 million 9-liter cases. The segment continues to be energized by growth in the super- premium segment, while also benefi ting from fl avored bour- bon debuts. At the same time, the smaller American blends segment decreased by 1.5% to just over 4.86 million 9-liter cases. For its part, overall Scotch whisky built on 2012's modest gain (up 0.2%) to increase by 2.3%, one of the best showings for the category in recent years, totaling about 8.84 million 9-liter cases. Though several blended Scotch brands performed well, single malt Scotch sales saw an 11.7% across the board increase. Likewise, Canadian Whisky added to its modest sales increase in 2012, with a 1.2% gain 2013, to 15.65 million 9-liter cases. The segment's recent popularity can be partly traced to an increase in high-quality, high-end offerings, BY RICHARD BRANDES

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