CORRECTION: U.S. SPIRITS MAKE A COMEBACK IN OCTOBER
Spirits growth isn’t slowing as much as we thought as October sees a leap in growth from September. According to data from NABCA, Melissa Earlam of UBS reports that spirits volumes from US control states (24% of the market) grew a solid 3.5% for October year over year. Year to date growth is 3.3%, below the reported 3.9% in the same period in 2006. Overall, said Melissa, this marks an improvement in volumes since September when volumes were down 0.9% year over year (y/y).
Diageo, Pernod, Brown-Forman and Remy Cointreau all lost volume in October. Diageo’s volume growth was reportedly below the market in the month, up only 2.8%, which UBS blames on recent price increases. The company gained volume in vodka, gin and cocktails, but lost volume in its whiskey portfolio, rum, tequila and cordials. Volume of Diageo’s vodka portfolio was up 7.6% in October versus category growth of 6.9%, while the company’s gin category increased 6.7% versus category growth of 1%. Cocktails, meanwhile, gained 11.1% of volume while the industry only gained 2%. Diageo’s whiskey portfolio declined -2.2%, as compared to industry volume growth, up 2%. The company’s rum brands gained 1.8% versus industry growth of 4.1%.
“Though Diageo appears to have lost some share, having talked to the company we believe this was due to pricing action (difficult to see in the NABCA data which just shows volume). Specifically, lower levels of promotion on Johnnie Walker Red Label versus the same period last year and increased pricing on Crown Royal and Captain Morgan affected October yoy volumes,” said Melissa in a research note.
Pernod’s volume performance continues to be weak at -0.4% (+1.8% ytd), said Melissa. The French company gained volume in Scotch and rum, up 9.9% year over year versus category growth of 4.1%, but lost volume in cordials and brandy/Cognac. Pernod’s brandy/Cognac category decreased -36% as compared to the category which lost only -0.7%. Pernod’s gin portfolio was down -3%, while the category gained 1%. It’s important to point out that Pernod raised US prices across its portfolio at the start of August.
Meanwhile, B-F decline -1.4% of volume in October but faired better than in September when the company was down -6%. Remy lost volume in the month, up 0.6% y/y, while Campari grew 4.3%.
“Though lapping a tough comparison in October 06 (+5%), the US spirits market posted solid growth. We continue to believe that US spirits have limited correlation with the economy and should grow c2-3% with price/mix of 2-3%,” said Melissa.
Diageo, Pernod, Brown-Forman and Remy Cointreau all lost volume in October. Diageo’s volume growth was reportedly below the market in the month, up only 2.8%, which UBS blames on recent price increases. The company gained volume in vodka, gin and cocktails, but lost volume in its whiskey portfolio, rum, tequila and cordials. Volume of Diageo’s vodka portfolio was up 7.6% in October versus category growth of 6.9%, while the company’s gin category increased 6.7% versus category growth of 1%. Cocktails, meanwhile, gained 11.1% of volume while the industry only gained 2%. Diageo’s whiskey portfolio declined -2.2%, as compared to industry volume growth, up 2%. The company’s rum brands gained 1.8% versus industry growth of 4.1%.
“Though Diageo appears to have lost some share, having talked to the company we believe this was due to pricing action (difficult to see in the NABCA data which just shows volume). Specifically, lower levels of promotion on Johnnie Walker Red Label versus the same period last year and increased pricing on Crown Royal and Captain Morgan affected October yoy volumes,” said Melissa in a research note.
Pernod’s volume performance continues to be weak at -0.4% (+1.8% ytd), said Melissa. The French company gained volume in Scotch and rum, up 9.9% year over year versus category growth of 4.1%, but lost volume in cordials and brandy/Cognac. Pernod’s brandy/Cognac category decreased -36% as compared to the category which lost only -0.7%. Pernod’s gin portfolio was down -3%, while the category gained 1%. It’s important to point out that Pernod raised US prices across its portfolio at the start of August.
Meanwhile, B-F decline -1.4% of volume in October but faired better than in September when the company was down -6%. Remy lost volume in the month, up 0.6% y/y, while Campari grew 4.3%.
“Though lapping a tough comparison in October 06 (+5%), the US spirits market posted solid growth. We continue to believe that US spirits have limited correlation with the economy and should grow c2-3% with price/mix of 2-3%,” said Melissa.
posted at 1:56 PM
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