Vodka Trends Showing Little Pattern
Once considered invincible to economic downturns, the reigning leader in spirits is showing signs of trouble. Vodka continues to post growth, but price categories that used to grow double digits are now declining and once sought after brands are softening.
Don’t get us wrong. Vodka still outperformed the overall spirits industry in October, gaining 3.6% in dollars and 4.2% in case sales, according to IRI. The total spirits category rose 1.5% in dollar sales and volumes gained 1.3%.
As we’ve seen with wine and spirits, domestic vodka made up a huge chunk of the category’s growth with dollar sales rising 5.9% and imports declining -0.7%. Volumes of domestic vodka grew 4.6% and imports rose 2.3%. The weak U.S. dollar is driving up the price of imports across the board, so this leads us to believe that price is becoming increasingly important to consumers who are opting to buy less expensive, domestic vodkas.
Similarly, ultra-premium and super-premium vodka brands declined in October, although they were on fire in the not too distant past. Ultra-premium vodka brands priced above $26 (which was growing double digits last year) declined -0.2% in dollar sales and volume in October. Super-premium vodkas ($21-$26) were down -18.3% in dollars and -17.4% in volume.
The fastest growing vodka category was mid-value brands ($11-$16), up 9.6% in dollar sales and 9.7% in case sales. Value vodka ($10 and below) was strong in dollar sales, up 3.9% in value and 3% in volume. Finally, premium vodka ($16-$21) was nearly flat in dollar sales, up 0.5%, but strong in volume, 4.9%.
There seemed to be little rhyme or reason among brand data. Some brands are doing well, while other brands in the same price category are not. For example, ultra-premium Belvedere vodka performed strong in October, growing 14.7% in dollars and 22.3% in volume, beating last month’s growth. However, the company said today it may not reach its full-year profit forecast amid a slowdown in alcohol consumption (despite its retail growth in the U.S.) Meanwhile, Ketel One declined -2.8% in value and -1.7% in volume, and Grey Goose was down -3.2% and -5.4%, respectively. Better marketing? Price/mix? Perhaps a bit of both?
In the super-premium range, Stolichnaya declined -15.3% in dollars and -18.8% in volume. As far as premiums go, Skyy gained a notable 18.7% in dollars and 26.5% in volume, but Absolut declined -7.4% in dollars and -7.7% in volume.
Mid-value vodka faired far better. Svedka was up an impressive 52.5% in value and 55.8% in volume. Gordon’s grew 26.3% in value and 37.2% in volume, and Seagram’s rose 13.5% and 18.1%, respectively. Category leader Smirnoff lagged behind the other brands in its price category, gaining 1.5% in dollars and was flat in volume. Recall that Diageo recently took a price increase.
As far as value vodka goes, McCormick rose 10.9% and 9.1%, respectively, while Skol was up 2.9% and 0.9%. It’s interesting to note that McCormick was down -13% in dollars during the same period last year, while case sales declined -19.1%. Similarly, Skol was down -2.9% in sales and -6.6% in volume.
The trading up trend was so strong before the recession hit we expect consumers to return to their old habits once it’s over. As a result of the declining economy, consumers are also trending to the off-premise which is never good for spirits brands which rely heavily on on-premise growth for dollar sales and drinking occasions.
KROGER STAYS FOCUSED ON PRIVATE LABELS
Shares of Kroger fell 7% in recent trading Tuesday after the company issued projections below Wall Street estimates. However, revenues rose 9% to $17.58 billion in the quarter and sales at identical stores (those open five full quarters without relocation or expansion and not scheduled to close) rose 7.8%, or 5.6% excluding fuel sales. In the month, identical store sales dipped slightly below 5%. The supermarket chain continues to reap the benefits of offering lower prices and successful private labels brands. As a result, the company pledged to cut prices on in-house brands and other items it produces as input costs fall rather than keep the profit.
ITALY PROJECTED TO BECOME LARGEST WINE PRODUCER
Italy is expected to surpass France in becoming the world’s largest wine producer for the first time in a decade, according to the Coldiretti farmers lobby. A bumper harvest as a result of good weather is estimated to push Italian wine production up 8% over last year to 4.7 billion liters, compared to 4.44 billion liters in France where production fell -5%. The AP reports that production estimates by Assoenologi, an association of Italian wine producers, claim Italy’s production will increases only 5% to 44.5 billion liters. According to Assoenologi, that gives Italy a 17% share of the world wine market and one-third of the European market.
Until tomorrow, Megan
“History will be kind to me for I intend to write it.”
Sir Winston Churchill
--------- Sell Day Calendar ----------
Today's Sell Day: 8
Sell days this month: 22
Sell days this month last year: 20
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: +1
BEER SUMMIT 2009 - The Four Seasons, Austin, Texas - Join us for great speakers, intelligent discourse, good food, and of course great beer at the next Beer Summit on March 1 - 2, 2009. Click here: http://tinyurl.com/beersummit
WINE & SPIRITS DAILY
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Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
Don’t get us wrong. Vodka still outperformed the overall spirits industry in October, gaining 3.6% in dollars and 4.2% in case sales, according to IRI. The total spirits category rose 1.5% in dollar sales and volumes gained 1.3%.
As we’ve seen with wine and spirits, domestic vodka made up a huge chunk of the category’s growth with dollar sales rising 5.9% and imports declining -0.7%. Volumes of domestic vodka grew 4.6% and imports rose 2.3%. The weak U.S. dollar is driving up the price of imports across the board, so this leads us to believe that price is becoming increasingly important to consumers who are opting to buy less expensive, domestic vodkas.
Similarly, ultra-premium and super-premium vodka brands declined in October, although they were on fire in the not too distant past. Ultra-premium vodka brands priced above $26 (which was growing double digits last year) declined -0.2% in dollar sales and volume in October. Super-premium vodkas ($21-$26) were down -18.3% in dollars and -17.4% in volume.
The fastest growing vodka category was mid-value brands ($11-$16), up 9.6% in dollar sales and 9.7% in case sales. Value vodka ($10 and below) was strong in dollar sales, up 3.9% in value and 3% in volume. Finally, premium vodka ($16-$21) was nearly flat in dollar sales, up 0.5%, but strong in volume, 4.9%.
There seemed to be little rhyme or reason among brand data. Some brands are doing well, while other brands in the same price category are not. For example, ultra-premium Belvedere vodka performed strong in October, growing 14.7% in dollars and 22.3% in volume, beating last month’s growth. However, the company said today it may not reach its full-year profit forecast amid a slowdown in alcohol consumption (despite its retail growth in the U.S.) Meanwhile, Ketel One declined -2.8% in value and -1.7% in volume, and Grey Goose was down -3.2% and -5.4%, respectively. Better marketing? Price/mix? Perhaps a bit of both?
In the super-premium range, Stolichnaya declined -15.3% in dollars and -18.8% in volume. As far as premiums go, Skyy gained a notable 18.7% in dollars and 26.5% in volume, but Absolut declined -7.4% in dollars and -7.7% in volume.
Mid-value vodka faired far better. Svedka was up an impressive 52.5% in value and 55.8% in volume. Gordon’s grew 26.3% in value and 37.2% in volume, and Seagram’s rose 13.5% and 18.1%, respectively. Category leader Smirnoff lagged behind the other brands in its price category, gaining 1.5% in dollars and was flat in volume. Recall that Diageo recently took a price increase.
As far as value vodka goes, McCormick rose 10.9% and 9.1%, respectively, while Skol was up 2.9% and 0.9%. It’s interesting to note that McCormick was down -13% in dollars during the same period last year, while case sales declined -19.1%. Similarly, Skol was down -2.9% in sales and -6.6% in volume.
The trading up trend was so strong before the recession hit we expect consumers to return to their old habits once it’s over. As a result of the declining economy, consumers are also trending to the off-premise which is never good for spirits brands which rely heavily on on-premise growth for dollar sales and drinking occasions.
KROGER STAYS FOCUSED ON PRIVATE LABELS
Shares of Kroger fell 7% in recent trading Tuesday after the company issued projections below Wall Street estimates. However, revenues rose 9% to $17.58 billion in the quarter and sales at identical stores (those open five full quarters without relocation or expansion and not scheduled to close) rose 7.8%, or 5.6% excluding fuel sales. In the month, identical store sales dipped slightly below 5%. The supermarket chain continues to reap the benefits of offering lower prices and successful private labels brands. As a result, the company pledged to cut prices on in-house brands and other items it produces as input costs fall rather than keep the profit.
ITALY PROJECTED TO BECOME LARGEST WINE PRODUCER
Italy is expected to surpass France in becoming the world’s largest wine producer for the first time in a decade, according to the Coldiretti farmers lobby. A bumper harvest as a result of good weather is estimated to push Italian wine production up 8% over last year to 4.7 billion liters, compared to 4.44 billion liters in France where production fell -5%. The AP reports that production estimates by Assoenologi, an association of Italian wine producers, claim Italy’s production will increases only 5% to 44.5 billion liters. According to Assoenologi, that gives Italy a 17% share of the world wine market and one-third of the European market.
Until tomorrow, Megan
“History will be kind to me for I intend to write it.”
Sir Winston Churchill
--------- Sell Day Calendar ----------
Today's Sell Day: 8
Sell days this month: 22
Sell days this month last year: 20
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: +1
BEER SUMMIT 2009 - The Four Seasons, Austin, Texas - Join us for great speakers, intelligent discourse, good food, and of course great beer at the next Beer Summit on March 1 - 2, 2009. Click here: http://tinyurl.com/beersummit
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 2:06 PM
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