Compared to other categories, holiday sales should bode well for the industry as Nielsen believes products aligned with at-home entertainment and considered “essential gift giving” such as alcoholic beverages, cookware, kitchen items and bed and bath accessories will do well. Traditional gifts such as apparel, toy and technology will also be popular but at “more restrained levels” and mostly sold in “value” channels. Consumers are also expected to spend more on gift cards this year.
Value retailers such as dollar stores, online discounters and club stores will attract the lion’s share of holiday spending as consumers minimize trips and search for the best values, while office supply, pet stores, home improvement and drug retailers are likely to feel the brunt of the economic slowdown.
In all, 86% of consumers expect to spend the same or less this holiday season than last year, with a 7% increase in those indicating they would spend less. Consumers will most likely start their holiday shopping before Thanksgiving. Overall, Nielsen is projecting that holiday sales will rise 0.03% this year, accounting for $90 billion in dollar sales.
“Given everything the consumer has absorbed over the past 12 to 18 months, the fact that we expect this coming holiday season to be flat in dollars can be viewed as a modest positive,” said James Russo, vp, global consumer insights at The Nielsen Company. “Americans have undergone a fundamental change in how they spend their money, and the days of stretching finances to make purchases not deemed as necessary are over, at least for the time being. That said, our research has shown that consumers are looking forward to loosening their purse strings a bit, but only once they feel more confident about the state of the economy and their personal financial situation.”
CONTROL STATE VOLUMES DECLINE IN AUGUST
August spirits volumes were down -1.2% in control states from the same period last year, according to NABCA data. Meanwhile, dollar sales declined -1.9% during August although sales grew 2.7% in the most recent 12-month period.
As for the 12 control states that run state owned and operated stores (Alabama, Idaho, Montgomery County Maryland, North Carolina, New Hampshire, Pennsylvania, Utah, Virginia, and Washington) or state licensed agencies (Ohio, Oregon, and Vermont): case sales declined -3.2% and rolling-twelve month volumetric growth was up 2.2%.
The 7 control states that operate as wholesalers of spirits (Iowa, Maine, Michigan, Mississippi, Montana, West Virginia, and Wyoming) selling reported volume gains of 4.3% in August and 2.1% rolling-twelve month trends.
Irish whiskey, with 0.5% share of the control states spirits market, was the fastest growing category in August with 8.6% growth and a twelve month trend of 13.5%. Vodka, with a 31% share, grew during the same periods at 4.3% and 6.6%. Cordials (-6.7%, -2.3%) and brandy (-8.5, -2.0%) continued to decline in control states.
B-F COMMITTED TO INDEPENDENCE
Thoughts that Bacardi may swallow Brown-Forman was thrown to the wayside months ago and B-F chief Paul Varga further dispelled speculation in a WSJ article last week. In speaking with David Kesmodel, Paul reiterated that the Brown family (which owns 70% of voting shares) intends on staying independent and isn’t interested in any “transformative” acquisitions.
"They've traditionally been very committed to their independence, and we're very committed to ours," said Paul with regards to a possible future deal with Bacardi. The two companies are considered a good match partly because they work together globally and have a distribution alliance in the US.
Meanwhile, cfo Don Berg told WSJ that they “have a list of things we are very interested in. The problem with being a buyer is you've got to have a seller.” Since prices tend to be “extremely high” on most spirits acquisitions, Don said it’s important “to take a very, very long-term mindset" about whether an acquisition makes financial sense. They also place less importance on size and scale compared to other spirits companies.
Recall that B-F last major acquisition was Case Herradura, and now El Jimador is one of the fastest growing spirits brands in the US.
JEREMIAH WEED JOINS NASCAR
Although Jack Daniel’s and Jim Beam announced they’re dropping their NASCAR sponsorships in 2010, not all spirits brands are dropping out of the race. Diageo’s Jeremiah Weed Southern Style Sweet Tea has signed as primary sponsor of the No. 26 Roush Fenway Ford Fusion driven by Jamie McMurray. The brand also becomes the first vodka to sponsor a car since Nascar lifted its ban on spirits sponsors in 2005. It will debut at Lowe's Motor Speedway on October 17.
COPIA WINE AND FOOD CENTER has been put up for sale under Copia’s liquidation plan, which has won creditor approval and awaits final approval by a California bankruptcy court, reports Reuters. Recall that Copia filed for Chapter 11 bankruptcy Dec. 1.
WESTERN ILLINOIS DISTRIBUTOR G&M has been awarded the distribution rights for White Rock Distilleries and Big Sky Brewery.
FORBES MAGAZINE recently listed Jess Jackson as the 193rd richest American. Last year he was estimated to be worth $2.4 billion and listed as No. 187.
Until tomorrow, Megan
“People who get nostalgic about childhood were obviously never children.”
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