Spirits Grow in July, Tough on RTDs and Tequila

FILED SEPTEMBER 1, 2009

Dear Client:

The spirits industry showed some growth in the 13 weeks to July 25, with dollar sales up 1.6% and volume up 1.1%, according to Nielsen scan data in food, drug and major market liquor stores. Value spirits showed the most growth (3%) in dollar sales, followed closely by mid-priced brands (2.3%) and then premiums (0.6%). Ultra-premium spirits declined -1.4% in the 13 weeks and -2.1% in the 4 weeks. Interestingly, in the four weeks mid-priced brands outpaced value brands by 2 percentage points. Premium brands fared much better in the 4 weeks as well, up 1.8% in dollar sales.

In terms of volume, mid-priced brands grew the fastest at 1.6% in the 13 weeks, followed by value brands (1.1%) and then premium brands (0.6%). Ultra-premium brands declined -1.1%. Mid and premium brands were much stronger in volume in the four weeks, growing 2.5% and 2.4%, respectively. Value brands grew 0.8% in the 4 weeks and ultra-premiums declined -1.5%.

Not surprisingly, vodka outpaced category growth with dollar sales up 5.2% in the 13 weeks and volume up 5.5%. Within the category, flavored vodka outpaced unflavored with dollar sales growing 10.1% versus 4.3% in dollar sales, and 9.1% versus 5.1% in volume. Average price was down 3 cents on 750ml bottles from the same 13 week period last year.

Whiskey grew 1.9% in dollar sales driven largely by Irish whiskey, which grew 21.2%. Bourbons grew 4.4% in dollar sales, Canadian grew 1.9% and Scotch declined -2.8%.

In terms of volume, whiskey sales were flat. Irish whiskey grew 20.8%, Bourbon grew 1% and Canadians grew 0.1%. Scotch declined -2.9%. Average price was up 24 cents in the 13 weeks year over year.

Rum gained 1.7% in dollar value with flavored rum growing 4.7% and unflavored rum declining -0.9%. Volumes of rum grew 0.5% in the 13 weeks, with flavors growing 3.6% and unflavored rum declining -1.8%. Average price was up 13 cents.

Dollar sales of tequila grew 0.7% and volumes rose 1.4% in the 13 weeks. Average price was down 12 cents.

Gin saw value gain 0.3% in the period while volume was flat. Average price was up 4 cents in the 13 weeks year over year on 750ml bottles.

And despite new entrances in the prepared cocktails segment from some of the major companies (Diageo, Beam and Brown-Forman), dollars were down -5.2% and volume declined -6.7%. Average price was up 11 cents in the 13 weeks year over year.

USVI RESPONDS TO PUERTO RICO “CRYING FOUL”

We received a statement from US Virgin Island Gov John deJongh, Jr in response to our article earlier this week. Recall that we covered the Chicago Tribune story on the ongoing battle between US Virgin Islands and Puerto Rico concerning Diageo’s Captain Morgan plant.

“The revenue generated by this partnership is, by U.S. law, tax revenue of the Virgin Islands. It has helped us stabilize our current financial position due to the recession, address our pension deficit, and build roads and schools. This partnership is sanctioned by a Congressionally approved program that is not a ‘special tax,’ but a fundamental part of the financial relationship between the U.S. and its territorial possessions; extended to the USVI in 1954. For Puerto Rico to cry foul as they continue to subsidize their rum companies under the same program, one that they have benefited from since 1917, is disingenuous. They were prepared to let Diageo take its production of rum destined for the U.S. market out of the United States. We were not. We are proud that Diageo will produce its rum on St Croix and pleased that this will generate great benefits to the people of the U.S. Virgin Islands for many years to come.”

VINFOLIO RAISES $4.5M

With the help of venture capitalist firm Panorama Capital, Vinfolio has raised $4.5 million in a Series A funding round. Prior to this, the company had been funded by private investors. Recall that in July the company launched Vinfolio Marketplace that helps consumers buy and sell wine. Shahan Soghikian, a managing director at Panoroma, will join the company's board alongside Vinfolio chairman Jean-Michel Valette, MW, (and former chairman at Robert Mondavi Winery), Colin Lind, managing partner at Blum Capital Partners, LP and William Timken, one of the founding partners of Hambrecht & Quist.

CONNECTICUT PACKAGE STORES CLOSED SUNDAY AND MONDAY

Connecticut Blue Laws will keep package stores closed on Sunday and Monday this Labor Day weekend, reports DISCUS. They’re one of only three states that still ban beer, wine and spirits sales on Sundays. “It’s laughable that in 2009, a 1930’s law forces package store owners to close for two consecutive days during one of the busiest home entertaining weekends of the year,” said Jay Hibbard, council vp. “Outdated laws hurt enterprising store owners, but also inconvenience consumers and deny the State Treasury millions in much-needed tax revenue.” Consumers can still order drinks on-premise though.

GAUGING THE INDUSTRY: WSD’S BI-ANNUAL SURVEY. We need your help! Please click here to answer 5 short questions about the state of the industry. We’ll post the results in the next few days. All respondents are anonymous.


Have a safe and prosperous Labor Day Weekend!
Until Tuesday, Megan

“I'm the only person I know that's lost a quarter of a billion dollars in one year.... It's very character-building.”
Steve Jobs

--------- Sell Day Calendar ----------
Today's Sell Day: 4
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Wed.
This month last year ended on a: Tues
YTD sell days Over/Under: 0

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