Resurgence of demand for premium spirits in US

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In what represents one of the strongest growth years for the premium-and-above spirits sector in the US, over 50 million nine-litre cases of premium-and-above spirits (priced at $20 retail and above) were sold there in 2012, up 8.5% on 2011, with the $20-plus sector now accounting for over one in four bottles in the US market according to the IWSR Forecast Report 2013-2018.

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Off-trade

1 November 2013

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This trend seems set to continue with the premium-and-above spirits market predicted to reach 70 million cases by 2018. The total spirits market is forecast to grow by 23.9 million cases over this period with the majority of this growth coming from premium spirits.

IWSR predicts that the premium-and-above segments in the whisky, rum, gin and tequila categories will outperform the lower-price segments in percentage terms. Although sales of super-premium vodka are slowing down, IWSR forecasts that overall premium-and-above vodka will gain another 4.3 million cases with the trend towards flavoured vodka driving growth; the super-premium flavoured vodka market is forecast to grow by over two million cases between 2013 and 2018.

Premium-and-above whisky is forecast to see the largest growth over the five years, adding five million cases to the category. American whiskies in particular have benefitted from the introduction of flavours, a development that’s attracting new, non-traditional consumers into the category.

Underpinning the growth in premium spirits are highly favourable demographics with immigration and an estimated one million US consumers annually reaching legal drinking age.

Many of the immigrant groups, particularly Latinos or Asians, have a preference for spirits, particularly premium aged. The market for premium-plus spirits has also been buoyed by the improving economy and housing market.

This higher consumer confidence is feeding through to recovery in the on-premise sector, a key driver of the US spirits market – in particular, the premium sector.

IWSR reports that there’s a growing connoisseurship culture with increasing interest among many consumers, mixologists and producers in craft spirits.

This has also been supported by highly-effective marketing by the spirits industry and cultural changes (such as the influence of TV programmes such as Mad Men).

A stream of product innovation at the high-end of the market has also helped maintain and encourage consumer trade-up, reports IWSR.

However unemployment in the US remains stubbornly high by historic standards. Economist surveys (Bloomberg) forecast GDP expansions of 2.7% in 2014 and 3% in 2015, although the great unknown is the impact of the federal shutdown and the potential, albeit unlikely, prospect of a US debt default.

 

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