Premium trend boosts US alcohol market

30th June, 2016 by Lauren Eads

US consumers are drinking more than ever with brand innovation and premium pricing credited with helping its alcohol market post gains across the beer, wine, spirits and cider categories, according to IWSR’s 2016 US Beverage Alcohol Review.

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The US wine category grew by 1% in 2015 finishing the year at 351.6m nine-litre cases, which the IWSR said represented two decades of consecutive growth.

Imported wine accounted for 26% of overall wine sales, while domestic wine took a 74% share. The premium-and-above segment held a 20.7% share in 2015, compared to a 13.3% share in 2005. During that period 31.6m nine-litre cases were added to the premium-and-above segments, which the IWSR said proved that “premiumisation is alive and well in the still light wine category and consumers are trading up.”

Still light wine comprised over 90% of the overall wine category with the leading domestic still light wine brand named as Franzia, despite its volumes decreasing last year by 0.3% to 25.1m nine-litre cases.

Four of the top five fastest-growing wine brands are owned by E&J Gallo (Barefoot, Dark Horse, Liberty Creek and Apothic), and along with DFV-owned Bota Box, the top five brands comprised 28.3m nine-litre cases, up 15.8% between 2014 and 2015.

Total sales of imported still wines increased by 2.3% to reach 80.6m nine-litre cases in 2015. Among the top five, Yellow Tail saw volumes decrease by 3%. Cavit, Concha y Toro, Riunite and Fish Eye round out the top five with these top five brands collectively losing 1.8% share last year. Imported brands that posted increases included Lindemans (+6.9%), Kim Crawford (+17.2%), Ruffino (+12.4%), Oyster Bay (+22.9%), Roscato (+45.7%), Castello del Poggio (+18.9%) and Nobilo (+11.7%).

Prosecco power

The sparkling wine category achieved gains of 6.2% with volumes rising to 20.6m nine-litre cases, which compared to a 3.7% growth rate posted a year earlier. The leading US domestic sparkler, André, increased volumes by 4.1% in 2015 to end the year with 2.3m nine-litre cases.

As is the current trend within many global markets, Prosecco showed its strength within the sparkling category, and wildly outperformed still wines in terms of growth. In 2005 Prosecco accounted for just 63,000 nine-litre cases and held a 0.5% share of the US sparkling wine category, according to the IWSR. In 2015, Prosecco grew by 30% and now holds an 11.9% share of the sparkling wine category.

Spanish Cava has also achieved growth since 2005, taking its share of the sparkling market from 7.5% in 2005 to 8.8% in 2015. Rosé held a 16% share of the still wine category in 2015, increasing its growth rate from 0.2% in 2014 to 1.9% in 2015, ending last year with 50.7m nine-litre cases.

Perhaps the biggest surprise was the success of Sangria, which ended 2015 with an increase of 12.7% to 1.7m nine-litre cases. Imported sangria accounted for 70.1% of sales with domestic sangrias holding the remaining 29.1% of the category, a growth rate of 7.8%.

Sangria

Sangria increased its volumes in 2015 by 12.7% to 1.7m nine-litre cases.

Falling fortifieds

The fortified wine category lost -3.8% of its overall volume last year, ending 2015 with 4.2m nine-litre cases. In 2005, sherry held a 32.3% share of the fortified category, which has since increased to 35% last year. Similarly, Port’s share went from 18.1% in 2005 to a 25.1% share last year.

There was however significant success for the spirits category, marking its 19th straight year of volume gains which rose to 221.6m nine-litre cases, up 28.7% from 10 years ago.

Between 2005 and 2015, Bourbon whiskey volumes grew over 56% to reach 14.8m nine-litre cases; Irish whiskey grew 409% to reach 3.1m nine-litre cases; vodka grew 52.8% to reach 71.3m nine-litre cases; Tequila grew 64.8% to reach 15.2m nine-litre cases; and mezcal grew 279% to reach 110,000 nine-litre cases.

Scotch whisky volumes increased by 0.3% ending 2015 with a total of 8.2m nine-litre cases and a 3.7% share of the overall spirits industry.

“Trading up to higher-quality products, or premiumisation, continues to be another contributing factor to the growth of the spirits industry”, the report said.

“Looking at price tiers that experienced double-digit growth rates, super-premium US whiskey increased by 33.1% last year and has grown at a CAGR of 16.4% since 2005. Super-premium gin increased by 22% in 2015, while growing at a CAGR of 15.6% since 2005. Looking at tequila, the super-premium (+10.3%) and ultra-premium (+49.4%) price tiers performed incredibly well not only last year but over the last decade, growing at CAGRs of 12.8% and 29.5% respectively.”

Craft continues to dominate

Overall, the beer category achieved a “modest gain” of 0.4% in 2015, ending the year at 247,300 hectolitres (or 202.5m barrels). Categories with the largest share were domestic lights (43.6%), domestic regular (23%), imported beer (15.1%) and craft (11%), with the former two losing some ground to imported and craft beers.

Compared to 2010, the domestic lights category has seen a decline in its share of from 50.3% to 43.6%. This category also lost 2.4% of its volume ending 2015 at 107,800 hectolitres. The top four leading beer brands all posted declines in 2015: Bud Light (-2.5%), Coors Light (-2.3%), Budweiser (-2.9%) and Miller Light (-1.3%).

Domestic regular meanwhile lost 1.8% of its share dropping from 24.8% to 23%. This coincided with the category’s fourth year of consecutive volume decline, dropping by 3.2% to 56,800 hectolitres in 2015.

Miller LiteIn comparison, imported beer increased its share, rising by 2.1% to 15.1%. However it was craft that saw the biggest increase raising its share from 6.1% to 11% in the past five years. By volume, the craft beer segment posted an increase of 6.9% in 2015, ending the year at 37,300 hectolitres. The top five leading brands (Corona Extra, Modelo Especial, Heineken, Stella Artois and Dos Equis) make up nearly 70% of the category and each increased volumes last year on an average growth rate of 10.6%.

Mexican imports performed particularly well, led by Constellation Brands’ Modelo Especial (+19.2%), Corona Extra (+8.5%), Corona Light (+7.4%) and Pacifico (+4.9%). Heineken’s Dos Equis grew 8.7% and Tecate Light was up 42.3%.

Cider growth slowing

The US cider category grew double digits once again in 2015, growing volumes by 14.7% to 2,600 litres. However this was at a starkly slower rate than in previous years, including 2014 when growth of 64% was posted and 2013 when the category grew by 74%.

Angry Orchard remained the category leader in 2015 with a share of 51.4% cider in the US.

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