Records Sixth Consecutive Year of Market Share Gain
Distilled spirits delivered another year of steady growth in 2015 with supplier sales up 4.1 percent and volumes up 2.3 percent, the Distilled Spirits Council announced today at its annual briefing for media and Wall Street analysts. Distilled spirits suppliers and marketers also marked the sixth straight year of increasing their market share relative to beer in 2015.
“The positive performance of distilled spirits is the result of many factors including market modernization, product innovation, consumer premiumization and hospitality tax restraint,” said Distilled Spirits Council President and CEO Kraig R. Naasz.
The Council reported strong growth in every whiskey category for the second straight year, with revenues rising 8 percent. Super premium whiskeys were particularly popular among American consumers with luxury Bourbon, Scotch, Canadian and Irish whiskeys all recording double-digit gains. Other categories performing ahead of the distilled spirits average growth included Tequila, with another exceptional year of 9.4 percent sales growth, and Cognac, with sales growth of 16.2 percent.
Category Highlights for 2015
The Council estimated that overall retail sales of distilled spirits in the U.S. market reached nearly $72 billion in 2015, supporting 1.4 million jobs in the hospitality industry.
Additionally, the spirits sector achieved a slight increase in market share relative to beer for the sixth straight year in 2015. Total market share gains by spirits compared to beer since 2000 totaled 6.7 points, with each point of market share equaling approximately $680 million in supplier sales for a total of $4.6 billion.
Several key factors contributed to the spirits sector’s continued growth, including:
- Demand for American whiskeys – Bourbon, Tennessee and Rye – booming in the U.S. and abroad;
- Millennials of legal drinking age interest in discovery driving innovation and premiumization;
- State legislatures showed hospitality tax restraint protecting jobs, consumers;
- Modernized alcohol laws expanding consumer access and choice;
- Focus on craft-style, artisanal products benefiting both large and small producers;
- Consumer fascination with provenance dovetailing with spirits’ authentic heritage;
- Growth of micro-distilleries generating excitement in the spirits sector; and
- Cocktail culture continuing to define nightlife in cities across the country.
American Whiskey Boom Boosts U.S. Farmers
The appeal of American whiskey – Bourbon, Tennessee and Rye – with consumers here and abroad resulted in 7.8 percent overall growth for the category, benefiting America’s farmers and boosting exports.
Corn used in spirits production increased 176 percent while rye used in spirits production was up 64 percent from 2010 to 2014, according to the U.S. Department of Treasury’s Tax and Trade Bureau. Additionally, the U.S. Department of Agriculture’s Small Grains Report estimates that farmers’ rye production was up 60 percent in 2015.
“Against the backdrop of an otherwise sluggish farm economy, it’s positive to note that American whiskey sales are benefiting America’s farmers and the agricultural sector,” said Naasz.
Additional Top Performers in 2015
Both Irish Whiskey and Single Malt Scotch continued their rapid growth with revenues up 19.9 percent and 13.5 percent, worth $664 and $732 million, respectively, as reported by Distilled Spirits Council Chief Economist David Ozgo. Cognac sales were also up an impressive 16.2 percent, generating $1.3 billion in revenue, and Tequila revenues grew 9.4 percent, generating $2.3 billion revenue. Despite growing only 0.5 percent, Vodka sales reached $5.8 billion.
American Whiskeys Continue to Lead Export Growth
Overall spirits export volumes increased 4 percent in 2015, while American whiskey export volumes of Bourbon, Tennessee and Rye grew 5.4 percent due to growing consumer interest in these products around the globe.
The Council reported that revenue from export sales were slightly up at over $1.56 billion despite the impact of a strong dollar in key foreign markets. Distilled Spirits Council Senior Vice President for International Trade Christine LoCascio noted that this was a record sixth year of export growth U.S. exports into positive territory.
LoCascio cited 10 markets to watch in 2016 for U.S. export growth: United Kingdom, Japan, Latvia, Panama, Vietnam, South Africa, China, Dominican Republic, Brazil and Taiwan.
In 2015, the top six export markets for all American distilled spirits by dollar value were the United Kingdom ($230 million), Canada ($193.5 million), Germany ($130 million), Australia ($125.4 million), Japan ($110.2 million) and France ($87.8 million).
The 2015 top six export markets by dollar value growth were United Kingdom (+$52.3 million USD), Latvia (+$18.9 million USD), Vietnam (+$11.8 million USD), Japan (+$10.4 million USD), Panama (+$3.5 million USD) and Dominican Republic (+2.9 million USD).
Top six export markets above $10 million USD by percentage growth Vietnam (+234.1 percent), Latvia (+76.2 percent), Brazil (+35.3 percent), United Kingdom (+29.3 percent), Dominican Republic (+27.9 percent), and Panama (+21 percent).
2015 Distilled Spirits Policy Achievements
The Council highlighted its progress in helping policymakers understand that hospitality taxes are bad for jobs and consumers, noting that all 18 out of 18 major tax threats at the state level were soundly rejected in 2015. At the federal level, a bipartisan proposal sponsored by U.S. Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) to reduce the federal excise tax on spirits, beer and wine received serious consideration in Congress prior to the end of the year and is sure to be revisited.
The Council also noted five states authorized spirits tastings in 2015, bringing the total number of states that support some form of spirits tastings to 46 nationwide. This continued U.S. market access modernization is an important marketing tool that enables consumers to sample the many innovative and premium products available today in the distilled spirits sector.
Importantly, the country continues to make significant progress on social responsibility, with underage drinking and binge drinking at historic lows and drunk driving fatalities continuing its long-term decline.
Link to the slide deck: 2015 Distilled Spirits Council Industry Review
Link to the distilled spirits category data tables: Supporting Category Tables