Distilled spirits imports increased by 17.8% to $1.5 billion in the first quarter of 2015, based on data provided by the Distilled Spirits Council of the United States. Major categories like whiskey and vodka saw double-digit growth. Imports of cordials or liqueurs increased by 8.7% in 1Q15. However, the cordials category’s import volumes declined by 2.6% due to the growing demand for other spirits, like flavored whiskey.
Diageo (DEO)(DGE.L) owns some major imported spirits brands-like Johnnie Walker, and Crown Royal. Pernod Ricard (PDRDY)(RI.PA) owns popular brands like Chivas Regal whisky and Absolut vodka. These imported spirits brands compete with domestic US brands manufactured by Constellation Brands (STZ), and Brown-Forman (BF.B).
Beverage companies account for ~20.1% of the Consumer Staples Select Sector SPDR Fund’s (XLP) portfolio allocation. Constellation Brands makes up ~0.2% of the portfolio holdings of the iShares Russell 1000 Growth ETF (IWF).
Distilled spirits are the second-largest category of the US alcoholic beverage industry. They accounted for 35.2% of gross supplier revenues in 2014. Beer is the largest category in this industry, and wine is the third-largest category of the alcoholic beverage industry.
Whiskey and vodka are the two major categories of the distilled spirits industry based on gross revenue. We’ll discuss whiskey imports in part 2 of this series.
Vodka imports increased by 17.1% to $351.9 million in 1Q15. In 2014, vodka imports declined by 7.7% to $1.6 billion. Flavored vodkas had a long run of success, but now they’re losing ground to whiskey. Vodka makers have flooded the market with hundreds of flavors, ranging from buttered popcorn to cinnamon. But consumers seem saturated and are moving from one flavor to another or to other spirits categories, like Bourbon whiskey, for its authentic taste.
Brandy, tequila, and rum imports grew by 31.6%, 22.4%, and 38.5%, respectively, in 1Q15 from the corresponding quarter in the previous year. The growing demand in the United States for cognac and brandy is partially offsetting the decline in sales in China for major producers like LVMH Moet Hennessy Louis Vuitton SE (LVMUY)(MC.PA). Premium categories are driving the demand in some of these liquor categories.
Source: Market Realist