Shanken's Impact Newsletter November 15, 2016

THOUGH COMPETITION REMAINS STIFF in the global gin category, the segment appears to be gaining momentum. Leading premium players like Tanqueray (+5.5%) and Beefeater (+3.9%) posted solid turn-arounds in 2015, helping to offset declines by mainstream brands such as Gordon’s (-3.5%), Seagram’s (-6.8%) and Gilbey’s (-3.5%). Moreover, gin’s super-premium and craft segments continue to soar, with William Grant & Sons’ thriving Hendrick’s label paving the way for a bevy of fast- growing boutique brands in key markets like the U.S. “The gin category as a whole has been trending down over the past few years, pri-marily driven by losses in domestic gins within the value price segment,” notes Ned Duggan, vice president, managing director for Bacardi Ltd.’s Bombay Sapphire. “How-ever, premium gin is rising—there’s been a shift from lower priced,…

NOT LONG AGO, THE SO-CALLED BRIC MARKETS OF BRAZIL, RUSSIA, INDIA AND CHINA were the talk of the global spirits industry, as major players poured heavy investments into those and other countries whose demographic trends presage dramatically increased drinks consumption in the decades ahead. These days, economic volatility, geopolitical conflict and numerous locally-defined hurdles have contributed to create at best a mottled near-term growth picture for the BRICs and other key emerging markets. While the slowdown in China’s rate of economic growth—from 10% in 2010 to 6.7% in the first half of this year—garners the most headlines, emerging economies from Brazil to Rus-sia to Nigeria are all in the midst of difficult periods, forcing drinks marketers to adapt their strategies to the new, less dynamic landscape—and shift significant investment dollars…

OKAY, SO GIN ISN’T EXACTLY ON FIRE. STILL, FOR THE first time in quite a while, things are looking up for the category. Fol-lowing years of decline, the U.S. gin market is on pace to hold its ground in 2016, according to Impact Databank. The improved performance starts at the top, where longtime leader Seagram’s Gin is making progress after years of struggle. It’s difficult for a category to achieve significant gains when its biggest seller is los-ing ground, and that’s been no exception for gin. However, with Sea-gram’s core offering on the wane, brand owner Pernod Ricard has en-hanced the gin franchise’s fortunes by turning much of its focus to extensions—both flavors and more upscale products. That effort is now paying off. The company has successfully employed a similar…

THE OWNERS OF LAURENT-PERRIER, ONE OF THE WORLD’S BIGGEST CHAMPAGNE suppliers, are considering a stake sale, according to Bloomberg. Citing “people famil-iar with the matter,” the news outlet reports that the de Nonancourt family, which owns around 60% of Laurent-Perrier (and nearly 75% of its voting rights), has in-formally discussed strategic options—including a partial or full sale of its stake. How-ever, a spokesperson for Laurent-Perrier told Bloomberg that the de Nonancourts have no plans to “cede the company.” Founded more than 200 years ago, Laurent-Perrier is the fourth-largest Champagne supplier, with yearly shipments of more than 1.1 million cases, according to Impact Databank. More than half of that comes from the company’s flagship Laurent-Per-rier brand, which ranked fifth worldwide at 625,000 cases in 2015. Laurent-Perrier is also a key supplier…

THE U.S. ATTORNEY FOR MARYLAND fully dismissed its indictment against Republic National Distributing Co. (RNDC) in late October, five months after charging the distributor and three of its employees with interstate liquor smuggling. “RNDC and our three employees vio-lated no law and should never have been charged. We’re certainly happy that the U.S. Attorney in Maryland realized that fact—before the needless expenditure of more time and resources—and de-cided to drop the case,” said RNDC president and CEO Tom Cole in a state-ment following the withdrawal of the indictment. The court previously re-turned to RNDC $50 million that it seized relating to the indictment. In May, the U.S. Attorney for the Dis-trict of Maryland charged RNDC and three of the employees at its Maryland operation—Eugene Gerzsenyi, Jason Lockerman and Lisa Robbins—in…

BARDSTOWN BOURBON CO., THE Kentucky distiller that recently took on Constellation Brands as an inves-tor, is planning to expand capacity from 1.5 million proof gallons (roughly 750,000 nine-liter cases) to 6 million proof gallons (3 million cases) looking ahead. Led by entre-preneur David Mandell and former Maker’s Mark master distiller Steve Nally, Bardstown began production on a state-of-the-art $25 million fa-cility in September. Bardstown’s strategy is based on its “Collaborative Distilling Pro-gram,” which creates customized whiskies for craft distillers and brand owners. Following Constellation’s recent acquisition of High West Distillery, Constellation CEO Rob Sands said the Bardstown investment “jumpstarts our opportunity to fur-ther explore innovation in the brown spirits category.” –Daniel Marsteller…