Shanken's Impact Newsletter July 15, 2017

THE VODKA CATEGORY CONTINUES TO carve out steady growth in the U.S. market, even as brown spirits have stolen much of the spotlight. In 2016, vodka rose 4% in the U.S. to 75.6 million nine-liter cases, according to Impact Databank, more than double its 2000 volume of 36.9 million cases. The U.S. spirits market’s largest category by far, vodka shows no sign of slowing, with brands across all price tiers continuing to post solid gains despite increasing competition. Despite pricing competition, vodka is still shifting toward the high end. The sub-premium segment of brands priced under $10 remains large at 27 million cases, representing about a 36% share of category volume, but it’s significantly smaller than it was in 2000, when it accounted for 60% of the market. By contrast,…

BREAKTHRU BEVERAGE HAS DRAMATICALLY EXPANDED ITS FOOTPRINT IN NEW JERSEY by combining with Allied Beverage Group. Allied is New Jersey’s largest spirits and wine wholesaler, with revenues projected at $825 million for 2017, according to Impact. New Jersey’s number-two player is Fedway Associates, at $790 million. Breakthru’s subsidiary in the state, Breakthru Beverage New Jersey, is at number-three with projected 2017 revenues of $365 million. The new entity will operate as Allied Beverage Group, and will have total revenues of nearly $1.2 billion and a roughly 60% share of the market. The combined company’s portfolio will include Smirnoff, Patrón, Jose Cuervo, Jameson, Kendall-Jackson, Yellow Tail, Absolut, Bacardi, Johnnie Walker, Jim Beam, Hennessy, Beringer and Campari, among other brands. The deal is expected to close by late summer. Breakthru, formed through…

A YEAR AGO AT THIS TIME, SOUTHERN WINE & Spirits and Glazer’s Inc. had just completed their blockbuster merger, creating a $17.5 billion colossus at the drinks industry’s middle tier. Given the enormity of the task of combining two multi-billiondollar companies, we decided to check in with Southern Glazer’s CEO Wayne Chaplin to see how things are proceeding a year after the deal. In our exclusive interview (page 13), Chaplin discusses the many challenges attendant to the merger, but concludes that the business is now fully integrated and primed for further growth, given the opportunities afforded by its massive scale and unprecedented national footprint. The conventional wisdom goes that while whiskies and brown spirits in general have been a relatively easy sell for Southern Glazer’s and other distributors lately, vodka…

BACARDI LTD. HAS BECOME THE EXclusive U.S. importer for the Teeling Irish whiskey range, effective September 1. Under the new partnership, Teeling will be distributed in select states by Southern Glazer’s Wine & Spirits, joining the distributor’s Transatlantic Spirits division. As part of the deal, Bacardi has taken a minority stake in Dublin-based Teeling, marking its first foray into the Irish whiskey segment. Established in 2012, Teeling is known for its flagship 46%-abv Small Batch Irish whiskey ($40). A Single Grain ($50) and Single Malt ($60) round out the core lineup. Teeling was previously handled stateside by Infinium Spirits. Teeling is on pace to reach about 20,000 cases in the U.S. this year. Dominated by Pernod Ricard’s Jameson, the U.S. Irish whiskey category has more than doubled since 2010, and…

MOËT HENNESSY HAS PURCHASED Washington state craft whiskey distiller Woodinville Whiskey Co. Financial terms weren’t disclosed, but Moët Hennessy confirmed that it’s buying 100% of the company. The deal is part of an ongoing trend of major drinks multinationals acquiring craft distillers. Constellation has been particularly active, last year purchasing Utah-based High West Distillery for around $160 million, while also taking minority stakes in Kentucky’s Bardstown Bourbon Co., Virginia’s Catoctin Creek Distillery and Tennessee-based Nelson’s Green Brier Distillery. Meanwhile, last year Pernod Ricard acquired control of West Virginia’s Smooth Ambler Spirits Co., while Remy Cointreau bought Washington- based Westland Distillery. Earlier this year, William Grant & Sons purchased Tuthilltown Spirits Co. in its entirety, having already acquired Tuthilltown’s largest brand, Hudson Whiskey, back in 2010. Woodinville Whiskey Co., based in…

INDIAN SINGLE MALT WHISKY MAKER John Distilleries Ltd. has released Paul John Bold, a new peated single malt whisky, in the U.S. market. Bold ($75) joins a Paul John portfolio that also includes Brilliance ($60), Edited ($65), Select Cask Classic ($95) and Select Cask Peated ($100). Initially, about 1,000 cases will be available in the U.S. Paul John expects to sell about 12,000- 15,000 cases total in the U.S. for 2017. Paul John Single Cask Whisky P1-163 recently garnered a 91-point rating from Whisky Advocate, and Paul John Brilliance and Paul John Select Cask Peated both scored 88 points.…