Shanken's Impact Newsletter May 15, 2020

Super-Premium Strength: Gin’s High End Shows Robust Growth WHILE GIN’S GROWTH HAS BECOME A phenomenon globally, with particular strength in European markets, the U.S. category has been slower to gain momentum on a volume basis. Still, promising results continue for higher-end labels, and marketers remain confident in the category’s potential for further progress and premiumization. According to Impact Databank, total U.S. gin depletions declined by 0.5% to 9.2 million cases last year, with the top 10 brands down 1.4% to 7.2 million cases. Though many of the largest brands are struggling to generate growth, the super premium segment continues to gain ground, reaching a 36.7% share of the market last year, up from 27.5% five years ago. “Gin has exploded in places like the U.K. and Spain. In the U.S., it…

Key Marketers Look To Extend Gains PROVENCE’S GROWTH STREAK COOLED A BIT IN 2019, WITH SHIPMENTS TO THE U.S. falling from their all-time high of 2.14 million cases in 2018 to 2.12 million cases last year, according to Impact Databank. But that decline was at least partly due to a steep drop-off of total French wine exports to the U.S., which fell by double-digits following the implementation of 25% tariffs on French, Spanish, and German wines last October, according to the French Federation of Wine & Spirits Exporters. Despite last year’s slight decline, Provençal rosé remains the pinnacle of the rosé category, as consumers continue to favor the region’s salmon-colored wines. And though the tariffs have created difficulties, all leading rosé labels from France are still growth mode—even as numerous rosé…

IN THE FACE OF UNPRECEDENTED CONDITIONS AND the greatest challenge many of us have faced in our lifetimes, the drinks industry continues to show remarkable resolve and resilience. While the Covid-19 crisis is taking a toll on the business, especially in the on-premise, which remained largely shuttered at press time, agile marketers are responding at all levels of the industry, adapting their operations to meet the new reality while keeping an eye on the future and preparing for better times ahead. Given the conditions, one might think a mixology-focused category like gin would be seeing particularly tough times. But gin has consistently been among the spirits enjoying the biggest off-premise gains in recent weeks, with consumers clearly taking to making cocktails at home, encouraged by the outreach efforts of their…

HEAVEN HILL BRANDS IS CONSOLIdating its U.S. business with Southern Glazer’s across 39 markets. While the two companies already had an extensive partnership, nearly a dozen new markets are now being added in the western part of the country. Heaven Hill’s legacy brands—including Evan Williams, Elijah Craig, Burnett’s, and Admiral Nelson’s—are transitioning to Southern Glazer’s in 11 markets under the new accord. Effective June 1, the Southern Glazer’s Western Region—which includes the states of Alaska, Hawaii, Washington, Oregon, California, Nevada, Arizona, New Mexico, Utah, Idaho, Montana, and Wyoming—will handle those brands on an exclusive basis. RNDC-Young’s currently represents Heaven Hill across the West. Additionally, the new alignment will see Black Velvet Canadian whisky, which Heaven Hill recently acquired from Constellation Brands for $266 million, join Southern Glazer’s in 25 new…

PERNOD RICARD POSTED SALES down 2.1% on an organic basis to €7.2 billion ($7.8b) in the nine months through March, representing the first three quarters of its fiscal year, weighed down by a 14.5% decline in the third quarter owing to the unprecedented conditions brought on by Covid-19. Pernod’s U.S. business managed a 3% sales increase in the first nine months of the fiscal year, but saw slowing growth in March due to physical distancing and other containment measures, including the on-premise shutdown. Jameson, which was up 6.5% to 3.7 million cases in the U.S. last year, according to Impact Databank, was affected by the cancellation of St. Patrick’s Day events, but continued to perform well off-premise, the company said. Jameson grew by 22% in IRI channels in the 12 weeks…

GRUPO CUERVO SAW ROBUST SALES GROWTH IN THE FIRST QUARTER DESPITE the Covid-19 crisis, with its North American sales soaring 15% to MX$3.5 billion ($146m) on a volume increase of 6.4% to 2.1 million cases. Globally, the company’s sales rose 5.3% to MX$5.2 billion ($217m) during the first three months of the year, despite a volume decline of 9% to 3.4 million cases. Consolidated net income slipped 0.8% to MX$698 million ($29m) as high agave prices continued to weigh down earnings. The company’s core Jose Cuervo brand saw global volume increase 5.8% to 1.2 million cases in the first quarter, with net sales up 18.2% to MX$1.9 billion ($79m). While Cuervo saw rapid growth in the U.S. and its international business, it was partially offset by a slowdown in Mexico,…