Shanken's Impact Newsletter June 1-15, 2020

A DECADE AGO, TEQUILA WAS DEFINED BY Margaritas and shots, and had only a few major brands leading the category. Exports to the U.S., too, were far below their current levels—in 2010, just 13.15 million cases of Tequila came stateside, according to Impact Databank. Today, Tequila is telling a different story. A flurry of activity has resulted in a proliferation of prominent new brands and unique product launches, many of which sit at the higher-end. Such wideranging innovation has expanded the very notions of what Tequila can be, and the number of occasions in which it can be enjoyed. As the category has received more attention, its U.S. volume has risen in tow: In 2019, some 22.7 million cases of Tequila were imported from Mexico, up 11.2% from the year…

WHILE OVERALL U.S. BEER VOLUMES CONTINUE TO FALTER, SOME BRANDS ARE MAKING rapid gains, with just over three dozen labels from the beer, cider, seltzer, and RTD categories earning Impact “Hot Brand” honors this year. Moreover, nearly all the award winners are priced at a premium-and-above level. Indeed, the 37 Hot Brands for 2019 signal that despite the challenging environment for the beer industry, products that respond to the increasing demand for innovation and authenticity will continue to resonate. Almost two-thirds of this year’s Hot Brand winners are RTDs (primarily malt-based flavored beverages, with an abv generally below 10%). Their ranks include several skyrocketing hard seltzer labels—a category that continues to redefine itself. Among imported beers, Mexico once again dominates the list, while the domestic winners were limited to craft…

THERE MAY BE NO BETTER EXEMPLAR OF THE SPIRITS industry’s long-term premiumization trend than the progress of the Tequila category in the U.S. over the past decade. While premiumization has occurred throughout the market, in Tequila’s case the pace of change has been especially rapid, driven by the proliferation of 100%-blue agave offerings. In 2010, just 17.8% of Tequila imported to the U.S. was 100%- blue agave—with the vast majority of volume accounted for by lower-priced mixto expressions. Last year, the share of 100%-blue agave Tequilas reached 57.6%. Correspondingly, the high end of the category has expanded apace: In 2019, Tequila brands retailing at $25 and over a 750-ml. bottle represented more than 40% of total category depletions, according to Impact Databank, and upscale labels continue to significantly outpace the…

DIAGEO IS SWITCHING DISTRIBUTORS in the New York market, aligning with Southern Glazer’s Wine & Spirits, effective September 1. Empire Merchants has previously handled the Diageo portfolio in New York. According to Shanken’s Impact Newsletter, Southern Glazer’s had revenues of $1.8 billion in New York last year, trailing only Empire, whose 2019 revenues totaled $1.9 billion. By adding Diageo’s estimated $400 million portfolio—including Smirnoff, Crown Royal, Johnnie Walker, Captain Morgan, Don Julio, and other key labels—Southern will overtake Empire to become the No.-1 wine and spirits distributor statewide. Diageo accounts for an estimated 22% of Empire’s total revenues. Along with Diageo, Southern’s New York portfolio includes Bacardi, Beam Suntory, Campari, Pernod Ricard, and Rémy Cointreau, which also recently switched from Empire. “New York is both a significant business hub and…

CONSTELLATION BRANDS AND E.&J. GALLO ARE EDGING CLOSER TO COMPLETing their billion-dollar deal covering a host of lower-end wine brands, but the two companies recently announced that Constellation’s California-based Mission Bell winery will no longer be included. The removal of the Mission Bell facility is related to an earlier amendment of the deal under which Constellation will be retaining the Cook’s California Champagne and J. Roget American Champagne labels. They were previously among the brands slated to transfer to Gallo. Excluding Mission Bell, the revised transaction is worth $1.03 billion, of which $250 million is in performance-based earnouts. Still subject to FTC review, the deal is now expected to close before the end of the second quarter. “This move puts us one step closer to finalizing this transaction,” said Constellation…

A WHISKEY RITUAL AT AN OBSCURE TENNESSEE GOLF COURSE HAS INSPIRED its own brand of Bourbon, with All-Pro quarterback Peyton Manning and tennis great Andy Roddick, among others, behind it. The golf course is Sweetens Cove in Marion County, Tennessee. It was bought by Manning, Roddick, and partners in 2019. Sweetens Cove has no clubhouse or even bathrooms, just a Home Depot shed, in which it’s traditional for players to take a shot of whiskey before each round. “Like they say there, ‘Take your first shot before your first shot,’” Manning tells Whisky Advocate. The whiskey brand, Sweetens Cove 13-year-old Tennessee Straight Bourbon, is the handiwork of master distiller and blender Marianne Eaves, formerly of Woodford Reserve and Castle & Key.…