Shanken's Impact Newsletter July 1, 2020

LAST YEAR, CHAMPAGNE REACHED A MILE-stone in the U.S. market, with shipments topping 2 million cases for the first time on an 8.3% increase. Progress was even better on the value side, with exports to the U.S. jumping 15% to €665 million ($745m). That performance capped a run in which U.S. shipment value has more than doubled since 2010. Four of the top five brands in the U.S. market showed increased volumes last year, according to Impact Databank, although total U.S. depletions advanced by a modest 0.5% to 1.5 million cases after a nearly 5% bump in 2018. What a difference a year makes. The first half of 2020 has been marked by unprece-dented turbulence in the market, fomented initially by a threat of up to 100% tariffs on all…

WITH THE GLOBAL DRINKS INDUSTRY CONFRONTING the ongoing challenges of Covid-19, the news that the U.S. has renewed its threat to expand tariffs to a host of European Union wine and spirits products is ill-timed at best. The industry successfully beat back a similar threat earlier this year by mobilizing to flood the U.S. Trade Representative’s (USTR) web-site with 28,000 comments on the issue, highlighting the potential damage such tariffs could do within the drinks business, with smaller importers and distributors especially vulnerable. Now it falls to us to rise to the moment again. The USTR will accept comments on its new proposal through July 26, and industry players must make their presence felt While the news on the trade front remains troubling to say the least, it’s heartening to…

READY-TO-DRINK COCKTAILS HAVE been among the fastest-growing spirits segments lately, and top players are taking notice. Bacardi recently expanded in the space with a new line of Bacardi Real Rum Cocktails. The RTDs are made with Bacardi Superior Rum and come in three flavors: Lime & Soda, Limón & Lemonade, and Rum Punch. Major chains have picked up the line, including Publix and Total Wine, where a 4-pack retails for $13. Ned Duggan, global senior vice presi-dent of Bacardi rum, points to the spirit base as a strong selling point. “Just like with most categories within spirits, peo-ple are going to be looking for more and more premium products as the segment evolves,” Duggan told Impact. “The segment has been known as primarily malt-based, which is more affordable, but more…

WITH THE DRINKS INDUSTRY STILL CONFRONTING THE CHALLENGES PRE-sented by the Covid-19 pandemic, another significant obstacle to growth has reemerged in the form of threatened U.S. tariffs on a host of European wine and spirits products. The preliminary tariff list released by the U.S. Trade Representa-tive (USTR) threatens increased or new tariffs on most wine and spirits categories. The new product list includes Scotch whisky, Irish whiskey, other whiskies and grape brandy (from all E.U. members), vodka and gin from the U.K., Germany, France, and Spain, and liqueurs and cordials from all other E.U. members not cur-rently facing tariffs. This list builds on the existing 25% tariffs on single malt Scotch whiskies and French, Spanish, German, and U.K. wines that went into effect last October. The USTR is accepting comments…

E.&J. GALLO HAS EXPANDED ITS spirits portfolio with luxury Tequila brand Don Fulano. Gallo is now the exclusive U.S. importer for the brand, owned by the Fonseca family. The Don Fulano range includes Blanco ($50), Blanco Fuerte 100 Proof ($60), Re-posado ($60), Añejo ($80), and Don Fulano Imperial Extra Añejo ($190). The brand’s Tequilas are made using a dual distillation process, comprised of a double column still and a traditional copper pot still. Gallo’s other luxury spirits brands include The Dalmore, Diplomático, and Jura among others.…

BROWN-FORMAN HAS AGREED TO offload its Early Times, Canadian Mist, and Collingwood whisk(e)y brands to Sazerac for an undisclosed sum, along with its Canadian Mist production facilities. The deal is expected to close later this summer. According to Impact Databank, Canadian Mist was down 6.4% to 1 million cases last year, while Early Times fell 6.8% to 426,000 cases.Brown-Forman said the divestiture “re-flects the continued evolution of the company’s portfolio strategy to focus on premium brands.” Meanwhile, Constellation has agreed to sell its Paul Masson Grande Amber Brandy to Sazerac in a deal worth $255 million. According to Impact Data-bank, Paul Masson was up 1.5% to 2 million cases in the U.S. market last year. The transaction remains subject to certain purchase price and closing adjustments, requires FTC review and…