Shanken's Impact Newsletter June 1-15, 2021

PREMIUMIZATION CONTINUES TO BE THE buzzword in the spirits industry, and one spirits category where that trend is most evident is Tequila. According to Impact Databank, most of the best-selling premium, super-premium and luxury-priced Tequila brands grew in 2020, while all of the top sub-premium labels suffered. Proximo’s Jose Cuervo, the No.-1 Tequila in the United States, increased 21.5% to 4.7 million nine-liter cases last year, and its portfoliomate, No.-3 brand 1800, advanced 31.2% to 1.5 million cases. The No.-2 Tequila, Bacardi’s Patrón, jumped 25.2% to 2.7 million cases, and No.-4 offering Hornitos rose 11.7% to roughly 1.1 million cases. Rounding out the top five is Diageo’s Don Julio, which saw a 24.5% bump to about 1.1 million cases as well. Overall, Tequila depleted 20.6 million cases in the U.S.…

FLAVORED MALT BEVERAGES, INCLUDING HARD SELTZERS, LED THE WAY FOR IMPACT’S “Hot Brands” this year, signifying that within the beer category demand for flavored and perceived better-for-you drinks continues unabated. Only a handful of domestic beers made the grade, however, while imported winners were virtually all brewed in Mexico. And nearly halfway through 2021, many of the honorees continue on similar trajectories, according to marketers, indicating that next year’s roster of Hot Brands could see their return. Hot Brand honors are awarded to established brands with double-digit growth in 2018, 2019 and 2020; established brands with at least 15% growth last year; brands among the top 10 in their respective categories with at least 5% growth in 2020 and at least 15% growth since 2017; and significant new products. Of…

AMID UNPRECEDENTED CONDITIONS OVER THE PAST year, there have been many fluctuations in market dynamics, such as the broad turn to the off-premise, a dramatic increase in the premixed cocktail category, and a consumer focus on trusted brands. But one thing that clearly hasn’t been affected by the pandemic is U.S. consumers’ love affair with Tequila. The numbers don’t lie. Last year, Tequila shipments to the U.S. surged 24% to above 28 million 9-liter cases, more than doubling in size from a decade earlier. The U.S. accounted for nearly 90% of global Tequila exports in 2020, and achieved a new milestone with 60% of shipments comprised by the higher-priced 100%-blue agave segment, an all-time high. Growth was rampant last year for each of the top five Tequila brands in the…

DIAGEO RECENTLY ANNOUNCED THAT it’s expecting organic operating profit growth to be at least 14% in its fiscal year ending in June, with net sales growth trailing only slightly behind that figure. Chief executive Ivan Menezes noted the group’s “strong competitive performance across key markets,” and said it would resume its return of capital of up to £4.5 billion ($6.37b) to shareholders, which had paused during the pandemic. Diageo said business remains “particularly strong” in North America, its largest market, led by resilient consumer demand and innovation. That momentum builds on a robust fiscal first half ended in January, in which Diageo’s U.S. sales grew by 15%. Its super-premium and luxury Tequila stable was a growth driver, with net sales for the category up 80% in North America, led by…

THE E.U. AND U.S. HAVE AGREED TO START TALKS TOWARD ENDING THEIR TRADE dispute over steel and aluminum, with the E.U. suspending its pending tariff hikes related to the situation, including a 50% levy on American whiskey that would have taken effect June 1. American whiskies have been under a 25% retaliatory tariff in the E.U. since mid-2018, which the bloc instituted in response to 25% U.S. tariffs on E.U. steel and 10% tariffs on aluminum. “This news couldn’t come soon enough,” said Chris Swonger, president and CEO of the Distilled Spirits Council of the U.S. (DISCUS). “Distillers across the United States are breathing a huge sigh of relief after bracing for a 50% tariff on American whiskey that would have forced many craft distillers out of the E.U. market.”…

THE BOSTON BEER COMPANY ANnounced recently that it’s establishing a new research and innovation hub in Canada that will focus on non-alcoholic cannabis beverages. The company has hired industry veteran Paul Weaver to lead the Canadian subsidiary business, where he will focus on developing and piloting cannabis drinks in advance of federal legalization in the U.S. The development comes nearly two years after CEO Dave Burwick told CNBC the company was looking at cannabis drinks. “We’re not going to be the first one in, but we’re going to study and learn once the hard seltzer category develops,” he said at the time. “Innovation is core to what we do, beginning with craft beer, then hard cider, hard iced tea, and now Truly Hard Seltzer,” Burwick said of the new unit.…