Shanken's Impact Newsletter December 1-15, 2021

FEW DRINKS CATEGORIES HAVE BEEN AS successful as flavored whiskies in the U.S. market over the past several years, and even a global pandemic and on-premise shutdown have failed to slow the sector’s advance. In fact, according to Impact Databank, the category has accelerated amid the tough conditions over the past two years and is projected to total almost 17.5 million 9-liter cases in the U.S. for 2021, up from 2.7 million cases in 2011. Pioneered by brands like Wild Turkey American Honey and Fireball, flavored whiskies have rapidly developed from merely a bridge into the larger world of whisk(e)y into a force in their own right. “Currently, flavored whisk(e)y makes up about one-fifth of the total whisk(e)y category. As a subsegment of whisk(e)y, it’s consistently been a contributor in spearheading…

WHILE THE COVID-19 PANDEMIC HAS PRESENTED NUMEROUS CHALLENGES TO EMERGing markets around the globe, Mexico is showing signs of a strong rebound for its beverage alcohol industries, led by the widespread popularity of its signature Tequila and mezcal offerings. In response to the public health emergency last year, Mexican health authorities enacted measures to limit on-premise business and other economic activity, severely depressing sales for most major spirits brands in the market. Those measures have since eased and consumers are resuming social activities, leading to sharp rebounds for brands positioned in popular categories like Tequila and whisk(e)y, particularly Scotch. With a population of 130 million, Mexico ranks among the 15 largest economies in the world and is the second-largest economy in Latin America, according to the World Bank. Between 1980…

IT WASN’T THAT LONG AGO THAT FLAVORED WHISK(E)Y was a novelty in the spirits market and industry observers wondered just how far it might go. Roughly 10 years into the category boom, it’s more than apparent that flavored whiskies not only have staying power, but appear to be accelerating off of an already sizable base. According to Impact Databank’s projections, flavored whiskies will approach a total of 17.5 million cases in the U.S. this year, up from approximately 14 million cases in 2019. Sazerac’s Fireball remains the elephant in the room with volume of more than 6.3 million cases, but flavored whiskies have proven to be successful in a range of profiles and price points, most recently evidenced by the rapid ascent of Infinium Spirits’ Skrewball peanut butter whiskey. Moreover, leading…

ENERGY DRINKS MAKER MONSTER Beverage, which counts Coca-Cola as a major shareholder, is exploring a potential tie-up with Constellation Brands, Bloomberg reported, citing people familiar with the matter. Constellation hasn’t commented on the situation. Monster, known for its namesake energy drink, has a market cap of around $47 billion, compared with Constellation’s $44 billion. Monster had revenues of $4.6 billion last year, while Constellation’s sales topped $8.6 billion in its fiscal year through February. Back in 2017, Constellation reportedly eyed up an acquisition of Brown-Forman, although the deal never came to pass. Later the same year, however, Constellation announced its first investment in Canadian cannabis company Canopy Growth, in which it now holds close to a 40% stake.…

ST. LOUIS, MISSOURI-BASED DISTRIButor Major Brands scored a victory in federal court against Mast-Jägermeister in a case dating back to 2018, concerning distribution rights and Missouri’s franchise law. The jury found in Major Brands’ favor on all but one count, awarding the company $11.75 million in damages, plus legal fees. The case stems from Mast-Jägermeister’s 2018 termination of its contract with Major Brands, when the company aligned nationally with Southern Glazer’s. Major alleged that Mast-Jägermeister violated Missouri’s franchise laws when terminating their contract, while Mast-Jägermeister said Major Brands’ performance was the cause for termination.…

TREASURY WINE ESTATES HAS AGREED to acquire Napa Valley’s Frank Family Vineyards for $315 million. Frank Family is known for luxury Chardonnay and also produces Cabernet Sauvignon, Pinot Noir and sparkling wine. The company had revenues of $54 million and EBITS of $21 million in its most recent fiscal year. Frank Family’s annual volume stands at 174,000 9-liter cases. Discussing the deal on a conference call recently, Treasury CEO Tim Ford described it as “an important step towards our ambition of becoming the market leader in premium wines in the Americas. The acquisition is strategically compelling. It is clearly aligned to our Americas divisional strategy, being highly complementary to our existing portfolio and in particular it fills a key portfolio gap for luxury Chardonnay.” Treasury noted that the acquisition, coupled with…