The Spirits Category

Part
01
of four
Part
01

The Alcohol Spirits Category: Brands

In terms of sales volume, the seven largest spirits brands in the United States are Smirnoff Vodka with 9.2 million nine-liter cases sold in 2017, Crown Royal with 6.06 million, Tito's Handmade Vodka with 5.8 million, Captain Morgan Rum with 5.7 million, Jack Daniel's Whiskey with 5.23 million, Jim Beam Whiskey with 4.96 million, and Fireball Whiskey with 4.9 million.

In terms of dollar sales, Smirnoff Vodka still leads the race, with $315.46 million sales in 2018, followed by Jack Daniel's Whiskey ($313.13 million), Crown Royal Whiskey ($277.99 million), Tito's Handmade Vodka ($255.07 million), Captain Morgan Rum ($223.9 million), Fireball Whiskey ($204.07 million), and Jim Beam Whiskey ($201.1 million).

SMIRNOFF VODKA

  • Smirnoff Vodka recorded a total sales volume of 9.2 million nine-liter cases in the US in 2017.
  • Smirnoff Vodka made $315.46 million in sales in the US in 2018.

CROWN ROYAL WHISKEY

  • Crown Royal recorded a total sales volume of 6.06 million nine-liter cases in the US in 2017.
  • Crown Royal Whiskey made $277.99 million in sales in the US in 2018.

TITO'S HANDMADE VODKA

  • Tito's Handmade Vodka made a total sales volume of 5.8 million nine-liter cases in the US in 2017.
  • Tito's Handmade Vodka made $255.07 million in sales in the US in 2018.

CAPTAIN MORGAN RUM

  • Captain Morgan rum recorded a total volume sales of 5.7 million nine-liter cases in the US in 2017.
  • The company had about $223.9 million in sales in the United States in 2018.

JACK DANIEL'S WHISKEY

  • Jack Daniel's Whiskey made a total sales volume of 5.23 million nine-liter cases in the US in 2017.
  • Jack Daniel's Whiskey made $313.13 million in sales in the US in 2018.

JIM BEAM WHISKEY

  • Jim Beam made a total sales volume of 4.96 million nine-liter cases in the US in 2017.
  • Jim Beam recorded a total sales of $201.1 million in the US in 2018.

FIREBALL WHISKEY

  • Fireball had a total sales volume of about 4.9 million nine-liter cases in the US in 2017.
  • Fireball Whiskey made $204.07 million in sales in the US in 2018.

RESEARCH STRATEGY

To determine the largest spirits brands in the United States by market share or sales, we began our search by looking for precompiled information from industry reports and databases. We found several reports on the top/most popular spirit brands in the United States; however, the articles did not mention any figures or statistics on the ranking. We collated those lists and used the final list as a starting point. With the collated list, we individually looked into each of the brand's sales, and we found two very relevant data points: sales volume in nine-liter cases and dollar sales. Since the ranking slightly changes using these two data points, we created two rankings—based on sales volume in nine-liter cases and dollar sales—and presented them in the findings above.
Part
02
of four
Part
02

The Alcohol Spirits Category: Brands, Landscape

Of the four largest spirit brands in the United States, which were identified to be Smirnoff Vodka, Crown Royal, Tito's Handmade Vodka, and Captain Morgan, only Smirnoff, Crown Royal, and Tito's are projected to grow in the next two to three years. The vodka and Canadian whisky categories have been growing in recent years, but the rum category, on the other hand, has been in decline. Smirnoff, Crown Royal, and Tito's are expected to grow mostly as a result of product innovations, while Captain Morgan is expected to decline mostly as a result of changing consumer preferences.

SMIRNOFF VODKA

  • Smirnoff is expected to grow in succeeding years. According to Ivan Menezes, the CEO of Smirnoff-maker Diageo, the Smirnoff trademark and franchise in the United States is "stabilizing and improving slowly."
  • As Smirnoff's base business is in a better shape, Menezes only expects continued growth.
  • Trends and credentials are "moving in the right direction," and the growth of the ready-to-drink (RTD) category in the United States is proving advantageous to Smirnoff as well.
  • Smirnoff Zero Sugar Infusions, a product innovation launched in May 2019 that targets ingredient-conscious consumers, is expected to contribute to Smirnoff growth in fiscal year 2020.
  • Though Smirnoff has a number of underperforming markets in the United States, it is experiencing growth in around half of the states in the country.
  • Volume sales of vodka in the United States has grown by 1.6% between 2017 and 2018, with flavored vodkas driving category growth. In 2018, flavored vodkas, including those infused with citrus flavors, natural spices, vanilla, and raspberry, accounted for approximately 21% of vodka sales in the United States.

CROWN ROYAL

  • As Canadian whisky Crown Royal is among Beverage Dynamics's 2019 Spirits Growth Brands in America, it appears it is expected to grow in succeeding years.
  • Limited-time offers, especially Crown Royal Peach and Crown Royal Salted Caramel, and strong brands, particularly Crown Royal Regal Apple and Crown Royal Vanilla, support the growth of the Crown Royal brand in the country.
  • These product innovations contributed largely to the 6%-growth in net sales of Crown Royal in the United States in fiscal year 2019. That year, the growth in Crown Royal Regal Apple net sales in the United States was in double digits.
  • Volume sales of Canadian whisky in the United States has grown by 5.2% between 2013 and 2018, with super-premium brands driving category growth. In 2018, sales of super-premium Canadian whisky brands grew by 48%.

TITO'S HANDMADE VODKA

  • As Tito's is among Beverage Dynamics's 2019 Spirits Growth Brands in America, it appears it is expected to grow in succeeding years.
  • The marketing strategy of Tito's appears to be a contributing factor to the growth of the brand. Tito's uses folksy marketing and consistently positions itself as a reasonably-priced vodka. This strategy has enabled the brand to "tap into emerging consumer tastes."
  • According to Frank Polley, vice president of trade marketing at Tito's, American-made vodka is driving vodka category growth. In the past decade, American-made vodka has increasingly been recognized as one of the world's best-tasting vodkas.
  • Volume sales of vodka has grown by 1.6% between 2017 and 2018, with flavored vodkas driving category growth. In 2018, flavored vodkas, including those infused with citrus flavors, natural spices, vanilla, and raspberry, accounted for approximately 21% of vodka sales in the United States.

CAPTAIN MORGAN

  • Captain Morgan is expected to decline in sales in the near future because rum is a shrinking category. Sales of Captain Morgan in the United States declined by 5% in fiscal year 2019.
  • Diageo CEO Ivan Menezes considers Captain Morgan a challenge because the rum category has been in decline for a large part of the past ten years. Diageo's plan to address this challenge is to tap into the broader multicultural consumer base.
  • Volume sales of rum in the United States had steadily decreased from 25.182 million 9-liter cases in 2014 to 23.874 million 9-liter cases in 2018. Between 2017 and 2018, volume sales declined by 3.1%.
  • The decline in the rum category is attributed to evolving consumer preferences. In their desire to try new flavors, recipes, and formats, consumers are increasingly exploring other spirit categories such as tequila and whiskies.
Part
03
of four
Part
03

Spirits Brands on the Decline

Ciroc, Captain Morgan, and Grey Goose are examples of spirits brands that have been experiencing a decline in sales in the United States. The requested details on their struggles have been outlined below.

Ciroc

  • Ciroc Vodka's sales have been on a decline in the United States in recent years. The brand's sales dropped by 43% in 2016.
  • Again, Ciroc's sales dropped by 12% in the last six months of 2018, which offset Diageo's overall profit margin for 2018. This decline continued in the first half of 2019 with sales dropping by 14%.
  • According to the WSJ, analysts attribute Ciroc's declining sales to consumers' growing preference for more classic and niche vodka offerings over Ciroc's flavored choices.
  • According to the Spirits Business, Ciroc's struggles are as a direct result of the growing popularity of craft distilleries and the gin category in the United States. While American consumers are increasingly leaning towards premium spirits, vodka consumers are showing a preference for lower-end products.

Captain Morgan

  • According to Forbes, Captain Morgan’s sales dropped by 9% in the United States in 2018.
  • According to reports by Shanken News and CBS News, the brand's declining sales continued into the 2019 fiscal year. CBS reports that Captain Morgan's sales dropped by 5% in the 2019 fiscal year.
  • Captain Morgan's decline has contributed significantly to the 2% drop in sales of rum in the United States.
  • Diageo's CEO attributes the sales decline to the current health trend that has caused sugary carbonated drinks to fall out of favor with consumers. The decline in cola intake has affected Captain Morgan since its marketing was hinged on its combination with cola beverages i.e., Cuba Libre cocktails.

Grey Goose

  • Market Watch reports that Grey Goose's troubles started in 2015 with a 4.4% decline, which dropped its ranking in the United States vodka market to eighth from fourth in 2012. The premium Vodka brand's performance was flat through February 2016 before falling again by 1% in the following months.
  • In 2017, Grey Goose's sales in the United States dropped significantly by 13.3%, which represented its most significant decline in half a decade. According to data from Shanken News, Grey Goose's sales declined by 2% in 2018.
  • Similar to Ciroc's case, analysts attribute Grey Goose's, decline in the United States to vodka consumers' preference for lower-end vodka products such as Tito. In addition, the Spirits Business reports that millennials still perceive flagship vodka brands such as Grey Goose as "their parents’ brands," which has contributed to their shift towards newer brands.

RESEARCH STRATEGY

Our research for spirits brands that have declining sales or are struggling in the United States began by searching for any comparative measures from market research reports such as MarketsandMarkets, company/business profiling sites including Crunchbase, and statistics sites such as Statista. However, there was no analysis on the subject from these sites.

Next, we searched through financial magazines including Forbes and the Wall Street Journal, general media resources such as CBS News, liquor/spirits associations such as the Distilled Spirits Council, dedicated liquor magazines such as the Spirits Business and Shanken News, and data analytics resources such as Nielsen. From the second strategy, we managed to identify several spirits brands that have declining sales in the United States.

We then expanded our research to 3-4 years back in order to establish a trend in the decline of the identified brands. Our aim was to only provide the brands whose decline has been consistent in recent years. Therefore, we have only included brands that have seen decline in sales for at least three years.
Part
04
of four
Part
04

The Alcohol Spirits Category: Trends

Three future trends in the US spirits industry for spirits categories are the decrease in American whiskey exports due to retaliation for Trump's tariffs, support for American-made vodka, and the rapid growth of organic vodkas. Detailed information is presented in the next section.

AMERICAN WHISKEY EXPORTS TO DECREASE

  • American whiskey exports will continue to decrease in the future because of retaliation for President Trump's tariffs.
  • According to the Distilled Spirits Council, American whiskey exports had been doing well, with exports to the EU growing at 33% in the first half of 2018, but this changed and the numbers reduced in the last half on 2018 after China, the European Union (EU), Mexico, and Canada, imposed high tariffs, some as high as 25% on whiskey, in response to Trump’s aluminium and steel import tariffs. Exports fell 8.7% compared to the same time in 2017. Exports to the EU in the first quarter of 2018 were $363 million between January and June, but declined to $312 million between July and November.
  • According to the president and CEO of Distilled Spirits Council, Chris Swonger, the American whiskey export decline trend will continue for the foreseeable future until the Trump administration and importers in Canada, the EU, and Mexico resolve the tariffs.

SUPPORT FOR AMERICAN-MADE VODKA

RAPID GROWTH OF ORGANIC VODKAS

  • An offering of organic American vodka is one consumer trend that “bodes well for the future.” Economic changes have enabled vodka consumers to re-evaluate their preferences. This has impacted their choice of drink, including choosing organic vodka.

RESEARCH STRATEGY

To identify future trends in the US spirits industry for spirits categories, our first strategy was to search for pre-compiled lists with information on future trends to answer the question. This strategy was not successful as no relevant lists were found. Our second strategy was to search for trends in reputable sources, repeated in at least two sources, and which we felt were likely to still be a trend in the future. We also searched for information that pointed to the fact that these trends would continue. This strategy was successful as it led us to industry databases and publications such as the Distilled Council of the United States, Beverage Wholesaler, and Beverage Media, which provided information on trends in the spirits categories in the US and provided information that suggested that the trends would continue.
Sources
Sources

From Part 04
Quotes
  • "Retaliatory tariffs caused a sharp downturn in American whiskey exports in the last half of 2018 as distillers started feeling the pain from global trade disputes, an industry trade group said Tuesday."
Quotes
  • "On a down note, new data show the negative impact retaliatory tariffs are having on U.S. whiskey exports, which had been a bright spot for distillers, small and large alike. “For the first time, data can demonstrate the negative impact of retaliatory tariffs on what had been a booming export growth story,” said Council Senior Vice President for International Affairs Christine LoCascio."
  • "While it was another record year for total U.S. spirits exports, reaching almost $1.7 billion through November, the retaliatory tariffs had a measurable impact on American whiskey exports, particularly to the EU, the largest market at $675 million (Jan-Jun: $363 million; Jul-Nov: $312 million)."
  • "We strongly encourage the Administration and our trading partners in the EU, Canada and Mexico to quickly resolve these harmful tariffs that are undercutting economic growth in this sector and adversely affecting American workers."
Quotes
  • "American whiskey exports around the world climbed 28 percent in the first half of 2018 as the category continues to gain global popularity. But exports dropped 11 percent in the last six months of the year after Canada, Mexico, China and the European Union (EU) imposed whiskey tariffs as high as 25 percent in response to President Donald Trump’s steel and aluminum import tariffs."
Quotes
  • "The buy-American impulse is helping sales of domestic vodkas, coupled with the popularity of marketing terms like local and craft."
Quotes
  • "American-made vodkas are in a strong position. Vodka remains the number one spirit consumed in the U.S. and the category has shown small but consistent year on year growth. Consumers are looking for authenticity, quality and provenance, three things that American-made vodkas, especially Skyy, have been able to deliver on."
  • "For American vodkas overall, the ascent of organic offerings is just one of the numerous consumer trends that bode well for the future. "
  • "With purity always a vodka signature, it should be no surprise that organic vodkas are proliferating.Nationally distributed organic vodkas include Ocean (Hawaii); Koval (Chicago), made from local rye, milled on-site; and Prairie Vodka, made from organic Minnesota corn, in cucumber as well as neutral. "
Quotes
  • "Vodka in the US is demonstrating its versatility, which has given it the flexibility to make it more and more relevant to the Millennial consumer. This is illustrated by the number of products that have adopted ‘natural’ flavours and a more simplistic and natural story to their marketing. Organic vodkas, for instance, have begun to gain traction. These are likely to be new product drivers that will be exported in the years ahead, with positive results."
  • "Vodka demand in the US is benefiting from the escalating interest in craft cocktails due to its clean and clear properties, as well as ease-of-mixability."