High-End Spirits more Important than ever On-Premise

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Nielsen data reveals continuing decline of beer and the importance to high-end spirits on-premise.

According to Nielsen and Nielsen CGA data, the 52 weeks from October to October showed significant changes in on-premise beverage alcohol volume.

While premium segments have continued to grow faster than lower price tiers, spirits lead the way, faster than wine as well as beer. Those growth rates, according to Nielsen, have pushed the overall dollar sales of spirits in on-premise channels past beer. That makes spirits the largest adult beverage category in dollar sales in that channel.

However, growth rates have decelerated in the most recent quarter, with new forms of shopping and purchasing in part shifting some spending.

The latest report shows that in 2017, overall adult beverage sales volume on premise was down by 1.6 percent, with beer the main culprit. The result: the negation of modest growth among wine and spirits.

According to Scott Elliott, SVP at Nielsen CGA: "In this modern, experience-driven On Premise environment, premiumization is evident in all categories, however no category highlights this more than Spirits.” High End spirits now account for 55 percent of total spirits volume and 62 percent of dollar sales. With dollar growth of 3.2 percent, High End spirits brought an additional $807 million to the on-premise channel, while Ultra-Premium Spirits are growing at the fastest pace (up five percent in dollar sales). Premium and Ultra Premium whisky and tequila alone have contributed 65 percent (or $631 million) of total spirits growth. In contrast, middle- and value-priced spirits combined grew less than one percent in dollar sales, Elliott said.

Among spirits, vodka is under-performing to the overall category with scant growth, whiskeys inched up 1.2 percent and both tequila and cognac had bullish performance, with volume sales up 6.5 percent and 11 percent, respectively. Irish whiskey continues to post double-digit growth, up 10.2 percent.

Sparkling and rosés wines are showing good growth on-premise, the report shows. Elliott noted that volumes and dollar sales of sparkling wine are up by 7.5 percent and 11.5 percent, respectively. France, New Zealand and Italy are the leading import countries (by order of growth in percentage terms), while Oregon is a top performer in domestic wine, growing 18.4 percent in volume over the last year. Reds overall are outperforming whites in bars and restaurants.

While beer, malt beverages and ciders declined overall on-premise last year by 2.1 percent, imports grew, up 2.1 percent as a sub-category influenced heavily by standout performance of Mexican imports which were up five percent, and by craft beer showing stability at growth of half a percentage point.