(FRQRPLF 2YHUYLHZ 7UHQGV LQ WKH 8 6...Feb 03, 2020 · Consumers shopping more online; and less in stores (17 fewer Grocery store trips per year now vs 2000) Alcohol is a want (not

Economic Overview: Trends in the U.S.

Spirits Market

Distilled Spirits 2019 February 17, 2020 | New York City

David OzgoDistilled Spirits Councilof the United States

Senior Vice President, Economic and Strategic Analysis

Economic Overview

t

• Industry Growth

• Market Share

• Category Drivers

• Industry Potential

U.S. Supplier Revenues Up 5.3 Percent to $29 Billion - $1.5 Billion Gain

$0

$3

$6

$9

$12

$15

$18

$21

$24

$27

$30

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Su

pp

lier

Gro

ss

Re

ven

ue

s (

Bill

ion

s)

Supplier Gross Revenues (Billions)

$17.2 $18.2 $18.7 $18.7 $19.2$20.4

$22.2

$26.2

$21.3

$27.5$29.0

$23.2$24.1

$25.2

Source: Distilled Spirits Council Market Segmentation Database

U.S. Volume Up 3.3 Percent in 2018Up 7.6 Million to 239 Million Cases

100

120

140

160

180

200

220

240

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

9-Li

ter C

ases

(000

)

U.S. Spirits Volume (Millions)


4.1%1.7%

2.2%

1.9%2.2%

2.3%2.4%

2.6%2.2%

3.3%

2.0%2.9%

3.0%

1.4%

Spirits Market Share – RevenueEach Point Worth $770M

30%

31%

32%

33%

34%

35%

36%

37%

38%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sp

irit

s M

ark

et

Sh

are

Revenue Market Share

33.1%

34.7%35.2% 35.4%

35.9%36.2%

37.3%37.8%

33.0%

34.1%34.3%

33.1%32.9%

33.3%


Spirits Market Share – VolumeEach Point is Worth 6.6M Cases

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sp

irit

s M

ark

et

Sh

are

Volume Market Share


29.3%30.2%

30.9%31.7% 31.9% 32.5%

33.0%33.5%

34.6%33.8%

35.3%36.3%

29.5% 29.7%

Growth by Price Point(Revenue)


-100

0

100

200

300

400

500

600

700

800

Value Premium High End Premium Super Premium

Supp

lier G

ross

Rev

enue

s (M

illio

ns)

2018 Incremental Growth Compared to 2019

2018 2019

Rapid Growth in Revenue Per 9-Liters

$90

$95

$100

$105

$110

$115

$120

$125

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

U.S. Gross Supplier Revenue Per 9-Liters


Category Drivers

• American whiskey volumes up 8.4%• Bourbon/Tenness 5.5%,

• Rye 14.6%

• Tequila up 8.5%, Mezcal up 15.7%

• Single malt Scotch up 6.9%

• Pre-mixed cocktails up 6.1%

• Super premium up across all categories

Source: DISCUS MSDB, Beverage Information Group Handbooks

U.S. Historical North American Whiskeys

-

10

20

30

40

50

60

70

80

90

9-L

ite

r C

as

es

(m

illio

ns

)

Bourbon, Tennessee, Rye, Canadian & Blends

LDA 122M

LDA 233M

Copyright © 2020 The Nielsen Company. Confidential and proprietary.

INAUGURAL DISCUS CONFERENCE – February 18. 2020

Danny Brager – SVP Beverage Alcohol Practice, Nielsen

Danelle Kosmal – VP Beverage Alcohol Practice, Nielsen

ECONOMIC OVERVIEW: TRENDS IN THE U.S. SPIRITS MARKETThe Competitive View – Beer and Wine

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BEV AL SIMPLE & HARD FACTS

WHAT DIRECTION

Per capita Alcohol consumption FLAT

% of people “drinking” CONSTANT

LDA Population Growth LIMITED

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Hard Seltzers Hard Tea/Coffee Hard Kombucha

Beer

Non Alc Bev

WE’RE COMPETING WITH…

Wine

Cannabis/THCSober Curious

70% 65%

• Exclusive Spirit drinkers account for only 7% of Spirit sales;

• Non Exclusive Spirit drinkers contribute the other 93%; 68% from

Spirit drinkers who ALSO drink Beer AND Wine

Hard Ciders

% of Spirit drinkers drinking

26%

Source: Nielsen Homescan (2019)

52%/18%

Source: Nielsen CannaUse Study (2019)survey conducted online

by The Harris Poll in

partnership with Nielsen

(Jan 30 – Feb 3, 2020)

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0%

10%

20%

30%

40%

50%

60%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Share of Servings – Total Bev Al = 100%

Beer Wine Spirits

SPIRITS GAINING SHARE – AT BEER & WINE EXPENSE

Source: BW166

BEER LOSING to WINE& SPIRITS

BEER (Core) & WINELOSING to SPIRITS

It was…

It’s now…

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SPIRITS LEADING; “BEYOND” CORE BEER TURNING

“TOTAL” BEER AROUND; WINE TRAILING

*Total Store Definition – Includes Departments Bakery, Baby Care, Dairy, Deli, Frozen, General Merchandise, Grocery, Health & Beauty Care, Household Care, Meat, Pet Care, Produce….

Does NOT Include Alcohol and Tobacco Products (UPC Coded + Random Weight)

Off Premise Source: Nielsen Measured Off-Premise Outlets – Total U.S.

Beer includes ALL Flavored Malt Beverages, Hard Cider, Hard Kombucha

3.4

1.01.4

2.1

5.4

2.7

1.91.6

Rolling52 Wks -12/28/19

















Core Beer BEER (+) WINE SPIRITS TOTAL STORE

Rolling 52 Week Dollar Trends (Off Premise)+6.3%

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BLURRING/

PROMISCUITY

Categories

Channels

Competitors

DRINKING

“BETTER”

Premiumization

FLAVOR

Taste/Styles

Mixology

POP’N/GEN SHIFTSMulti-Cultural

Ageing Population

Gen Z/Millennial vs Boomers+

TODAY’S BEV AL U.S. CONSUMER DRIVEN LANDSCAPE

CONVENIENCE

How/where we buy (e-comm)

What we buy (packaging)

EXPERIENCE

Food & Entertainment ledAuthenticity & Local

Cocooning

HEALTH &

WELLNESS

Better for MeBetter for WeTransparency

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Spirits Category Strengths/Growth Drivers

• Diversity– Drink types/flavors (Mixology; Cocktail culture) – every drink can be a new one

– Broad Consumer Base – Age/Generation, Gender, Multi-Cultural

– Broad Company/Brand Growth Contribution – Big & Small/Craft; Public & Private

• Premiumization

• Attractive Price per serving/great value

• Range of Pack Sizes

• Innovation

• Marketing Support

• Strong(er) Brand Loyalty

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WHAT IS “BEER” TODAY?

Lager

FMB

CocktailKombucha

Seltzer

Cider IPACoffee

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A TALE OF TWO CATEGORIES

Source: Nielsen Off Premise All Outlet Scan; 52 weeks ending 1/25/20

3.3

Beer/FMB/Seltzer/Cider Category

TOTAL CATEGORY

% Dollar Change

CATEGORY EXCLUDING FMB/SELTZER

% Dollar Change

0.0

Category ex FMB/Hard Seltzer

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SELTZER GROWTH OFFSETS MAINSTREAM

BEER DECLINES

$(800)

$(600)

$(400)

$(200)

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

Seltzer MX Import SuperPremium

FMB exSeltzer

Cider Craft Budget Premium

Actual $ Change ($MM): Beer/FMB/Cider Segments

Seltzers contributed more growth dollars than all other growth segments combined


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TOP 10 BEER BRANDS THEN VS NOW…


2011

2019

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Did

someone

say

Seltzers?

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SELTZERS SURPASSED $1.5 BILLION IN 2019

Source: Nielsen All Outlet Scan; 52 weeks ending 1/25/20

$524

$1,653

93

171

275

0

50

100

150

200

250

300

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

4 YAG 3 YAG 2 YAG YAG 52 WE 1/25/20

Hard Seltzer Off Premise Dollar Sales ($MM)

Hard Seltzers generated $1 billion with just over 200 items on shelf!

$ M

M

# Ite

ms S

elli

ng

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NOT ALL SELTZERS ARE THE SAME

*Average EQ Case Price(288 oz)


*PRICE

ABV

TOP

FLAVOR

CALORIES

$33.61

5%

Black

Cherry

100

$31.10

5%

Black

Cherry

100

$31.30

4.2%

Passion

Fruit

88

$32.74

5%

Black

Raspberry

100

$26.07

6%

Aloha

Beaches

133

$37.55

8%

Lime

228

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Assorted packs

represent

66%of Hard Seltzer

dollars

ASSORTED PACK IS #1 PRODUCT FOR NEARLY EVERY BRAND

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Source: Nielsen Homescan Panel: 52 weeks ending 10/05/19; Harris Poll conducted in collaboration with Nielsen, January 7-9, 2019

Higher

IncomeMillennials

Age 21-44

Affluent

Neighborhoods

White College

Educated

Gender

Neutral

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SELTZER DRINKERS ARE ENGAGED DRINKERS

Source: Nielsen Homescan Premium 52 Weeks ending 9/719 vs YAG, Total US, All Outlets – Off Premise

Hard Seltzer buyers spend an

average of

$219 more on adult

beverages annually compared to the

average alcohol-buying

household.

$477

vs

$258

Hard Seltzer buyers increased their total alcohol spend by 10.2% in the latest year

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WHERE IS SELTZER SOURCING VOLUME?

Source: Nielsen Homescan; 52 weeks ending 11/30/19 vs year ago

5%

42%

53%Expansion

Shifting

New to

Bev Al

SELTZER SOURCE OF DOLLAR GAINS

53% came from Expansion(adding Seltzer purchase)

42% came from Shifting(swapping other alcohol for Seltzer)

5% came from New Alcohol buyers

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SELTZER

AND RTD

TAKING

OVER THE

SHELVES

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WINE

COCKTAILS$107MM

+45%

GROWTH ACROSS MANY FRINGE SEGMENTS

Source: Nielsen AOD Syndicated Beer, Wine, and Spirits databases [Total US All Outlet, 52Wks W/E 12/28/2019]

CANNED

WINE$111MM

+79%

RTD SPIRITS

COCKTAILS$105MM

+83%

HARD

KOMBUCHA$21MM

+69%

“BEER”

COCKTAILS$175.4MM

+207.4%

HARD

COFFEE$2MM

+???%

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BEER, WINE, or SPIRITS??? How much does the base Liquid matter compared to other factors?

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PROGRESSIVE ADULT BEVERAGES

Source: Nielsen Measured Off Premise Channels (52 weeks ending 12/28/2019)

$5.9 BILLION

+30% vs YAG

What’s included:

• Flavored Malt Beverages inclusive of

Hard Seltzers, Teas, Ciders, Kombuchas

• RTD Prepared Cocktails (Spirits)

• Wine Tetra Packs, Cans, Small Sizes in

Glass (inclusive of Wine Spritzers and

Cocktails)

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WINE MARKET VOLUME GROWTH STALLED (at best)

Source: BW166

-

50

100

150

200

250

300

350

400

450

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Annual Wine 9L Cases (MM); Shipments

2019 vs 2018:Total Wine: +1.1%

Still Wine: +0.2%

DM Wine: Flat

CA: +0.8%

IMP Bulk Still: -6.3%

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• Is the U.S. Wine consumption boom over?

• Oversupply of premium wine, slower sales growth

• Millennials not embracing wine

• Millennials like White Claw better than wine

• Hard times ahead for U.S. Wine

• Wine grape growers felt the squeeze in 2019; 2020 looks no friendlier

January 2020

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WINE – GROWTH WINNERSTable Wine (100%) Double

DigitsShare Mid to High

Single DigitsShare

PRICE TIER >$11+ 39.5%

ORIGIN Oregon 1.5% New Zealand 3.5%

VARIETAL Rose’ 4.0% Sauv Blanc 6.9%

PACKAGE TYPE Cans 0.3% 3L Box 4.7%

Sparkling Wine (100%)

PRICE TIER $12-$15 21.8% $11+ 52.6%

ORIGIN/VARIETAL ProseccoRose’

22.7%8.3%

ItalyFrance

34.9%20.8%

PACKAGE TYPE Cans 0.8%

Total Wine (100%)

PACKAGE TYPE TetraCans

1.5%0.4%

Source: Nielsen Total U.S. Measured Off-Premise Outlets – 52 w/e 12-28-2019

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WINE LEADS IN BEV AL E-COMMERCE

Consumers shopping more online;

and less in stores (17 fewer Grocery

store trips per year now vs 2000)

Alcohol is a want (not need) -

impulse in-store purchases at risk

Source: Nielsen e-commerce measurement (12 Months ending Nov 2019)

Consumers must have convenient & affordable online browsing & shopping

experiences, plus convenient & affordable options for receiving what was purchased

10%

14%

75%

US online sales

+20%

+45%

+64%

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WINE DtC SHIPMENTS

• $3.2 Billion; +7.4% vs YAG

• Almost 7MM 9L cases; +4.5% vs YAG

• Average bottle price $40.70

• Of note…

• Large Wines producers (15% of the volume of all

winery DtC Shipments) growing fastest

• Shipments to CA represent 30% of total U.S.

11% of Domestic Off Premise Retail $

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Wine Age/Race Demographics – White & Older

Source: Nielsen Homescan (2019)

50

60

70

80

90

100

110

120

130

White Hispanic Af-Am Asian 21-34 35-44 45-54 55-64 65+

INDEX: Table Wine % of Dollars compared to 21+ Pop’n Imptce %

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WINE WELL BEHIND SPIRITS (& BEER) ACROSS

ON-PREMISE CHANNEL TYPES

NCGA Channel Strategy Reports – July 2019

CHANNEL TYPE WINE BEER SPIRITS

Airport Bar

Brewpub

Casino

Casual Dining

Fine Dining

Game Bar

Groceraunt

Indep. Restaurant

Neighborhood Bar

Premium Bar

Premium Nightclub

Polished Casual

Sports Bar

Stadium

What drinks do you typically drink when at (this channel)?

>20% Response

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Wine Headwinds/Tailwinds

CATEGORY HEADWINDS

• Demographic challenges

• Underdevelopment among younger generations,

and Multi-cultural consumers

• Reliance upon ‘older” generations that will drink

less as they age

• Relatively low brand loyalty

• Highest price per serving

• Narrowly confined in On Premise

• Wine hasn’t effectively enough addressed

(or messaged) aspects around…

• Local/craft marketing

• Being part of a healthy lifestyle

• Single serve options

CATEGORY TAILWINDS

• Gender equality

• Alternative Packaging diversity

• Growth in Eating AND Drinking occasions

• Winner among Bev Al e-comm (incl DtC)

• Expanding & larger location store count • Newer/different channels

• State(s) legalization into mainstream channels

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WHAT DIRECTION

Per capita Alcohol consumption FLAT

% of people “drinking” CONSTANT

LDA Population Growth LIMITED

BEER Direction

(Core) Growth DOWN

(Core) Share DOWN

“Beyond” Beer UP

WINE Direction

Growth FLATTISH

Share DOWN

SPIRITS Direction

Growth UP

Share UP

Copyright © 2020 The Nielsen Company. Confidential and proprietary.

[email protected]

[email protected]

Documents

(FRQRPLF 2YHUYLHZ 7UHQGV LQ WKH 8 6...Feb 03, 2020 · Consumers shopping more online; and less in stores (17 fewer Grocery store trips per year now vs 2000) Alcohol is a want (not