Embed Size (px)
Citation preview
Beer49%
Spirits34%
Wine17%
Beer55%
Spirits29%
Wine16%
Spirits Continues to Gain U.S. Market Share at the Expense of Beer
2
Supplier $ Share (Billions) Beverage Alcohol Market Share
Servings (Billions)(1) Growth in Servings
$25.6 $26.3 $27.5 $28.5 $28.8 $28.6 $29.2
$16.0 $17.2 $18.2 $18.7 $18.7 $19.2 $19.9
$8.3 $8.6
$9.2 $9.4 $9.5 $9.8 $10.2 $49.9 $52.2
$54.9 $56.6 $57.0 $57.6 $59.2
2005 2006 2007 2008 2009 2010 2011
Beer Spirits Wine
66.2 66.9 67.8 68.2 66.9 65.7 65.1 63.1
34.9 36.2 37.5 38.0 38.5 39.1 40.2 42.6
17.0 17.6 18.3 18.4 18.5 18.7 19.2 20.3
118.2 120.8 123.7 124.5 123.9 123.6 124.6 126.0
2005 2006 2007 2008 2009 2010 2011 2015P
Beer Spirits Wine
2011 – 2015P
CAGR: 0.3%
Source: Beer Marketer’s Insights, DISCUS, IMPACT Spirits Databank. (1) Serving size: Beer – 12 oz; Spirits – 1.5 oz; Wine – 5 oz.
2000 2011
1.0%1.3%
0.5%
(1.8%) (1.8%)
(0.9%)
(3.1%)
3.6% 3.6%
1.1% 1.4%1.7%
2.7%
6.1%
4.0% 3.8%
0.4% 0.7%1.3%
2.5%
5.7%
2006 2007 2008 2009 2010 2011 2015P
Beer Spirits Wine
2005 – 2011 Absolute Growth: Beer:
Spirits:
Wine:
(1.7%)
15.0%
13.1%
Wine:
Spirits:
Beer:
3.4%
3.7%
2.2%
2005 – 2011 CAGRs
0
20
40
60
80
2005 2006 2007 2008 2009 2010 2011 2012P
Vodka Whiskey Rum Cordials
Tequila Brandy Gin Cocktails
$97
$133
$108 $118
$160
$140
$96
$60
$1.60
$4.25
$2.60 $1.28
($0.11)
$9.17
$0.88 $1.38
Vodka Whiskey Rum Cordials & Liqueurs
Tequila Brandy Gin Cocktails & Mixed Drinks
2011 Average FOB $ Increase from 2010
Vodka and Whiskey are Large and Driving Spirits Industry Growth
3
Vodka34%
Whiskey22%
Rum13%
Cordials & Liqueurs
10%
Tequila6%
Brandy6%
Gin5%
Cocktails & Mixed Drinks
4%
172179
185 187 190 193 198 203
3.0%
3.6% 3.6%
1.1% 1.4%1.7%
2.7%
2.2%
2005 2006 2007 2008 2009 2010 2011 2012P
9 Liter Cases Consumed Growth %
(cases in millions)
(cases in millions)
69
45
26 21 13 11 10 8
Source: IMPACT Spirits Databank. (1) Serving size: Beer – 12 oz; Spirits – 1.5 oz; Wine – 5 oz.
+5.2%
+0.5%
+2.6% (0.1%) +4.7% (0.3%) (0.6%) +2.3%
2005 - 2012P
CAGR:
Spirits Industry Market Size Varieties of Spirits
Growth by Spirit Variety Average FOB by Spirit (2011 vs. 2010)
Vodka28%
Whiskey25%
Rum13%
Cordials & Liqueurs
12%
Tequila5%
Brandy7%
Gin6%
Cocktails & Mixed Drinks
4%
2005 2012P
Vodka has grown at a faster rater since 2005 than any other
spirit (+5.2%); 4 of the top 5 brands are gaining size
The Vodka market is approximately 60% domestic and 40%
imported
– Imported Vodka is pushing industry growth with a CAGR
approaching 10% since 2005; Domestic Vodka is also
growing strong at a 3% CAGR
– 3 of top 5 Vodkas are imported, with Svedka growing over
10%
Beam’s Pinnacle will enter the top 10 in 2012 and is growing
nearly 50%
Diageo’s Smirnoff is the industry’s dominant brand, >2x the
size of the 2nd largest Vodka brand
Vodka is the Fastest Growing Spirit (’05 – ’12P CAGR: +5.2%)
4
(9L eqv. cases in millions)
35 36 38 39 40 41 42 43
13 15 17 19
20 22 24 26
48.4 51.3
55.0 57.0 60.0
63.0 66.2
69.0
4.1%
6.0%
7.2%
3.6%
5.3% 5.0% 5.1%4.2%
2005 2006 2007 2008 2009 2010 2011 2012P
Domestic Imported Growth %
Overview Vodka Market Size (Consumption)
Top Producers Top Brands
Source: IMPACT Spirits Databank and IRI 52 Weeks Ending December 2, 2012.
Diageo25%
Pernod Ricard
9%
Sazerac8%
Beam6%
Bacardi6%
Campari6%
Constellation5%
Nolet Spirits4%
Other31%
Imported:
Domestic:
9.9%
3.0%
2005 – 2012P CAGRs
Non-Flavored96%
Flavored4%
Non-Flavored95%
Flavored5%
Non-Flavored78%
Flavored22%
Non-Flavored70%
Flavored30%
Non-Flavored77%
Flavored23%
Non-Flavored91%
Flavored9%
Non-Flavored74%
Flavored26%
Non-Flavored55%
Flavored45%
Vodka SKU-Magedon — Growth Driven by Flavor Expansion
5
SKU Expansion Over Time Select Vodka Brands Flavor SKU-ing Over Time
Citrus13%
Raspberry12%
Orange10%
Cherry9%
Vanilla7%
Grape5%
Strawberry3%
Apple3%
Other38%
Citrus52%
Raspberry9%
Orange30%
Vanilla6%
Other3%
2000
1.9 Million
9L Cases
7.2 Million
9L Cases
2010
Flavors: 29
2010 Depletions: 9,550
Flavors: 18
2010 Depletions: 4,630
Flavors: 11
2010 Depletions: 2,700
Flavors: 20
2010 Depletions: 1,800
2000 2010 (9L Cases in Thousands)
Source: IMPACT Spirits Databank.
20 21 21 21 21 21 22 22
24 24 24 24 24 24 24 24
43.9 44.3 44.6 44.5 44.7 44.9 45.2 45.4
0.0%
0.9%0.7%
(0.2%)
0.4% 0.4%0.7%
0.4%
2005 2006 2007 2008 2009 2010 2011 2012P
Domestic Imported Growth %
Whiskey is Large and Steadily Growing (’05 – ’12P CAGR: +0.5%)
6
Whiskey has grown at a CAGR of 0.5% since 2005; the top 3
brands are growing above the Whiskey average
The Whiskey market is approximately 50% domestic and 50%
imported
– Domestic Whiskey is growing at a 2005 – 2012P CAGR of
1.0% whereas Imported Whiskey is flat
– 3 of top 5 Whiskies are domestic, with the top 3 brands
all growing above industry growth
Diageo is the clear category leader with 2 of the top 5 brands
and 24% market share
2005 – 2012P CAGR: 0.5%
Source: IMPACT Spirits Databank and IRI 52 Weeks Ending December 2, 2012. (1) Domestic Whiskey includes Tennessee and Kentucky Whiskies, Bourbons, and Blends. Imported Whiskey includes Scotch, Canadian, Irish, Japanese, and other imported Whiskies.
Overview Whiskey Market Size(1) (Consumption)
Top Producers Top Brands
(9L eqv. cases in millions)
Diageo26%
Brown Forman
21%
Beam18%
Sazerac7%
Pernod Ricard
7%
Heaven Hill4%
Constellation3%
Campari3%
Other11%
Imported:
Domestic:
0.0%
1.0%
2005 – 2012P CAGRs
Rank Brand Distiller / Importer
2011
Depletions
(Thousands)
2010 - 2011
Growth
1 Brown-Forman 4,860 2.0%
2 Diageo 4,185 1.0%
3 Beam 3,305 2.5%
4 Diageo 2,390 (1.0%)
5 Constellation 1,780 (0.6%)
Flavored Whiskies Seeing Hyper-Growth and an Explosion of SKUs
7
Overview IRI Growth of Select Flavored Brands
Whiskey brands are SKU-ing into new flavors and un-aged to give
current drinkers expanded offerings and new consumers a more
mild Whiskey entry
Both line extensions (Jim Beam Red Stag, Jack Daniels Tennessee
Honey, etc.) as well as upstart brands (Ole Smoky Tennessee
Moonshine, Cabin Fever Maple Honey, etc.)
– Typically a combination of flagship Whiskey mixed with
flavored liqueurs
– Line extensions generally priced a few dollars premium to
the original product
– Un-aged Whiskey, also known as White Whiskey or
Moonshine, easy to flavor, as well as attracting the Whiskey
enthusiast, looking for a higher proof Whiskey
$10.5
$2.3
$0.9
$7.9
$1.7
$0.5
Jim Beam Red Stag
Evan Williams Honey
Evan Williams Cinnamon
($ in millions)
Source: IRI 52 Weeks ending December 2, 2012.
Brown-
Forman
70 Proof
Campari
71 Proof
Diageo
71 Proof
Heaven
Hill
70 Proof
Diageo
80 Proof
Beam
80 Proof
Heaven
Hill
70 Proof
Diageo
71 Proof
Ole
Smoky
100 Proof
Brown-
Forman
80 Proof
Beam
80 Proof
Sazerac
125 Proof
New Investment Anchoring Whiskey Brands with a Sense of Place for Authenticity
8
Jim Beam American Stillhouse (Beam) Wild Turkey (Campari)
$30 million Jim Beam
Visitor Center and
Distillery opened
October 2012 in
Clermont, Kentucky
Offers visitors first ever
tour of adjacent
production facility
(expected to attract
200,000+ visitors
yearly)
Evan Williams Bourbon Experience (Heaven Hill) Independent Brand Visitor Centers
$10 million Evan Williams Visitor
Center expected to open in
September 2013 in downtown
Louisville, Kentucky
Artisanal distillery, immersive
tourism experience, and retail
location located in Heaven Hill’s
‘Bourbon Row’ Main Street
location
$4 million new Wild
Turkey Visitor Center
expected to open in
April 2013 in
Lawrenceburg, Kentucky
Adjacent $40 million
bottling and packaging
operation also under
construction (125,000
sq. ft.)
Visitor Center 8x bigger
than previous facility
Ole Smoky Tennessee Moonshine
opened a retail / production facility in
Gatlinburg, Tennessee in July 2010
Michter’s Distillery opened a distillery,
bottling operation, and Visitor Center
($8 million) in Louisville, Kentucky in
July 2011
Four Roses Distillery completed 5,000
sq. ft. Visitor Center expansion ($2.4
million) in Lawrenceburg, Kentucky in
September 2012
Also will house new state-of-the-art Global Innovation
Center
Majority of Growth Coming from 6 of the Top 10 Players
9
Industry Growth by Supplier Largest Growing Spirits Brands in 2012
Source: IRI 52 Weeks Ending December 2, 2012.
Diageo20%
Beam10%
Sazerac 9%
Brown Forman
7%
Pernod Ricard
6%
Constellation Brands
4%
Other44%
Over 55% of the Industry’s dollar growth has been driven
by the 6 of the Top 10 largest suppliers
Global Spirits Companies Acquiring Market Makers, Typically in Emerging Markets
10
August 2012
Acquired
Pending
Acquired
September 2012
Acquired February 2011
Acquired
June 2011
Acquired
March 2012
Acquired
(Sichuan
Swelfun)
December 2011
Acquired
August 2011
Acquired
January 2013
Acquired
Within the U.S., Beam is the Intriguing M&A Target, Especially for Pernod & Bacardi
11
Pernod Ricard Current Bacardi Current
Pernod Ricard Pro Forma with Beam Bacardi Pro Forma with Beam
26%
10%
8%
8%
7%
6%
3%
3%
3%
2%
Diageo
Beam
Pernod Ricard
Bacardi
Brown-Forman
Sazerac
Campari
Heaven Hill
Constellation
William Grant & Sons
26%
10%
8%
8%
7%
6%
3%
3%
3%
2%
Diageo
Beam
Pernod Ricard
Bacardi
Brown-Forman
Sazerac
Campari
Heaven Hill
Constellation
William Grant & Sons
26%
19%
8%
7%
6%
3%
3%
3%
2%
2%
Diageo
Pernod Ricard
Bacardi
Brown-Forman
Sazerac
Campari
Heaven Hill
Constellation
William Grant & Sons
Moet Hennessey
26%
18%
8%
7%
6%
3%
3%
3%
2%
2%
Diageo
Bacardi
Pernod Ricard
Brown-Forman
Sazerac
Campari
Heaven Hill
Constellation
William Grant & Sons
Moet Hennessey
Source: IRI 52 Weeks ending December 2, 2012.
Vodka34%
Whiskey24%
Gin14%
Cordials13%
Rum12%
Cocktails3%
Other2%
Rum50%
Vodka22%
Whiskey9%
Gin7%
Cordials6%
Tequila4%
Other3%
Whiskey39%
Vodka 24%
Cordials10%
Rum7%
Gin7%
Tequila6%
Cocktails5%
Other2%
Whiskey33%
Rum24%
Vodka 19%
Tequila7%
Cordials7%
Cocktails5%
Gin4%
Other1%
(Market Share % / Portfolio Overview)
(Market Share % / Portfolio Overview)
(Market Share % / Portfolio Overview)
(Market Share % / Portfolio Overview)
At the Same Time, Major Wineries Increasingly See Spirits as an Adjacency
Company
(Producer)
(Distributor)
(Distributor)
Select Brands Commentary
Continuing spirits legacy of E. & J. Brandy, Gallo
launched New Amsterdam Gin in 2007 and New
Amsterdam Vodka in 2011
Launched Family Camarena Tequila in 2010
Launched Shellback Caribbean Rum in 2012
(Producer)
Acquired CRUZ Tequila in 2012 and developed
Trinchero Family Estates Spirits division
Signed agreement with Tres Agaves Tequila in 2012 to
import, sell, and market Tequila and non-alcoholic
mixes
2011 core initiative to build Spirits division with focus
on acquiring small amounts of equity in distributed
Spirits brands
– Sold equity stake in Skinnygirl Margarita to Beam
in 2011
Formed separate Spirits division in 2009
Launched 2011 joint venture with Adult Beverage
Company (Chocolate Milk, Limeade) with equity stake
12
(Producer)
Launched Cupcake Vodka in 2011 and flipflop Rum and
Big House Bourbon in 2012, extending successful Wine
brands into Spirits
Housed under “Underdog Wine & Spirits,” The Wine
Group’s Millennial-focused division
(Realized)
13
Demeter Group Recent Transactions (December 2010 – 2012)
Acquired by
Acquired by
Acquired by
Acquired by
Acquired by
Acquired by
Acquired by
Acquired by
Has Acquired
Acquired by
Joint Venture With
Acquired by
Acquired by
Private Placement
Transactions Marketed
to Fewer Than 5
Potential Buyers
$850 million
Completed Transaction Value
15
Completed
Transactions
71% 36%
Transactions
Marketed to
1 Buyer
67%
Completed Transactions
in Beverage Alcohol
Acquired by
14
Demeter Group Recent Beverage Alcohol Transactions
July 2012
Acquired By:
Constellation Brands
May 2011
Acquired By:
Crimson Wine Group
March 2011
Acquired By:
Beam Global Spirits & Wine
December 2010
Acquired By:
Fiji Water
September 2012
Acquired By:
E. & J. Gallo Winery
August 2012
Acquired By:
E. & J. Gallo Winery
June 2012
Acquired By:
Accolade Wines
June 2012
Acquired By:
E. & J. Gallo Winery
May 2012
Acquired By:
Precept Wines
August 2011
Acquired By:
Fiji Water
15
Jeff Menashe
Chief Executive Officer
220 Halleck Street, Suite 110
San Francisco, CA 94129
(415) 632-4400
www.demetergroup.net
