Sex and the City helped ‘rebuild’ US spirits scene

With a somewhat unconventional route into the industry, the outgoing president of Discus, Peter Cressy, has an insightful and unhindered view on all issues affecting the American spirits trade.

Peter Cressy will step down as the CEO of trade body Discus at the end of this year

*This article was first published in the June 2015 issue of The Spirits Business magazine

If it weren’t for Carrie Bradshaw, things may have turned out somewhat differently for Peter Cressy. Fortunately for him, the Sex and the City heroine’s fondness for Cosmopolitans handed the Distilled Spirits Council of the US (Discus) CEO the chance to piggyback popular culture and thrust spirits and cocktails into the limelight.

It was in 1999, around the same time Bradshaw began brunching in Manhattan and made ordering a Cosmo alongside a cheeseburger and large fries normal behaviour, that Cressy joined Discus. In hindsight, he says, the US drinks industry was on the brink of a new era, in which spirits would finally earn back some of the market share lost to wine and beer over the preceding 30 years. For him, the timing couldn’t have been more perfect.

“In 1948, long before I got here, the industry made a decision not to advertise on television,” he explains. “That was never a legal restriction, it was self-imposed, but beer on the other hand was extremely active; no-one back then could have predicted the power of television. Spirits sort of turned inward on itself and didn’t develop trends or push the cocktail. That meant that by 1999 our share of the alcoholic beverage market had slipped from a historical high in 1970 of 41% down to just 28.5%.”

Sex and the City effect

Cressy’s job to turn the dwindling market around looked bleak, until Bradshaw strutted her Manolo Blahniks onto screens. “We were fortunate to capture the whole notion of the Cosmopolitan from Sex in the City,” he adds. “We couldn’t do culture by ourselves but we were certainly able to leverage it and to create excitement around it. Being able to rebuild spirits and cocktail culture has been the most fundamental and important success we’ve had here at Discus, and we are now on a much more level playing field with beer and wine.”

Since Cressy began at Discus, the spirits industry has increased its market share by 25%, while supplier revenues have more than doubled from US$10.7 billion to over US$23bn. America’s spirits bounceback has been a remarkable achievement by the industry, Cressy and his team at Discus, but after 16 years at the Washington DC-based company’s helm and at the age of 74, Cressy is ready to retire at the end of 2015 and hand the wheel over to a new CEO. While he has undoubtedly earned some respite, Cressy admits the decision was also somewhat strategic. “It’s important for any organisation to deal with transition when things are going very well; you don’t want to leave in the middle of a crisis,” he explains. “I can’t emphasise enough what a great team we have which will be very helpful for whatever individual succeeds me as CEO.” (Since this article was first published, Kraig Naasz has been named Cressy’s successor at Discus)

Discus is remaining tight-lipped regarding the appointment process, although one thing for certain is there is no prerequisite for the incoming CEO to have experience in the drinks industry already. Cressy spent the majority of his working life in teaching and the armed forces, including 28 years’ service as a rear admiral with the US Navy and six as chancellor of the University of Massachusetts (UMAS) Dartmouth. Nevertheless, according to Cressy, his involvement with Discus “turned out to be a match made in heaven”.

He explains: “While I was at UMAS I worked a good deal on fighting underage drinking, and by the time Discus was hiring they were particularly interested in getting someone who had a track record on social responsibility. They also wanted someone who understood the dynamics of running an organisation, and at that point I had run many.”

Cressy has attributed Carrie Bradshaw’s love of the Cosmopolitan as boosting the US spirits industry in the 90s

Responsible strategy

Even today, social responsibility is a core pillar forming the backbone of Discus’ work with its members, which represent around 70% of distilled spirits in the US. A new strategic plan implemented in December last year will continue to push the group’s stance on promoting moderate and quality consumption, which Cressy says has been adopted with earnest by Discus’ members. “The industry has been serious about responsibility for decades, but I’m very pleased that during my time here there’s been a further enhancement of that; a tougher code with dedication on the parts of companies to promote moderation,” he exclaims. “Continuing this serious emphasis on social responsibility and moderation is essential.”

However, he sees education as the key to long-term success, rather than punitive tax regimes that “simply force people to drink at a different price point”. In this sense, the conversation is not just one with American consumers, but with policy officials as well, who Cressy believes are influenced all too often by “bad science”.

“As university president I have a great deal of reverence for research, which I think needs to be scientifically solid and honestly evidence-based,” he explains. “We have a duty to ourselves to push back against advocacy groups and researchers that grab onto poorly researched surveys and push them in an effort to curtail market access or advertising, or raise taxes. We have to expose that as bad science and not an appropriate way to solve those problems.”

American ‘parochialism’

The promotion of social responsibility falls hand-in-hand with Discus’ on-going battle to gain spirits cultural acceptance, levelling the playing field between the category and its wine and beer competitors. As it currently stands, just 38 states allow the sale of spirits on a Sunday either locally or state-wide, while some states, such as Minnesota, Texas and Oklahoma, allow the sale of beer and wine on a Sunday but forbid liquor. “All the policy officials need to recognise that alcohol is alcohol, whether it’s beer, wine or spirits,” says Cressy. “There’s a certain parochialism in America which is formed from the leftover messages from Prohibition. All beer, wine and spirits need to be treated equally going forward.”

Discus’ demolition of outdated laws that restrict the sale and accessibility of spirits in the US has slowly, but surely, made headway for the category. Cressy speculates that the body has also helped defeat some 355 state tax fights out of 384 over the past 14 years – a statistic that the outgoing CEO claims underlines its dedication to restoring a fairer market. “Cultural acceptance on spirits has been key to our being able to modernise and improve the marketplace and to increase access for the consumer,” he says.

The industry’s return to advertising on the nation’s screens in the noughties went some way to restoring its market share and addressing the balance between the categories. Combined with premiumisation and the continuing cocktail renaissance, spirits sales grew by 2.2% in 2014 (Discus), with the category now accounting for 35% of the American beverage alcohol market. Current trends signal its growth is only set to continue, particularly with the soaring popularity of Bourbon and Tennessee whiskey that increased by 7.4% last year. The story may have moved on from Ms. Bradshaw’s Cosmopolitans to Don Draper’s Old Fashioneds, but the premise remains: cocktail culture is central to spirits’ growth in the US.

Amid debate over its definition, craft distilling is a “state of mind”, according to Cressy

Continuing cocktail boom

“Going forward, categories will work hard to get on board with the growth of the cocktail,” Cressy predicts. “The key though will be to create something that captures the imagination of various consumer groups, demonstrates heritage and sophistication and is fun and lively. Who knows if the next big thing will be Tequila, rum or even vodka?”

What about American whiskey? The US’ flagship spirits category has been travelling on a steady incline for several years now, but is the industry nearing the brow of the hill? “Absolutely not,” Cressy predicts. “We will continue to see the premiumisation and specialisation of Bourbon and Tennessee whiskey within large companies. What we are really doing is building American whiskey to a new fundamental level of acceptance, and it will become a standard worldwide. There’s going to be a new baseline for annual consumption that will develop and it will be somewhere north of where we are today, which is substantially more than where we were 10 years ago.”

The level of quality and choice in American whiskey has developed swiftly in recent years as an effect of the craft distilling boom, another area Cressy bets will continue to flourish. As well as representing most of the large spirits groups in the US, such as Beam Suntory and Brown-Forman, Discus has 116 independent members as part of its Small Distiller Affiliate Membership. Here, the term “craft” is obsolete, and membership is granted based on a maximum output of 50,000 cases per year.

State of mind

“We think craft is a state of mind,” Cressy states. “All distillers take a lot of hands-on artisanal pride in what they are doing and that’s the essence of it. Whether you’re large or small, if you have pride in what you’re doing, if you’re focused on quality, innovation, getting it right and meeting a standard you’re setting, then that’s craft and it’s that simple.”

That said, there are several new small distilleries springing to life every day, and only so much shelf space. Will we see the industry begin to reach saturation point any time soon? “Inevitably some of the small distillers will close no question, but on the other hand there will continue to be new distilleries that do well. And some of those, most of those, will focus on their local markets to take advantage of the provenance phenomenon.”

Reading recent trends data it looks unlikely that Cressy will see the slowdown of American whiskey, “craft” distilling or even cocktail culture in his months left as CEO. With plans to move back into teaching, his association with the industry will be put far behind him, but Cressy’s legacy of helping the American spirits industry find its feet again will no doubt live on.