The 10 biggest spirits stories of 2015
There may not have been any mega-mergers or groundbreaking lawsuits, but 2015 was certainly an eventful year for the spirits trade.
This is our selection of the most talked-about spirits stories of 2015Palcohol was the gift that kept on giving in 2015. The powdered alcohol product continued to spark controversy across the US, leading to its preemptive ban in a number of key states.
The world’s biggest alcoholic drinks group Diageo encountered a fair amount of controversy last year, with two government probes launched in the US and Turkey. The firm’s closest rival Pernod Ricard also revealed that it had been forced to undertake a hefty write-down the value of one of its key portfolio leaders.
In the on-trade, one of the bar and cocktail industry’s most respected and well-established figures was tragically mourned.
Click through the following pages to discover our pick of the top 10 biggest spirits stories of 2015. If you think we’ve missed essential choices any out, let us know by leaving a comment below.
A time of change for Bacardi
No international drinks group has experienced more radical change in the last 12 months than Bacardi.
After the appointment of former IMG head Mike Dolan (pictured) as its permanent CEO at the start of the year, the company made an unprecedented number of acquisitions, some in completely new spirits categories.
The group made its much-anticipated foray into Bourbon with the takeover of Angel’s Envy, and entered the cachaça category after acquiring Leblon. In addition, the company added Banks Rum and a minority stake in Compass Box, an independent Scotch bottler, to its stable.
Bacardi also restructured its global advertising and marketing activities, hiring Omnicom Group to handle its entire media, publicity and digital operations. Dolan admitted to The Spirits Business that a number of key executives left the business as a direct result of these changes.
Controversial powdered alcohol approved, then banned, in US
Powdered alcohol brand Palcohol sent shock waves through the industry when it was unveiled in 2014, attracting a torrent of criticism from politicians, health lobbyists and worried parents.
The product was officially approved for sale in the US by the Tax and Trade Bureau in March 2015, but had already been pre-emptively banned in many states.
More lawmakers swiftly followed suit, prompting Palcohol’s founder, Mark Phillips, to hit out at governments for what he described as their “knee-jerk” reactions and “ignorant” speculation.
While critics argued the product would be subject to misuse, Phillips said Palcohol was no more dangerous than liquid alcohol and that banning it restricted consumer freedom and variety of choice.
Cocktail world mourns loss of Milk & Honey founder Sasha Petraske
The cocktail industry mourned the passing of one of its foremost revivalists when Milk & Honey founder Sasha Petraske was found dead at the age of 42. The New Yorker was discovered unresponsive by his wife, journalist Georgette Moger, at their Hudson home on 21 August. A cause of death has not been publicly disclosed.
In 1999, Petraske opened Milk & Honey in New York’s Lower East Side. The bar has been credited with playing a vital role in reviving the US and global cocktail scene, in particular pioneering the speakeasy trend with its unmarked location, reservations-only policy and classic cocktails.
US and Turkey investigate Diageo
Diageo came under the scrutiny of Turkish and American authorities this year over shipping and competition concerns.
In July, the US Securities and Exchange Commission asked Diageo to provide information so it could ascertain whether the company had shipped excess inventory to distributors in order to artificially elevate figures. In 2014/15, Diageo’s three “global giants” – Smirnoff, Captain Morgan and Johnnie Walker – all struggled in North America, where sales fell 1%.
One month later, Diageo confirmed that its Turkish spirits subsidiary Mey Icki was being probed by Turkish Competition Authority, otherwise known as Rekabet, but no specific details were provided.
Currency turbulence hits spirits trade
The world’s economy remained in a state of flux this year as key emerging market currencies devalued, with industry leaders in the spirits trade keenly feeling the effects.
In addition to currencies in Russia, Venezuela and Europe, the Chinese yuan experienced a shock devaluation when the People’s Bank of China fixed the “official midpoint” for the currency down 1.6%, causing it to fall to its lowest value against the US dollar since 1994.
Currency volatility not only contributed to Diageo’s stagnant sales in 2014/15, but its CEO, Ivan Menezes, also warned that the group’s operating profits for 2015/16 would plummet by approximately £150m because of “adverse exchange rate movements”.
Pernod writes down Absolut vodka
Like those of many of the world’s biggest drinks groups, Pernod Ricard’s full-year 2014/15 financial results left much to be desired. However, the French company’s report also revealed that it had been forced to substantially write down the value of its Absolut vodka brand.
The brand was hit with a €404m (£281m) impairment charge, causing Pernod Ricard’s net profits for the year to plummet 15%. Absolut had experienced another “disappointing” year in its key US market, leading to an overall 1% net sales slip.
Pernod said it had a “strong action plan” to stabilise the brand, centring on super-premium Absolut Elyx.
Brown-Forman distills overseas for first time
Brown-Forman’s purchase of Slane Castle Irish Whiskey may not be the most groundbreaking spirits acquisition in recent years, but it is significant for a variety of reasons.
The move marked not only Brown-Forman’s entry into the fast-growing Irish whiskey category, but also the group’s first ever establishment of a distillery outside of the US. The Jack Daniel’s producer bought all shares in Slane Castle and pledged US$50m (£33m) to build a new Irish whiskey distillery on a historic estate in County Meath.
Since 1701, Slane Castle and its grounds have been owned by the Conyngham family, who will play a “key part” in creating a brand-building model.
Bourbon theft ring charged
The mystery of a missing hoard of valuable Pappy Van Winkle Bourbon reached its dramatic denouement in May when Kentucky police charged nine people it alleged had formed a syndicate to pilfer bottles, and indeed entire barrels, of Bourbon.
Investigations began in 2013 when workers discovered 65 cases of Pappy Van Winkle were missing from Buffalo Trace’s warehouses. The plot thickened 18 months later when five casks of Wild Turkey Bourbon were found in the backyard of Buffalo Trace employee Gilbert Curtsinger, who was later identified as the “ring leader” of the group.
The group has been accused of stealing more than US$100,000 (£66,000) worth of whiskey. Pleas have been entered by the accused and the court case is ongoing.
Cognac exports back in growth
When the Chinese government embarked on a long-running campaign of austerity in 2012, cracking down on extravagant spending and gifting in the realm of officialdom, the international drinks industry felt the affect – and none more so than Cognac.
However, after years of sharp declines, producers have started to see their books look a little brighter. Figures released by trade body the BNIC show that between 1 August 2014 and 31 July 2015, Cognac shipments grew 5.9% by volume to 164.7m bottles, and 9.4% in value of €2.4bn.
A strong performance in North America boosted figures and flat sales in Asia were described as an “improvement” compared to the much more substantial declines in 2013/14. Nevertheless, shipments of XO expressions dropped starkly, 11.5% by volume and 4.3% in value, representing a new focus for producers.
Glenlivet overtakes Glenfiddich in sales stakes
William Grant & Sons-owned Glenfiddich has long-been the only single malt Scotch whisky to sell more than one million cases. However, last year saw the malt giant joined by rival brand The Glenlivet on the million case podium.
Not only that, but Chivas Brothers-owned The Glenlivet usurped Glenfiddich to become the world’s best-selling single malt Scotch. in 2014, the brand sold 1,065k nine-litre cases.
Both labels revealed distillery expansion plans last year to “significantly” increase capacity, meaning this year’s best-selling single malt title may change hands once again.
