American whiskey boosts US spirits once again

Spirits have experienced another year of “steady growth” in the US, driven by “booming” demand for American whiskey and Bourbon, new data released by Discus shows.

Sales of American whiskey grew 7.8% in 2015, boosting the overall performance of the US spirits industry

In its annual meeting with the media and Wall Street analysts, trade body the Distilled Spirits Council of the United States (Discus) said supplier sales increased 4.1% in 2015, with total volumes up 2.3%.

Discus estimates that total retail sales of distilled spirits in the US market reached almost US$72 billion in 2015, supporting 1.4 million jobs in the hospitality industry.

This signalled the sixth consecutive year that spirits increased its market share more than beer.

Total market share gains by spirits compared to beer since 2000 totaled 6.7 points, with each point of market share equaling approximately US$680m in supplier sales for a total of US$4.6bn.

“The positive performance of distilled spirits is the result of many factors including market modernisation, product innovation, consumer premiumisation and hospitality tax restraint,” said Kraig R. Naasz, new CEO and president of Discus.

The council attributed another year of success in the US spirits industry to “strong growth” in the whisky sector – encompassing all subcategories – which saw revenues rise 8%.

In particular, sales of American whiskey grew 7.8% (adding US$210m), with demand booming both in the domestic market and abroad. Almost all price points in the category saw volume and value sales increases.

Agricultural boost

Discus claims that the positive performance of American whiskey has benefited US farmers. US Department of Treasury’s Tax and Trade Bureau figures show that corn used in spirits production increased 176% from 2010 to 2014, while rye increased 64%.

“Against the backdrop of an otherwise sluggish farm economy, it’s positive to note that American whiskey sales are benefiting America’s farmers and the agricultural sector,” added Naasz.

Irish whiskey, single malt Scotch whisky and Cognac recorded double-digit growth, with total revenues of more than US$2.6bn. Tequila revenues grew 9.4% to US$2.3bn and while vodka’s growth remained flat at +0.5%, the category reached sales of US$5.8bn.

Export volumes increased 3.4% in 2015, however reported revenue from exports remained “flat” at US$1.56bn due to the impact of a strong dollar in key foreign markets.

The US generated the most significant revenues from the UK in terms of spirits exports, reporting sales of US$226.1m.

Other lucrative export markets for the industry included Canada (US$194.6m), Germany (US$128.m), Australia (US$126.1m), Japan (US$108.3m) and France (US$84.1m).

Discus said that in addition to the success of American whiskey and Bourbon, a number of other factors drove US spirits growth in 2015.

The council cites the influence of millennials in driving “innovation and premiumisation”, hospitality tax restraints, modernised alcohol laws, “craft” products, provenance-focused products, micro-distilleries and the continued growth of cocktail culture enhanced the industry.