Members of the beverage alcohol industry can find comfort in the fact that the entire industry continued to grow in 2001, despite all the economic, social and political turmoil that marked last year. Overall increases in sales of distilled spirits, wine and beer were small, but given the alternatives, the performance of the three segments highlights the general health of the entire beverage alcohol industry.
According to the Adams Handbook Advance 2002, sales volume of distilled spirits rose 1.3% in 2001, reaching a total of 150 million 9-liter cases. As has been the case since the mid-1980s, much of the growth was concentrated among the non-whiskeys, though Irish whiskey (+9.6%) continued to expand off a small base. The top performers included rum (+6.4%), brandy & cognac (+4.7%), vodka (+4.0%), cordials and liqueurs (+1.3%) and prepared cocktails (+1.2%). Gin sales fell 1.1%; however, the high-margin imported gin segment rose 3.1%. For the first time in several years, sales of tequila declined, by 9.8%, with supply and pricing pressures contributing to the fall-off.
Wine consumption also maintained its upward trend, with an overall increase of 0.8% to 233 million 9 liter cases in 2001. This marked the eighth straight year that wine sales have increased in the U.S., though 2001's increase was more modest than the 2.5% jump in 2000. Table wine, which now accounts for more than 87% of the U.S. wine market, had an estimated 1.3% increase last year, with imported table wine growing at an impressive 7.4% clip (domestic table wine sales decreased slightly by 0.2%). The champagne and sparkling wine segment, which was hit hard in 2000 with a 20.4% sales decline, stabilized with a slight 0.8% decrease in sales last year.
The beer industry also posted slight volume gains in 2001, registering a 0.3% increase compared to 2000, with total U.S. beer consumption now at an estimated 2.764 billion 2.25-gallon cases. As was the case in 2000, the higher-priced imports had a significant rise, up 8.6%. And light beer, the dominant segment in the beer industry, also grew with Bud Light finally overtaking its full-caloried brother Budweiser, to become the top-selling beer in the U.S.
Accenting the health of the industry, total retail dollars from the sale of wine, beer and distilled spirits increased approximately 3.5% in 2001, from $122.8 billion in 2000 to $127.3 billion last year. Spirits retail sales increased 2.9%, from approximately $37.3 billion to more than $38.4 billion. Wine retail sales grew about 4.4% from $18.1 billion to just under $19.0 billion; and beer dollar volume rose from $67.4 billion in 2000 to almost $70 billion in 2001, up 3.7%. Although the percentage gains were smaller than last year, these retail dollar sales highlight not only the modest volume increases across all segments of the industry but also reflect consumption trends favoring higher-end products.
ITS ALL ABOUT BRANDS
Brand equity remains one of the most valuable assets a product can possess, whether it be in selling cars, clothes or beverage alcohol. A melding of resources, creativity perseverance, the right economic environment and just plain luck often go into creating and developing a successful brand, and still, it remains somewhat of a mystery Indeed, there are beverage alcohol products in every category and at every price point that, for a variety of reasons, have either fallen behind or outpaced their respective competitors. And although identifying category consumption trends is helpful, actual brand activity is what generates profits. Thus, the rationale behind "Growth Brands," an annual report which uses the latest industry results to highlight those brands that have demonstrated noteworthy growth over the past few years.
There are four categories of Growth Brands and Fast Track represents the most demanding set of criteria. Among wines and spirits, these are brands whose sales exceeded 100,000 9-liter cases in 2001 while having also demonstrated double-digit growth over each of the past four years. Domestic beers included in the Fast Track must have exceeded 9 million 2.25 gallon cases in 2001 with double-digit growth over each of the past four years. Imported beers included in the Fast Track met the same criteria, with their sales having exceeded 2 million 2.25 gallon cases in 2001. All Fast Track Brands must have at least a five-year history.
Other brands that have shown significant growth over the past few years, but have not yet been on the market for a full five years, have been designated as Rising Stars.
In addition, in order to highlight traditionally top-selling brands that have consistently grown over the past four years, we've created an Established Growth Brands category. Because many of these brands are already operating from huge sales bases, their percentage gains were often modest relative to their overall case volume, even though these brands have had substantial sales increases and are often leaders among their respective segments.
Finally there are brands that have had one or two years of sales declines since 1997, but have nevertheless bounced back over the past few years with healthy growth to have a positive impact in the marketplace. We have termed these products Comeback Brands, and they include some of the best-selling brands of wine, beer and spirits in the industry.
FAST TRACK BRANDS
The Fast Track represents the elite Growth Brand category, with only 10 spirits brand qualifying for inclusion this year, a decrease of four from last year's 14. As has been the case for the past several years, Captain Morgan Original Spiced Rum tops the Fast Track, reaching sales of 3.65 million 9-liter cases in 2001, a 14.1% jump over 2000. The brand represents an incredible success story, having more than doubled its case sales since 1997, showing a four-year annual compound growth rate (ACGR) of 24.0%.
Super- and ultra-premium vodkas have been one of the hottest segments of the beverage alcohol industry and fully half (five) of this year's Fast Track spirits brands can be numbered in that segment. Skyy Vodka, after having broken through the 1 million case mark in 2000, grew another 18.8% in 2001 to sales of just under 1.3 million 9-liter cases. A returning Fast Track brand, the superpremium domestic vodka boasts an ACGR of 21.5%. Other returning Fast Track vodkas include the high-end imports Ketel One and Belvedere. They both continued their extraordinary growth in 2001, with Ketel One hitting case sales of 880,000, a 17.3% increase, and Belvedere reaching 325,000, and registering a phenomenal 94.6% increase over 2000. Equally impressive was Grey Goose Vodka, which scored sales of 600,000 9-liter cases last year, more than doubling the previous year's figures. The ultrapremium import, which has seen added success with its orange-flavored line extension, reached the Fast Track for the first time this year, a fter having been included in the Rising Star category for several years. Another first-timer is Finlandia vodka -- another brand that has seen success with flavored line extensions -- which has seen steady double-digit sales growth since 1997. The brand reached sales of 342,000 9-liter cases in 2001, and features a four-year ACGR of 16.9%.
Bombay Sapphire, from Bacardi USA, registered sales of 550,000 9-liter cases in 2001, an impressive 20.9% jump over the previous year, and entered the Fast Track for the first time. The superpremium gin boasts a four-year ACGR of 21.8%. Another first-timer is Maker's Mark bourbon, from Allied Domecq Spirits USA. The only whiskey to be included in the Fast Track, Maker's Mark hit sales of 365,000 9-liter cases last year, a 10.6% increase over 2000.
Paul Masson Grande Amber Brandy has been a returning Fast Track brand for several years, especially since its upscale repositioning in the mid-1990s. The brand continued its double-digit percentage climb, registering a 11.7% increase last year to more than 1.5 million 9-liter cases. Finally, Remy Martin had another terrific year in 2001. The only cognac among Fast Track brands, Remy Martin reached sales of 550,000 9-liter cases last year (a 12.5% jump), and features …
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