Price-sensitive drinkers lift spirits

April 15, 2011

Spirits sales weather a sluggish economy, led by vodka, whiskey and rum.

The adage that alcohol sells in bad times lives on. The spirits category is high, with retail dollar sales advancing in most segments in 2010. But it doesn't mean people are partying more, or conversely drowning their financial sorrows with greater frequency.

This growth has a decidedly post-recession twist. Several Nielsen figures suggest price-sensitivity trends that F3 believes will probably continue in 2011. Here's what occurred during the 52 weeks ended December 11, 2010, in U.S. food, drug, convenience, liquor and other select channels:

  • The 50ml bottle size of spirits (excluding prepared cocktails) jumped by 16.0% to $118.8 million, on a 23.3% equivalized unit volume gain. This is significant because the small-bottle size is popular among people who aim to save money by pre-drinking before heading out to clubs for the night. Though this segment is still a relatively small contributor to total spirits dollar sales, its growth rate compares favorably with the 2.1% growth of total spirits to $8.31 billion, on a 1.9% EUV increase.
  • Tequila sales moved up by 2.4% to $577.9 million, on a 4.5% EUV gain. Yet the far pricier flavored tequilas tumbled by 24.7% to under $2 million, on a 29.9% EUV fall.
  • The vodka segment is the largest of all by spirits type. It posted a 3.9% dollar sales increase to $2.51 billion, on a 4.7% EUV rise, reports Nielsen. Look beyond the Nielsen data, however, and understand that some vodka marketers have wholly embraced consumers' savings mindset with bottles that look upscale on the shelf and campaigns that belittle buyers of costlier brands. "We've left the days of glitz and bling behind. Consumers might like their Grey Goose and Ketel One, but they might as well buy a good-tasting vodka at a lower price," spirits industry consultant Arthur Shapiro told Brandweek recently.

A closer look at bottle sizes shows increases as well in the popular 750ml size, up 3.4% to $3.36 billion, on a 2.9% EUV rise. Also up in 2010 is the value 1.75l size, which rose 2.5% to $3.44 billion, on a 2.6% EUV gain, the Nielsen data show.

Other spirits types were mostly ahead as well in the 52-week period:

  • Dollar sales of whiskey were up 1.8% to $2.24 billion, on a 0.3% EUV decline. Within this segment, the largest contributor bourbon blended and straight moved ahead 2.1% to $904.3 million, on a 1.2% EUV rise. The second largest, scotch, rose 1.2% to $703.7 million, albeit on a 3.6% EUV drop. The third largest, Canadian whiskey, dipped 1.0% to $517.3 million on a 1.6% EUV drop.
  • Dollar sales of rum advanced 1.3% to $1.05 billion on a 1.6% EUV increase.
  • Dollar sales of cordials and schnapps slipped 0.9% to $956.3 million on a 0.5% EUV dip.
  • Dollar sales of gin fell 1.8% to $358.2 million on a 2.3% EUV drop.
  • Dollar sales of prepared cocktails climbed 4.7% to $234.6 million on a 5.6% EUV increase.