Premium Spirits Will Drive Industry Growth Through 2020

November 13, 2017
Impact Databank
The U.S. distilled spirits market is expected to continue its long-term growth streak in 2017 with a solid 2.5% gain to a new record high of 228 million nine-liter cases, marking its 22nd consecutive annual increase. The industry is projected to expand by another 10 million cases by the end of the decade, according to the 2017 edition of The U.S. Spirits Market: Shanken’s IMPACT Databank Review & Forecast.

The spirits category has outperformed both wine and beer for five consecutive years, and will continue to do so for the foreseeable future, according to the 300-page report. Moreover, spirits are on pace to surpass beer in consumer-dollar terms by 2020.

The high end continues to fuel progress, as super-premium spirits ($25 a 750-ml. and above) including Bourbon, single malt Scotch, Irish whiskey, Tequila, Cognac and flavored whiskies have all posted impressive gains. Cognac and Irish whiskey achieved double-digit depletions increases each of the past three years, and are projected to reach 7 million cases and 5 million cases, respectively, by 2020.

Luxury brand Hennessy Cognac is projected to crest 4 million cases for the first time ever in 2017, and is also expected to enter the U.S. market’s top 10 ranking in volume terms. Hennessy also will continue to lead all spirits brands in retail dollar terms, propelling Moët Hennessy USA to surpass the $2 billion mark by year-end. Among other super-premium brands, Pernod Ricard’s Jameson Irish whiskey will easily surpass 3 million cases this year, while Diageo’s Crown Royal Vanilla flavored whisky is expected to reach 500,000 cases after less than two years on the market.

In the premium spirits segment ($15-$25 a 750-ml.), Fifth Generation’s Tito’s vodka is expected to top 5 million cases this year and surpass $1 billion in retail sales—one of only six brands to do so. Meanwhile, Pernod Ricard’s Malibu rum will top 2 million cases in the U.S. for the first time ever in 2017, according to Impact Databank.

High-end craft spirits are also far outpacing the market, even as the segment accounted for just 2% of total industry volume last year. After a 29% average annual gain the past five years, craft spirits are expected to surge another 20% this year to 5.5 million cases, and are projected to double their market share by 2020.