News & Politics
Shanken's Impact Newsletter

Shanken's Impact Newsletter January 1-15, 2020

Shanken’s Impact Newsletter, the leading source for exclusive data on the alcoholic beverage industry in the United States and internationally. Every issue features up-to-the-minute data and analysis on trends in the worldwide drinks market.

United States
M Shanken Communications
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in this issue

11 min.
tito’s, crown royal, jim beam propel spirits market’s growth

THE LEADING PLAYERS OUTPACED THE overall spirits category in the U.S. market last year, with momentum driven by the on-going expansion of Tito’s vodka as well as solid growth from a variety of other key brands. According to Impact Databank’s estimate, the U.S. spirits market totaled 237.2 million 9-liter cases in 2019, increasing 2.5% compared with the prior year. The top 25 brands advanced by an aggregate 3.1% to achieve a 45% market share, up from 43% in 2015. Over the past four years, the U.S. spirits market has expanded by more than 19 mil-lion cases, or approximately 9%. The top 25 has accounted for about two-thirds of that progress, with the market leaders tacking on over 13 million cases to their total since 2015. By comparison, brands outside the top…

1 min.
the new war on wine

AS THIS ISSUE WENT TO PRESS, THE U.S. TRADE REPRESENTATIVE was considering imposing up to 100% tariffs on all European wines as well as key spirits categories like whiskies, Cognac, and liqueurs. This comes on the heels of the existing 25% tariff on French, Spanish, and German wines and single malt Scotch whiskies that took effect in October. The rationale is to retaliate against illegal subsidies from European governments to their aircraft industries. But the wine and spirits industry is caught in the crossfire. One importer, who runs a family business that specializes in European wines, wrote me a letter. He said, “These fees would have a devastating impact on the American companies like mine that import wine into the United States, as well as other businesses that sell and serve wines…

2 min.
gallo, constellation revise their billion-dollar deal

IN APRIL OF LAST YEAR, CONSTELLATION Brands agreed to sell approximately 30 brands from its wine and spirits portfolio to E.&J. Gallo for $1.7 billion, along with related facilities located in California, New York, and Washing-ton. In recent weeks the two parties announced a scaled-back version of the deal, which will now be worth $1.1 billion, of which $250 million represents a performance-based earnout. Under the newly revised terms, made to address FTC competition concerns, the brands Cook’s California Cham-pagne, J. Roget American Champagne, and Paul Masson Grande Amber Brandy will be excluded from the trans-action. Combined, those labels sell ap-proximately 5 million cases annually, and Constellation will look to divest them elsewhere. The deal’s revised terms were still subject to FTC approval at press time. Also, separately, Constellation will now sell…

1 min.
total wine appeals to u.s. supreme court in ct casei

TOTAL WINE & MORE IS TAKING ITS BATTLE AGAINST Connecticut’s minimum pricing rules to the U.S. Supreme Court. In an appeal filed last month, Total presses its case that Connecticut’s pricing system violates federal anti-trust laws aimed at promoting competition. In Connecticut, drinks wholesalers must post prices in advance so that competing wholesalers can match them, hold those prices for a month, and may not offer volume discounts to retailers. This prevents larger businesses like Total from using their scale to the advantage of the company and consumers, according to the retailer. Connecticut’s smaller retailers counter that dis-mantling the current regulations would destroy small businesses that can’t take advantage of volume discounts, put employees out of work, and cost the state tax revenue. Last year, a three-judge panel affirmed a dismissal…

1 min.
illinois adult-use cannabis market off to rapid start

ILLINOIS’ RECREATIONAL CANNABIS MARKET ROCKETED out the gate when it launched on January 1 with $3.2 mil-lion in first-day sales. The state’s 40-some dispensaries (11 of which are in Chicago) completed over 77,000 transactions on New Year’s Day, averaging approximately $40 per sale. Inevitably, second-day sales were lower but still impressive: $2.2 million on more than 56,000 purchases. The figures dwarf Michigan’s first day of sales in December, which netted approximately $221,000 from 2,200 transactions. However, while experts do expect Illinois to be a larger market over the long term, much of the initial difference is attributable to Michigan’s “soft-launch” approach, with only three stores being open statewide on day one. The avalanche of sales in Illinois almost immediately spurred worries of a cannabis shortage in the state, as consumers queued up…

1 min.
diageo takes stake in non-alc ritual brand

DIAGEO BRAND ACCELERATOR DISTILL Ventures has acquired a minority stake in non-alcohol spirits producer Ritual Zero Proof, bringing the Chicago-based company into the fold. Ritual’s alcohol-free whiskey and gin products are created with similar taste profiles to their alcohol-based counter-parts, and are marketed as alternatives for use in classic cocktails like the Gin and Tonic or Whiskey Sour. The Ritual labels currently are available at retail in Chicago only, and online through Ritual’s website and Amazon, priced at $25 a 750-ml. Brand co-founder Marcus Sakey tells Impact he was in-spired to create Ritual during a break from drinking. Consumer knowledge and category understanding of non-alcoholic spirits is in its early stages, but the company sees acceptance growing. “It takes a little bit for people to wrap their heads around this…