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Shanken's Impact Newsletter

Shanken's Impact Newsletter July 15, 2019

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.

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United States
M Shanken Communications

in this issue

12 min.
vodka hits a new high in u.s., propelled by domestic brands

JULY 15, 2019 Competition Intensifies WHILE THE U.S. VODKA CATEGORY CON-tinues to face challenges as consumer inter-est spreads to other spirits, it still posted 1.5% volume growth last year, according to Impact Databank. Among the top 25 brands, legacy labels are struggling as younger brands like Tito’s and Deep Eddy drive gains, and brands outside the top 25 have collectively shed more than a half-million cases since 2016. Vodka’s depletions reached 77.68 million cases in the U.S. in 2018, making it the larg-est spirits category in the market by a wide margin. Only eight of the top 25 vodka brands posted growth last year, with the majority of brands flat or declining. Im-ported vodkas held steady at 23.7 million cases, bolstered by rebounds from Ketel One and Grey Goose. Among the imports, Absolut…

9 min.
top players tap innovation pipeline

INNOVATION IS ONGOING ACROSS THE BEVERAGE ALCOHOL INDUSTRY, AS BOTH ESTABlished and new brands vie to stay top of mind with younger consumers. While spirits innovation is primarily focused on flavors, RTD cocktails, and upscale whiskies, new products in wine have been heavily skewed toward cans and the thriving rosé segment. In spirits, flavor innovation continues despite some fatigue among vodka flavors, with distillers keen on capturing consumer interest in fruit-forward expressions. Among the more successful recent efforts is the Ketel One Botanicals range, which launched in May 2018 with three expressions: Peach & Orange Blossom, Cucumber & Mint, and Grapefruit & Rose. Diageo has focused the Botanicals around wellness—each expression is free of added sugars or artificial sweeteners and has 73 calories per serving. “Our data suggests there’s little cannibalization…

1 min.
competitive climate

VODKA, THE LARGEST SPIRITS CATEGORY IN THE U.S., has become a battleground, with virtually all of the major players pouring significant investments into their brands in hopes of holding share amidst the hyper-competitive environment—and perhaps stoking newfound growth. For certain, in recent years vodka has been hampered by the increased popularity of brown spirits and disrupted by the meteoric rise of the Tito’s brand. But leading marketers are undeterred by the tough climate. Grey Goose, Absolut, Svedka, Skyy, New Amsterdam, Stoli, and others have all introduced ambitious new campaigns recently, intending to reinvigorate their franchises and introduce them to a new generation of consumers. Innovation is also playing a vital role. Notably, Diageo has bolstered Ketel One with lower-alcohol Botanicals offerings and added Zero Sugar Infusions to Smirnoff, Absolut has introduced a…

3 min.
supreme court strikes down tennessee residency requirement, opens door to retailer direct shipping

THE U.S. SUPREME COURT AFFIRMED, in a 7-2 ruling, a lower court’s decision on Tennessee Wine and Spirits Retailers Association v. Russell F. Thomas (formerly v. Zackary Blair), striking down a durational-residency requirement for liquor retailers in Tennessee. The majority opinion, delivered June 26 by Justice Samuel Alito, issued a strong defense of the Constitution’s Commerce Clause, claiming Tennessee’s law exists only for economic protectionism and is unconstitutional. The ruling opens the door for future challenges to state alcohol laws, notably pertaining to retailer direct shipping. The case originated in 2016, when Total Wine & More, the retail giant, and Affluere Investments, owned by Doug and Mary Ketchum, each applied for a retail liquor license in Tennessee. The Tennessee Wine and Spirits Retailers Association (TWSRA) went to the Tennessee Alcoholic Beverage…

1 min.
u.s. threatens new tariffs on scotch and irish whiskies

THE NUMBER OF IMPORTED DRINKS CATEGORIES IN THE crosshairs of U.S. tariff threats keeps proliferating. The U.S. Trade Representative recently added $4 billion in additional European Union goods to its list of potential tariff targets in its battle with the E.U. over aircraft subsidies. The new list includes Scotch and Irish whiskies, building on an earlier set of targeted products that included brandy, liqueurs, cordials, wine, and non-alcoholic beer. Industry groups on both sides of the Atlantic have spoken out against the proposed tariffs. “These tariffs, if imposed, will have numerous unintended negative consequences on U.S. jobs, U.S. consumers, and many U.S. companies that export to the E.U.,” the Distilled Spirits Council warned. “U.S. companies—from farmers to suppliers to retailers—are already being negatively impacted by the imposition of retaliatory tariffs by…

2 min.
canopy looks ahead as linton exits

WITH THE FIRING OF CANOPY GROWTH co-founder and CEO Bruce Linton, the emerging cannabis industry could be entering a new phase in its development. Linton was terminated following an annual earnings report deemed unacceptable by 38% shareholder Constellation Brands, which noted an $828 million decrease in the fair value of its Canopy investment in its first quarter ended in May. Linton provided both the guiding vision and an outspoken public face for Canopy Growth since founding the company in 2013. With his departure—at press time a search for a permanent successor was in the works—the strategy of the world’s largest cannabis firm is likely to undergo major change in the months ahead. Upping the stakes is the fact that Canopy—and every other Canadian cannabis company—is gearing up for the launch of…