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Retailers Toast Bourbon’s Premiumization Drive

October 9, 2017

Bourbon continues to reign as one of the hottest spirits categories in the U.S., with sales hitting 20 million cases for the first time in 30 years in 2016, according to Impact Databank. Much of the boom has been concentrated at the high-end, with super-premium Bourbons far outpacing the overall market. Retailers, who have been expanding their selections to keep pace, report an unprecedented push toward premiumization within the category.

“People are definitely willing to move up in price,” confirms Mat Dinsmore, general manager at Fort Collins, Colorado-based retailer Wilbur’s Total Beverage, noting that strong demand for upscale specialty labels like Buffalo Trace’s Antique Collection and Heaven Hill’s Parker’s Heritage series. “They’re no longer hesitant to spend $100 or more on a bottle of Bourbon.”

Last year, the leading $25-and-over Bourbon brands in the U.S.—including Maker’s Mark, Bulleit, Woodford Reserve, Knob Creek, Gentleman Jack, Buffalo Trace, Basil Hayden’s and Maker’s 46—grew by 15% to 4.1 million cases last year, compared with a 5.5% increase for the total category. Maker’s Mark now sells nearly 1.5 million cases in the U.S., with the Maker’s 46 offshoot selling an additional 94,000 cases.

“If we could get more Buffalo Trace, we could sell more,” says David Jabour, president of Austin, Texas-based Twin Liquors, which operates more than 80 stores across Texas. “It clearly has more opportunity to grow. Supply just needs to catch up with demand.” Despite its relative scarcity, Buffalo Trace was up 20% to 165,000 cases last year, according to Impact Databank.

Retailers continue to diversify their Bourbon offerings, as consumers graduate from mainstream brands into the high-end craft segment. “When it comes to traditional Bourbon and craft brands, we want to have as many as possible available and see how everything plays out. In terms of shelf space, we’re now about 50-50 craft versus mainstream,” says Brett Pontoni, spirits buyer for Chicago-based retail giant Binny’s Beverage Depot, which operates 35 stores. “In terms of sales, it’s still 80% traditional brands. But a year ago, that ratio was 90% traditional and 10% craft, so the increase in craft has been dramatic.”

Still, as the upscale Bourbon space grows more crowded, some retailers caution that producers must ramp up on quality and innovation to stand out. “At $50 to $75, you have to step it up,” explains Gary Fisch, founder and owner of four-unit New Jersey retailer Gary’s Wine & Marketplace. “We’ve tasted through some spectacular Bourbons that are more expensive, and whether it’s a mashbill that’s slightly different, or there’s a little more aging done, the producers aren’t resting on their laurels. They’re not just pumping more Bourbon into the market. They know that in order to continue growing, they have to be better than the competition.” —Christina Jelski

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