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Top Brands Lose Ground In Control States, But Booming Fireball Heats Up Channel

May 19, 2014

Strong growth from flavored brown spirits, Irish whiskies and liqueurs is boosting sales in the control states, where trading-up trends continue gaining traction and boutique offerings are flourishing. “The consumers are demanding flavors,” says Bruce Stevenson, superintendent, Ohio Division for Liquor Control. “Flavored whiskey is especially popular because consumers are finding that it’s easier to drink than regular whiskey and it’s becoming a great entryway product into a very complex category.”

Overall, spirits in the 17 control states and Montgomery County, Maryland experienced 3.9% growth in dollar sales last year, outpacing a 1.1% volume increase to approximately 46.6 million nine-liter cases, according to IMPACT DATABANK. The control states spirits volume and dollar sales increases were both less than the overall market’s respective gains of 1.3% and 4.4%. Increases in both dollar sales and volume in control states were also down from 2012, when the industry experienced respective gains of 6.4% and 3.6%.

Nevertheless, trading-up trends appear promising for the industry. Spirits dollar sales growth trends in control states in 2013 continued to outpace the estimated U.S. GDP of 1.6%, with many leading control states implementing significant improvements for their internal business operations, retail stores and e-commerce platforms. Shoppers in Pennsylvania, for example, are trading up as ultra-premium spirits increased about 13% in dollar sales in 2013. “Shoppers appear to be willing to spend more on higher quality items,” says Joseph Brion, chairman, Pennsylvania Liquor Control Board, noting that strong growth from Bourbon, American whiskies, Tequila and mezcal are helping drive the ultra-premium segment. However, the top-five selling spirits brands in control states—respectively, Smirnoff (-3.2%), Bacardi (-1.7%), Captain Morgan (-3.2%), Burnett’s (-2.1%) and Absolut (-3.5%)—are all white spirits, and all decreased last year.

One major brand that was surely on the rise in 2013 was Sazerac Co.’s Fireball. Although the Canadian whisky-infused cinnamon liqueur wasn’t among the top 50 spirits brands in control states in 2012, it jumped to 17th in 2013. Fireball’s surge has continued in 2014. Through the first three months of the year, the Sazerac brand’s sales more than doubled. Fireball is now the seventh-ranked spirits brand in control states, and it’s dominating the segment’s growth so far this year. Overall control state spirits volume was up by 1.7% for the first three months of 2014. However, if Fireball is removed from the equation, the increase falls to just 0.7%. By year-end, Fireball will likely be among control states’ top five spirits brands. If that happens, the upstart Canadian whisky-infused liqueur entry will almost certainly have replaced one of the U.S. spirits market’s iconic brands in the leaders’ ranks.

For an in-depth report on the control states channel, see the May 15 issue of Impact.

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