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Control States See Trading Up In Key Categories, Growth For E-Commerce

May 16, 2019

The 17 control states, along with separate control jurisdictions in other states, represent just over one-quarter of the nation’s population and account for roughly 22% of distilled spirits sales, along with a significantly smaller percentage of beer and wine sales, according to the National Alcoholic Beverage Control Association (NABCA). By most accounts, business is on the rise, especially with premium products.

Depletions of distilled spirits in control states increased 2.8% in 2018 to 53.1 million nine-liter cases, according to Impact Databank. Of the top 10 control states, all but one—second-ranked Pennsylvania—registered spirits volume increases. Michigan topped the rankings with a 3.2% increase to 8.19 million cases, followed by Pennsylvania with a 1.6% decline to 7.67 million cases. Ohio’s consumption advanced 4.6% to 6.16 million cases, North Carolina registered a 5.2% increase to 5.98 million cases, and Virginia consumption gained 3.4% to 5 million cases.

Among the leading brands, Tito’s became the largest distilled spirits label in control states during the first quarter of this year. In 2018, the Texas vodka brand jumped 32.8% to 1.81 million cases in NABCA channels. Smirnoff vodka held on to the No.-1 position for calendar 2018 with a 1.3% gain to 1.93 million cases, but it appears likely that Tito’s will gain that title this year, given its extraordinary growth trajectory. Noting the recent rapid growth of Tito’s in Ohio, Jim Canepa, superintendent of the Ohio Division of Liquor Control, says momentum continues. “We really don’t see a slowdown on Tito’s,” he says, adding, “Without Tito’s, vodka as a whole would be in the red.”

The vodka category accounted for more than one-third of distilled spirits sales in control states in 2018, according to Impact Databank, but whiskies and Tequila continue to drive much of the growth. “Bourbon is up almost 8% this year, and rye is up 25%,” says John Shiffer, marketing director for the Virginia Alcoholic Beverage Control Authority. In Pennsylvania, “growth in the Tequila category last year was driven by increases in the premium (+17.1%) and ultra-premium (+15.9%) price segments, which we expect to continue in 2019,” notes Charles Mooney, executive director of the Pennsylvania Liquor Control Board (PLCB).

Meanwhile, control states are looking to up their game in e-commerce, including with delivery. “We’re going to be expanding and enhancing our e-commerce capabilities with real-time inventory,” Shiffer says, noting that the online effort is in its early stages.

In Pennsylvania, the FineWineAndGoodSpirits.com site is gaining momentum. While online is “still a very small part of our overall sales, it’s growing at a much more substantial rate than sales at our brick-and-mortar stores. From a shopping perspective, we believe the future is e-commerce, and as such we’re investing significant resources,” says Mooney. “We’re completely redesigning our site to provide a modern-looking, mobile-friendly shopping experience.” He adds that the PLCB is also hoping to introduce a same-day delivery service pilot program in the Philadelphia area this year.—Carol Ward

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