Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Covid-19 lockdowns spur shift to high-end liquor

Covid-19 lockdowns spur shift to high-end liquor

U.S. sales of spirits such as tequila and whiskey have grown at the fastest pace in decades as more Americans drink at home

Americans are splashing out on pricier whiskey, tequila and other spirits during the pandemic, helping distillers post their strongest sales in four decades despite widespread bar closures.

People who can’t spend on concerts, travel and watching live sports are splurging instead on high-end spirits to drink at home, say alcohol executives. That drove U.S. distillers’ revenue up 7.7% to $31.2 billion last year, according to the Distilled Spirits Council—or DISCUS—a trade body. It said the figures marked the fastest growth and highest sales for at least 40 years.

“Consumers’ behavior has shifted as a result, in part, of certain things they’re unable to do or not do to the same degree,” said Kathryn Mikells, finance chief of Johnnie Walker maker Diageo PLC. “They’re spending more money on food and beverage. They’re interested in treating themselves.”

Spirits costing above $40 per 750 milliliters accounted for 40% of the U.S. spirits industry’s growth last year, compared with 34% in 2019, according to DISCUS. High-end liquors are among the most profitable spirits for alcohol makers.

The trend toward premium products is reflected across the wider consumer-goods industry as many Americans use their disposable income differently. Pricier household cleaners, candles, spaghetti and paper towels have sold strongly, according to research firm IRI. Procter & Gamble Co. recently said its quarterly sales were helped by pricey dish detergent and a $300 electric toothbrush. Retailers like Neiman Marcus Group Inc., Saks Fifth Avenue and Macy’s Inc. have flagged a similar jump in spending on things like high-end handbags and jewelry.

Liquor giant Diageo on Thursday reported a big jump in U.S. spirit sales for the second half of 2020, driven by higher-end booze. Its tequila brands Don Julio and George Clooney -founded Casamigos—both of which sell for about $50 a 750 milliliter bottle—grew North America sales by 55% and 137%, respectively.

Tequila has benefited from the shift to at-home drinking as Americans increasingly drink the spirit in more ways, including on the rocks, with soda and in cocktails beyond margaritas, Ms. Mikells said.

Unlike in Europe and other parts of the world, Americans have long drunk more at home. Even before the pandemic, four out of every five alcoholic drinks in the U.S. were bought in liquor stores, supermarkets and other “off premise” channels, rather than in bars and restaurants. That trend has accelerated.

“Things that were really firing before Covid have picked up really strongly, and tequila has benefited from that,” Ms. Mikells said.

Spirits volumes in nine-liter cases—a standard industry measure—climbed 5.3% last year, up from growth of 3.3% in 2019, according to DISCUS. Total beverage alcohol sales by volume grew 3%, indicating Americans bought more booze overall last year.

American whiskey sales rose 8.2%, cognac grew 21% and tequila and mezcal combined jumped 17%, according to the DISCUS figures, which reflect overall industry numbers.

Sales of ready-to-drink cocktails surged 39%, which executives said was driven by at-home entertaining, new product launches and a desire for convenience.

However, a continuing dispute with Europe that has seen the U.S. slap a 25% tariff on imports of single malt scotch took the shine off the spirit, with revenue dropping 2.1%.

Through the pandemic, the spirits industry accelerated its previous share gains over beer and wine. While sales of sparkling wines have done well, still wine—a popular buy at restaurants—has declined, industry tracker IWSR said. Beer also has suffered partly because of a shortage of aluminum cans, an interruption to brewing in Mexico and out-of-stock issues in addition to the closure of bars, it added.

“The gap has gotten wider in spirits’ favor,” Lawson Whiting, chief executive of Jack Daniels owner Brown-Forman Corp. , said in December.

Like Diageo, Brown-Forman said it has seen pricier products under its Woodford Reserve and Old Forester bourbon brands grow strongly.

“This has been unlike any other recession that we’ve experienced,” Mr. Whiting said. “In the U.S., ultra- and superpremium spirits are gaining share at faster rates than in the pre-Covid time periods.”

Consumers stuck at home are also buoying e-commerce alcohol sales. Online alcohol retailer Drizly in January said its annual sales grew 350% from a year earlier.

Diageo, which lists a larger percentage of pricey brands online than in stores, is marketing its spirits online as indulgent treats and gifts. The company has invested in direct-to-consumer sales through its sites for Haig Club and Malts.com and said it has also increased the availability and visibility of its brands for sale online.

Distillers have benefited from law changes in many states allowing restaurants and bars to, for the first time, offer cocktails for home delivery or click-and-collect. Ohio and Iowa last year both moved to make their cocktails-to-go measures permanent. DISCUS, which has joined forces with restaurant trade associations, is lobbying for others to do the same.

“We believe if some of these are made permanent, they can really be part of the economic recovery to help restaurants, bars, taverns and craft distilleries,” said DISCUS CEO Chris Swonger.

Whether the pricey booze trend outlasts the pandemic remains to be seen. As venues reopen, executives expect people to socialize less at home and shift their disposable income. The large volume of spirits currently sitting in pantries could dampen sales in the months to come.

Still, Pernod Ricard SA’s North America head Ann Mukherjee says the Chivas Regal whiskey owner is betting that interest in making high-end cocktails or sipping a fine cognac at the end of a night will stick.

“Consumer palates have opened up, and many have figured out how to make cocktails at home,” she said, pointing to recent strong demand for Pernod’s coffee liqueur, Kahlua, as a cocktail ingredient. “The bar for bars has become a lot higher.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Hungary Ranked Among the World’s Safest Travel Destinations for 2025
G7 Leaders Fail to Reach Consensus on Key Global Issues
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Man Convicted of Fraud After Booking Over 120 Free Flights Posing as Flight Attendant
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Beata Thunberg Rebrands as Beata Ernman Amidst Sister's Activism Controversy
Hungarian Parliament Approves Citizenship Suspension Law
Prime Minister Orbán Criticizes EU's Ukraine Accession Plans
Hungarian Delicacies Introduced to Japanese Market
Hungary's Industrial Output Rises Amid Battery Sector Slump
President Sulyok Celebrates 15 Years of Hungarian Unity Efforts
Hungary's Szeleczki Shines at World Judo Championships
Visegrád Construction Trends Diverge as Hungary Lags
Hungary Hosts National Quantum Technology Workshop
Hungarian Animation Featured at Annecy Festival
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
UK and EU Reach New Economic Agreement
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
UK and EU Reach Agreement on Gibraltar's Schengen Integration
Israeli Finance Minister Imposes Banking Penalties on Palestinians
U.S. Inflation Rises to 2.4% in May Amid Trade Tensions
Trump's Policies Prompt Decline in Chinese Student Enrollment in U.S.
Global Oceans Near Record Temperatures as CO₂ Levels Climb
Trump Announces U.S.-China Trade Deal Covering Rare Earths
Smuggled U.S. Fuel Funds Mexican Cartels Amid Crackdown
Austrian School Shooting Leaves Nine Dead in Graz
Bezos's Lavish Venice Wedding Sparks Local Protests
Europe Prepares for Historic Lunar Rover Landing
Italian Parents Seek Therapy Amid Lengthy School Holidays
British Fishing Vessel Seized by France Fined €30,000
Dutch Government Collapses Amid Migration Policy Dispute
UK Commits to 3.5% GDP Defence Spending Under NATO Pressure
Germany Moves to Expedite Migrant Deportations
US Urges UK to Raise Defence Spending to 5% of GDP
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Low Turnout Jeopardizes Italy's Citizenship Reform Referendum
Transatlantic Interest Rate Divergence Widens as Trump Pressures Powell
EU Lawmaker Calls for Broader Exemptions in Supply Chain Legislation
France's Defense Spending Plans Threatened by High National Debt
European Small-Cap Stocks Outperform U.S. Rivals Amid Growth Revival
Switzerland Proposes $26 Billion Capital Increase for UBS
×