Trends in Spirits

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It can be difficult, maybe impossible, to distinguish between a fad, a trend, a fashion, or some variation on the new normal. In addition, when discussing alcoholic beverages, it’s almost impossible to tell what kind of measures to use in comparing sales and popularity.

The variables would have to include volume and price. For example, according to Bloomberg News, a rare Hanyu Ichiro Malt Japanese whisky was sold at auction for $11,116. In comparison, a case of Chateau Lafitte Rothschild Vintage 1990 Christies sold at an auction for the exact same price. That’s one bottle of whiskey to 12 bottles of wine,

Trends can change every few years. In October 1982 the New York Times reported:

“The sound of the cocktail shaker is fainter these days as a change in public taste is apparently diminishing the consumption of martinis, manhattans, whiskey sours and other drinks based on liquor. In the first half of the year American liquor sales declined 6.6 percent, with virtually every category of alcoholic beverage showing significant losses. Wine sales, on the other hand, have continued to grow, although moderately.”

According to Whisky Advocate, American whiskey sales had been in steady decline since 1970. The 1982 Times report continued:

“The changing market reflects the strong consumer shift from liquor to wine. In 1980, for the first time, wine outsold liquor in the United States (475.8 million gallons to 455 million). Liquor shipments fell 3.7 percent that year in their poorest performance in a decade, while wine shipments gained 7.1 percent.”

Then, the February 4th 2014, the annual Distilled Spirits Council of the United States (DISCUS) industry review announced a major turn around. Exports of bourbon and Tennessee whiskey topped $1 billion for the first time, and represented 2/3 of total U.S. spirits exports. The top six markets for export growth (by dollar sales) were Japan, Germany, France, the UK, Spain, and Panama, while Canada remained the single largest export market by far.

DISCUS attributed this export growth to economic recovery, recognition of American quality, a drop in tariff barriers in key markets, and a continuing strong interest in classic cocktails. They also noted the Department of Agriculture’s promotion of “American spirits overseas.”

That may be only part of the story. Ipsos Trends and Futures has issued a report called “Drinking to the Future Trends in the Spirits Industry.” The report examines worldwide patterns in alcohol consumption and marketing.

Some of the factors are simply trends that may be reversed by changes in market conditions. For example, while there is growth in sales of Scotch, bourbon and other whiskies, “US consumers are increasingly concerned about the effects of excessive drinking on both health and personal appearance. As a result, ‘Skinny’ or low-calorie pre-mixed cocktails are growing rapidly in the ready to drink (RTD) category” according to Ipsos. The Skinny Girl brand grew 388% in from 2010 to 2011.

In other nations, however, premium and super-premium whiskies are growing, either because of their position as status symbols or, for those who care, affordable luxuries. In China, imported spirits are only a small fraction of the market, but they are used as a means of flaunting wealth and three premium brands, two cognacs and a blended scotch had 43% or the import market.

The development of a premium brand image has been one of the leading factors in growth.

In 2010, sales of super-premium spirits grew by 24%, premium by 21% while standard spirits grew only 12%. The Ipsos report illustrates the market for alcohol sales with Maslow’s Hierarchy of Needs. This seems like a particularly bad comparison.

They describe it as, “The gradual progression from satisfaction of basic needs to higher ones” and while there are probably some people who can confuse sipping an XO Cognac with self-actualization, it implies that Maslow’s lowest rung is occupied by food, shelter, and street wine. Either way it’s a lousy analogy for alcohol.

A second area of growth has been an increase in collecting. Wine collecting has been around for decades and prices can run into the thousand and tens of thousands for bottles that the buyer has no intention of ever tasting.

Distillers have learned some tricks from publishers, who can put out special editions with premium prices. CNN Money reported on a bottle of single malt Scotch that sold for $628,205 in January 2014. What made the bottle special was that it had been planned to be very rare.

“First, there’s the bottle. The faceted crystal decanter of The Macallan Imperiale “M” is 28 inches tall and holds 6 liters of whisky — the same volume as 3 big soda bottles. The glass crafter said forty of the hand-blown decanters were created and destroyed due to imperfections before the piece was finally completed. Named after the Roman emperor, the “Constantine” decanter took 17 craftsmen over 50 hours to complete, the French glass company said. The Constantine is one of only four bottles of its kind.

Not many people will spend that much on a bottle of whiskey – and even those that do are more likely to keep the container intact than drink it down and recycle the bottle. Even a gift package with the whiskey in a nice decanter, the sort that turns up in the stores in December, may be left untouched just because it looks special. The most collectible spirits are most likely to be flipped, held for a few years and then put up for auction in the hope of setting a new record price.

A third consideration in the growth of whiskey sales is that some people really seem to be interested. The growing popularity of whiskey has led to a growing number of people who want to understand what they’re tasting, or at least learn how to describe the flavors.

Whiskey, like wine, is a complex mixture of flavors, and while it isn’t necessary to understand all the nuances to enjoy either, there are people who want to learn, or increase their knowledge.

For this there are whiskey schools, or private lessons. At the high end, Scottish distillers may run their own schools. According to a 2007 article in Travel + Leisure, the Jura Fellowship offers a four day course for $2,000 per person.

For those in the UK with less commitment or money, The Whisky Lounge offers a one-day prorgam at different locations.

“Our Whisky Schools are designed for those with a budding passion or interest in the subject. In the opulent settings of our venues at Malmasion and Hotel du Vin around the country, customers enjoy a full day of learning about the finest and most complex spirit in the world, the objective being to come away with a better understanding and therefore better enjoyment of the good stuff.”

Other schools offer similar programs, or will send an expert to your home or office for one-on-one lessons. Finally, for New Yorkers, the 92nd St. YMWHA (Young Men’s and Young Women’s Hebrew Association) offers a one-evening program for $40. They have another program about chocolate, but that costs $45.

 

About Sam Uretsky

Sam is a trained pharmacist and freelance writer with degrees from Columbia University and the University of Michigan. He lives in Long Island, New York, with Kandi the Cocker Spaniel and Minerva, a cat.
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