Brief

Millennial interest in strong liquor lifts spirit sales 2.6% in 2016

Dive Brief:

  • Liquor makers sold more spirits and mixed drinks in 2016 than the year before, but global alcohol volumes of all types still fell 1.4%, according to The Wall Street Journal. Sales of hard alcohol such as whiskey, gin and tequila saw an uptick of 0.04%, and mixed drinks — including pre-mixed cocktails and flavored alcoholic beverages — grew by 1.6%. Beer and wine sales fell 1.8% and 0.08%, respectively.
  • In the U.S., spirits sales jumped 2.6% last year, more than double wine-sales growth in 2016. Overall, alcohol sales volumes in the U.S. grew by 0.1%
  • Analysts attribute liquor's growth to new consumer bases, the return of liquor advertisements on TV and the shifting tastes of millennials. 

Dive Insight:

Last year marked another period of significant growth for the spirits industry, reflecting an improving economy and changes in consumer tastes. 

Some consumption has also been driven by millennial interest in vintage cocktails such as the Old Fashioned, which has spurred retail sales of spirits like whiskey, tequila, bourbon and gin. A survey last year found millennials drink more alcohol than Generation X and baby boomers. Researchers also have noted millennials experiment more often with alcohol brands and types. 

Fifty-two percent of baby boomers, who often have more experience with alcoholic beverages than younger adults, know which alcohol brands they intend to buy from the store in advance, compared to just 24% of millennials. This lack of brand loyalty poses a lucrative opportunity for alcohol manufacturers to lure millennials to their brands with premium ingredients, unique flavor profiles and eye-catching label art. 

In order to differentiate from competitors and appeal to fickle millennial tastes, spirits makers should leverage the trends that are driving sales in other categories of the beverage space. For example, younger consumers are interested in clean labels and value-added products, which is reflected in the rise of kombucha, drinking vinegars and other probiotic-infused drinks. 

It will be interesting to see how long this heightened interest in the spirits segment lasts. Craft beer, once one of the hottest trends in the alcoholic beverage space, has seen volume growth slow. Sales in the specialty beer segment haven't increased by double-digit percentage points since 2004. Spirits makers are hoping it doesn't meet a similar fate, but it's a tall order for any business.

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Filed Under: Manufacturing Beverages