CRAFT SPIRITS STAY HOT

More proof that whether it’s beer or spirits, if the word “craft” is affixed to it consumers want it. According to a GuestMetrics report, craft spirits continue to be strongly outpacing mainstream brands in the spirits category and are showing no signs of slowing. As the analyst group reported recently, the spirits category has not been immune to the continued weakness in the overall on-premise channel, with volumes down about 2.5% over the course of the first 11 months of 2O13 versus 2O12. However, within the spirits category, there is a significant difference when comparing craft versus mainstream brands: year-to-date, craft brands (which by GuestMetrics’ definition includes Tito’s Handmade Vodka) have grown volumes by 26%, while mainstream brands are down about 3.5%. In its report, GuestMetrics stated that even if Tito’s was excluded from craft, the category has consistently grown 12 to 13% over the course of 2O13 compared to the prior year. By comparison, Tito’s has grown by about 66% and appears to be continuing to pick up momentum: its volume growth was 53% in 1Q, 66% in 2Q, and during the most recent quarter accelerated even further to 72% growth (and 4Q is on pace to be even stronger). Craft spirits’ share of overall spirits volume has grown significantly over the course of the past two years, going from a share of 2.5% in 2O12 to about 3.3% in 2O13 to-date (and is about 3.7% during the most recent quarter, so is continuing to take share at a steady pace). Contrary to craft beer, where the proliferation of brands in on-premise in 2O13 is significantly outpacing the volume growth in on-premise, the growth in craft spirits appears to be in its early stages. However, when comparing the number of craft spirits brands sold in on-premise in 2O13 versus 2O12, there’s only been an increase of about 4%, suggesting the majority of the growth is due to increases in underlying consumer demand, which suggests there could be a long runway for growth for the category.