Insider research: Spirits are kicking beer's butt

Frank Coleman, vice president of the Distilled Spirits Council of the U.S. (DISCUS), passed along this article from Beer Business Daily -- and, given his affiliation, who could blame him?

Spirits Taking Us for a Ride More Than You Think

"Wine and particularly spirits have been kicking our tails. And they have done it by a systematic strategy of increasing its availability in accounts, by investing much more as a percentage of revenue than beer has in its marketing, in growing all of their price segments, in consistently and constantly coming out with new flavors, brands, and packages, and in creating a cocktail culture that appeals to a very broad base.

"That was the intuitive findings of Heineken USA (HUSA) chief Dolf van den Brink at the California Beer and Beverage Distributors annual convention yesterday.

"Dolf had sobering news for beer guys: Through HUSA's proprietary internal research, which he was good enough to share, he showed that we as an industry simply haven't kept up with wine and spirits, particularly when it comes to young Millenials, ethnics, and women. And until we rectify this disparity, it will be difficult to get beer growing no matter what the economy is doing.

"First, Dolf showed that wine and spirits' growth has come almost entirely through getting new drinkers entering the market at the 21-29 age. Over the last seven years, spirits has gained 4.1% of consumer penetration points in the 21-29 age group, coming ominously close to beer's penetration. But the really scary metric is the 2001-2011 percent change in the preferred drink:

"For Millenials, beer is down 14% and spirits is up 13%. In other words, spirits have picked up nearly all of beer's slack. It's a direct trade off.

"Beer lost drinkers in all other age groups to spirits and wine as well, but it was most pronounced in young people. Since in the past young people drink beer and then switch to wine and spirits as they get older, this doesn't bode well, since they are already starting with cocktails. And don't get me started with African Americans. Beer penetration has lost 15 points of penetration while spirits has gained 15%.

"In the general market, beer has lost 8 points while spirits has gained 6. As for gender, beer has lost 13 points for males while spirits has gained 9, and with females spirits has gained 4 points while beer has lost 4 points. This metric, as Dolf said, is very indicative of  "intent to purchase" and so is very distressing to see.

"Across occasions, beer is now only the preferred drink in one occasion: pub/dining with food. In all other occasions, wine or spirits is the preferred drink. What's the world coming to?"

There's a lot more, but you get the idea.

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