High Life

Spirits are as much of a status symbol to consumers today as designer fashions and luxury cars. Chic shoppers want upscale liquor brands to blend into cocktail-hour concoctions. They also prefer imported beers and exotic wines that make them appear sophisticated and wealthy, retailers told SN. Image is important to consumers at Dahl's Food Markets, Des Moines, Iowa, said C.J. Frazier, assistant store

Spirits are as much of a status symbol to consumers today as designer fashions and luxury cars. Chic shoppers want upscale liquor brands to blend into cocktail-hour concoctions. They also prefer imported beers and exotic wines that make them appear sophisticated and wealthy, retailers told SN.

Image is important to consumers at Dahl's Food Markets, Des Moines, Iowa, said C.J. Frazier, assistant store manager for the chain.

“Here, it's a bigger issue in wine than anything else,” he said. “We sell a lot of Franzia boxed wine, but people come in to buy bottles when they have company coming, because they're concerned about the [stigma] of serving wine in a box, which they believe isn't as classy.”

Beringer white zinfandel at $3.99 per bottle is a big seller. So is Wild Horse merlot at $17 per bottle, he added.

In Dahl's liquor section, vodka is the top seller. Brands like Iowa-produced Hawkeye vodka do well. Bacardi is the most popular rum there, and a small number of the chain's shoppers also buy gin at a variety of price points, ranging from $5.99 to $17.49 per bottle.

Whiskey is a hot-ticket item too. Black Velvet whiskey, priced at $17.99 for a 1.75-liter bottle, for instance, flies off the shelves. Imported beers, notably Heineken and Corona, are also in high demand.

“Anything imported, and more expensive items like dark ales, are big sellers,” said Frazier. “But, we're also seeing a lot of young professionals trading in the six-pack they used to drink for wine and flavored liquors. At first, I thought all the different flavors like berry vodka, citrus vodka and raspberry vodka were a bit of overkill, but they've all done really well.”

The mojito, a Mexican-inspired cocktail made with white rum, lime, club soda, simple syrup and mint, has been one of the most popular drinks in 2007, Frazier said. Dahl's embraced the trend during the summer, hanging signage in the liquor aisle directing shoppers to fresh mint in the produce department.

Frazier noted that new products tend to attract younger consumers. They enjoy taste-testing different varieties, while older generations are more attached to the brands they've consumed for years and are therefore less likely to buy something different.

TOP OF THE HOPS

Craft beers and microbrews are favorites among experimenters, said Bump Williams, general manager of the beer, wine and spirits practice at Information Resources Inc., Chicago.

“Craft beer companies are coming out with a flurry of products that are spicing up the category and keeping consumers interested year-round,” he said. “Samuel Adams is doing this. The company has an Oktoberfest beer, Winter Lager, White Ale, Summer Ale and Double Bock, each sold during a different season of the year.”

Five times annually, Boston-based Samuel Adams pulls last season's flavor from the shelf and stocks the next in line. This creates a sense of anticipation and often prompts consumers to buy in bulk so they won't have to wait a full year to enjoy their favorites, Williams added.

Some chains are seeing sales lifts from craft beer makers that offer variety packs.

“People like to try new beer, but with many craft beers priced at $10.00 for a six-pack, there's an aversion to paying such a high price for something they've never tried,” he said. “But, a variety pack with a porter, a stout, an ale and a few other varieties will usually sell well, and can be priced at $14.99 instead of $10.00.”

The microbrews/craft beers category is experiencing a major sales increase. Year-to-date figures tallied on Sept. 9 show $384.7 billion in dollar sales, representing a 17.3% increase compared with a year ago. Imports also increased 4.9% to $1.3 billion year-to-date, according to IRI.

Liquor sales were similar, with top-tier brands outselling all others. Total sales of premium gin products ranging in price from $15 to $25.99 per bottle were up 4% to $42.3 million, year-to-date. Rum priced at $16 to $24.99 increased 8.5% to $9 million, and tequila in the $20.99 to $29.99 range jumped 18.9% to $33.5 million.

Ultra-premium vodka selling at $26 a bottle or more was up 15.3% to $48.9 million, while $22 and higher-priced ultra-premium whiskey increased 6.6% to $72.5 million.

Despite stellar sales results in higher-end brands, total liquor volume slowed significantly compared to the past three years, said Williams.

“Popular, low-tier brands account for the majority of the share of the category, and this is where there was a negative volume trend,” he told SN. “But, because high-end, premium liquor showed staggering, phenomenal growth, with brands like Grey Goose, Smirnoff, Crown Royal, Bacardi and Bailey's selling very well, sales were up.”

FINE DINING

Williams attributes the increased interest in upscale brands in part to a general trend toward fine dining. He's seen a slowdown in the number of people eating out at sit-down chain restaurants. At the same time, there's standing room only at white-linen dining establishments. Drink orders at bars and taverns have also become more chichi.

“No one orders a plain martini or a glass of wine anymore. They want a Grey Goose martini or a wine from Gallo Estates or Blackstone,” he said. “They use the name brand to separate themselves from the pack.”

Indeed, ultra is in, said Matt Carroll, vice president of marketing, The Patrón Spirits Co., Las Vegas. Light-colored liquor sales are surpassing others. Tequila, for instance, is the fastest-growing segment in the category, he said.

“The biggest trend in beverage alcohol right now, worldwide, is the popularity of ultra-premium white spirits — tequilas, vodkas, gins and rums,” claimed Carroll. “In the U.S., white spirits represented over 52% of all distilled spirits sales in the country last year, with tequila showing the greatest growth.”

Pricey wines are also popular. According to IRI, sales of table wine in the $15 to $19.99 range rose 21.5% to $175.8 million year-to-date, and bottles costing more than $20 were up 14% to $98.3 million.

Shoppers at Publix Super Markets, Lakeland, Fla., have taken a strong interest in wine in recent years, said Maria Brous, spokeswoman for the chain. The retailer carries a large assortment of wines from Australia, Chile, South Africa, Italy, New Zealand and the United States. Publix even has its own wine magazine, called Grape, for those interested in learning more about the category.

WINE SIGNS

“We want all of our customers, from wine connoisseurs to the beginner, to feel comfortable and confident when making wine selections,” said Brous. “We launched a campaign last year to help our shoppers make wine selections, with an in-store signage program that helps them identify the body of wine, what the wine pairs well with and what category the wine falls into.”

The chain also has a special “Wine 101” section on its website to help shoppers better understand the segment. Topics range from grape varieties and tasting suggestions to storing and serving the beverage. The site routinely features different varietals and brands, such as three of the labels highlighted in October: Marqués de Cáceres Crianza red, Ruffino chianti and Smoking Loon cabernet sauvignon.

Wine sales are also up at Giant Eagle, Pittsburgh. Olivier Kielwasser, director of beer, wine and liquor for the retailer, sees several reasons for the increase.

“Wine sales growth is currently driven by new wine introductions, deflationary trends caused by the global wine glut and continued media coverage on the positive effects of moderate wine consumption,” he said. “The liquor category is growing too, but at the expense of beer, especially with young adults.”

Liquor makers are focused on providing drink options for all occasions, said Ana Jovancicevic, spokeswoman for the Distilled Spirits Council, Washington. Spirits companies are expanding existing lines, reformulating some of their products and finding new ways to market their liquors for new uses, she said.

“Companies are making higher-end products, aged liquors and liquors that are flavored or blended in new ways,” Jovancicevic told SN. “There's now an Amaretto made with pistachios instead of almonds, and an elder-flower liqueur, which never existed before. There are even entirely new denominations, like ultra-premium or super-ultra-premium, because consumers are drinking better-quality spirits.”

Going forward, the industry will likely continue in the same direction, trying to please as many palates as possible with new products for every type of event, whether it's a simple dinner party, a night at the bar or a major celebration, she added.

BEVERAGE WATCH

Sales of private-label whole milk and bottled water rose substantially, but the gains were not as dramatic as the decline in store-brand sales of alcoholic beverages.

PRIVATE-LABEL CATEGORY $ SALES* % CHANGE VS. YEAR AGO % OF CATEGORY
Whole Milk $169.3M 18.0% 64.3%
Bottled Water $58.9M 22.1% 15.5%
Table Wine $95,796 -47.3% 0.03%
Beer $530,424 -43.1% 0.07%
Source: Information Resources Inc.
* Sales in food, drug and mass for all categories except table wine (sales in food and drug only) for the four weeks ending Sept. 9

Drinking Up

Consumers are indulging in higher-priced spirits, as is evidenced by the dramatic jump in ultra-premium rum, tequila and vodka sales.

ULTRA-PREMIUM CATEGORY DOLLAR SALES* % CHANGE VS. YEAR AGO
Rum ($25 & above) $1.2M 103.5%
Tequila ($30 & above) $28.4M 31.9%
Vodka ($26 & above) $48.9M 15.3%
Whiskey ($22 & above) $72.5M 6.6%
Gin ($26 & above) $1.4M -2.9%
*Year-to-date sales ending Sept. 9 in U.S. food and drug channels.
Source: Information Resources Inc.