Most of the leading international spirits companies struggled to achieve the same rate of growth (3.6%) as the wider spirits category in 2012 and consequently lost global share.
It is perhaps unreasonable to expect many of the international companies to match global growth, which has been driven primarily by local spirits categories or brands in Asia Pacific, such as Baijiu in China and other (Indian) whiskies in India. However, it does shed light on the performances and strategies of key international players.
Organic growth champions
LVMH’s strong performance was primarily due to its dominant Hennessy brand, not just in China but also in the US and smaller emerging markets. Brown-Forman also benefited from the strong performance of its key brand, Jack Daniel’s, which profited from the company broadening its geographical spread.
Of the companies that exceeded global growth due to acquisitions, only Diageo of those mentioned above grew at near global category level, registering 3.4%. This was thanks to a healthy performance in its core US market, but also a strong presence in key growth categories such as blended Scotch in Latin America and the Middle East and Africa, while it continued to be held back by key Western European markets such as Spain and the UK.
In contrast, without the acquisition of the Appleton Rum brand, Campari would have seen its volumes stagnate. While its Skyy and Wild Turkey brands performed well, these factors were countered by the weak performance of its local Brazilian brands, such as Dreher, and a trade dispute in Germany impacting its Aperol and Campari brands.
Of the companies that did not make any acquisitions, Pernod Ricard saw the strongest growth thanks to its Indian whisky brands as well as a robust performance from its Martell cognac and Jameson Irish whiskey brands. Growth, however, was moderated by the sluggish performance of a number of strategic brands such as Ricard and blended Scotch brands as the company was affected by the weak economy in Western Europe, especially in France.
The world’s third biggest international company by volume, Bacardi, continued to see sluggish growth thanks to the maturity of its portfolio. Its eponymous brand saw slight growth thanks to the emerging markets of Russia and India. However, its key growth driver was its economy Scotch brand William Lawson, which grew very strongly in France.
The weakest performance in 2012, rather surprisingly, came from William Grant. Despite its small brands, such as Hendrick’s and Sailor Jerry, growing strongly, it was held back by the weaker performance of its main Scotch brands, in particular its largest brand Grant’s. This was due to the company’s focus on value sales, which meant it saw steep declines in Grant’s two largest markets, France and the UK, as the company refused to discount as heavily as its competitors. This was particularly the case in the brand’s leading market of France.
2013 is expected to see more of the same. While Diageo could nearly double its volumes if it manages to complete the acquisition of United Spirits, it is also poised to grow well organically thanks to the continued recovery in the US and its strengthened position in emerging markets. Others will see more of the same. Organic growth for Campari should pick up now its dispute in Germany has been resolved, thus allowing its bitters brands to perform better. In contrast, the growth of LVMH, Pernod and Rémy Cointreau could be further impacted by the slowdown in China for international brands, particularly in cognac.
International Companies' Global Volume Growth in 2012
Source: Euromonitor International