Strategy Briefing

Darker Than Before: Global Prospects for Brown Spirits

Oct 2016

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About This Report

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Brown spirits comprise whiskies, brandy and cognac, and dark rum, and play an important role within the spirits category, accounting for 27% of global spirits volumes and 34% of value sales in 2015. While there are undoubtedly still significant opportunities for growth, prospects have dimmed slightly as a number of key emerging growth markets have suffered. The briefing will look at both the opportunities and potential pitfalls ahead.

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Overview

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Spirits taking greater share of alcoholic drinks volume but not value

Spirits continue to take an increasing share of the alcoholic drinks volume terms but not in value sales as trading down in super-premium baijiu impacted sales. A key driver of volume growth and mitigating factor in value decline has been brown spirits, thanks to a mixture of rapid volume growth and premiumisation.

Premiumisation

Premiumisation has been a major factor in growth in brown spirits within individual categories. The question is, especially in emerging markets, whether once consumers enter the categories they will trade up to more premium brands within them.

Flavour innovation

Flavoured variants have spread to all categories, especially whiskies. This has attracted new consumers and reinvigorated categories, but does not guarantee success, as Diageo found with Bushmills.

Emerging market promise and pitfalls

Emerging markets offer huge potential for growth, but equally, problems can be caused if they are relied on too heavily for growth, as witnessed in China in both cognac and blended Scotch, and in the reversal of fortunes in Brazil and Russia.

Mature markets offer potential

In a number of whisky categories, especially less developed ones, such as Irish and bourbon/other US whiskies, mature markets such as North America and Western Europe offer growth. Dark rum also offers growth potential, driven by spiced variants, in particular.

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Introduction

Scope

Definitions

Key findings

Overview

Spirits taking greater share of alcohol consumption and spend

Vital role of brown spirits

Cognac suffers in China due to super-premium baijiu price cuts

Themes

Broadening the profile

Premiumisation continues

Lower priced brands needed too

Flavours: Innovation out of need

Flavours spreading across whiskies

Whisky cross-overs

Slowing emerging markets still offer opportunities

Struggling Asia: Not everywhere offers potential

Huge potential for blended Scotch in China to get better or worse

Brandy and Cognac

Brandy and cognac: Contrasting fortunes

Changing fortunes of Chinese cognac

US is the power behind cognac

Global impact of core cognac markets performance

Narrowing growth base for cognac

Asian giants increasingly dominate brandy

Brandy: Fragmented category based on local strength

Dark Rum

Dark rum: Emerging economy vs mature premium

Rum being spiced up

Premiumising dark rum via age and heritage, craft

Whiskies

Whiskies galore

Diageo’s unassailable lead in a consolidating category

India rules in other whiskies

Emerging markets lead the way in blended Scotch

Brazil: Emerging market potential and fragility for blended Scotch

Single malts – premium growth

Premiumisation drives the largest single malt Scotch market

Changing shape of blended malt Scotch

Scotch w hisky innovation

Domestic matters dominate bourbon/other US whiskies

Super-premium bourbon/other US whiskey is key category driver

Jameson’s dominance poses challenges in Irish whiskey

Struggling whisky categories

Challenges

Challenges for the future

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model

Soft drivers and the Industry Forecast Model

Growth decomposition explained

Significance and applications for growth decomposition

Key applications for Industry Forecast Models

Why buy this report?

Want to find out more about this report?

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Megatrends

Strategy Briefing

Darker Than Before: Global Prospects for Brown Spirits

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Spirits taking greater share of alcoholic drinks volume but not value

Premiumisation

Flavour innovation

Emerging market promise and pitfalls

Mature markets offer potential

Want to find out more about this report?

Table of Contents

Introduction

Scope

Definitions

Key findings

Overview

Spirits taking greater share of alcohol consumption and spend

Vital role of brown spirits

Cognac suffers in China due to super-premium baijiu price cuts

Themes

Broadening the profile

Premiumisation continues

Lower priced brands needed too

Flavours: Innovation out of need

Flavours spreading across whiskies

Whisky cross-overs

Slowing emerging markets still offer opportunities

Struggling Asia: Not everywhere offers potential

Huge potential for blended Scotch in China to get better or worse

Brandy and Cognac

Brandy and cognac: Contrasting fortunes

Changing fortunes of Chinese cognac

US is the power behind cognac

Global impact of core cognac markets performance

Narrowing growth base for cognac

Asian giants increasingly dominate brandy

Brandy: Fragmented category based on local strength

Dark Rum

Dark rum: Emerging economy vs mature premium

Rum being spiced up

Premiumising dark rum via age and heritage, craft

Whiskies

Whiskies galore

Diageo’s unassailable lead in a consolidating category

India rules in other whiskies

Emerging markets lead the way in blended Scotch

Brazil: Emerging market potential and fragility for blended Scotch

Single malts – premium growth

Premiumisation drives the largest single malt Scotch market

Changing shape of blended malt Scotch

Scotch w hisky innovation

Domestic matters dominate bourbon/other US whiskies

Super-premium bourbon/other US whiskey is key category driver

Jameson’s dominance poses challenges in Irish whiskey

Struggling whisky categories

Challenges

Challenges for the future

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model

Soft drivers and the Industry Forecast Model

Growth decomposition explained

Significance and applications for growth decomposition

Key applications for Industry Forecast Models

Why buy this report?

Want to find out more about this report?

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