Fine Wines/Champagne and Spirits in the US

PROSPECTS

Luxury brandy and cognac leads strong fine wines/champagne and spirits growth

Fine wines/champagne and spirits registered one of the strongest growth rates among all luxury product subcategories in 2019 as US consumers increasingly prioritise spending their discretionary income on memorable, social experiences over material goods. Luxury brandy and cognac performed strongest in the category as cognac brands including LVMH Moët Hennessy Louis Vuitton’s Hennessy and Rémy Cointreau’s Rémy Martin brands continued to advertise heavily across a variety of media platforms, with a focus on TV commercials around sporting events.

Celebrity-sponsored luxury tequilas drive other luxury spirits growth

The outstanding growth in popularity of actor George Clooney’s Casamigos tequila brand, purchased by Diageo Plc in June 2017, has helped to popularise luxury tequila in the US and attracted a swath of other, celebrity-backed ventures into the market. In August 2019, fashion designer John Varvatos and singer-songwriter Nick Jonas announced the launch of Villa One Tequila, made in partnership with the Stoli Group, to be launched in select US cities beginning early 2020.

Spirits brands market to existing niche fan bases

As fine wines/champagne and spirits becomes increasingly fragmented with the emergence of craft distillers and the arrival of new celebrity-backed ventures, legacy players are tapping into existing niche fan bases to sustain growth. In August 2019, Scotch whisky brand Johnnie Walker expanded on its October 2018 partnership with the HBO fantasy series “Game of Thrones” with the release of two new limited edition whisky blends inspired by the show.

COMPETITIVE LANDSCAPE

Moët Hennessy USA leads with strong portfolio of brands

Moët Hennessy USA continued to lead fine wines/champagne and spirits in 2018 as the French luxury goods group benefited from its wide portfolio of iconic brands in fast-growing product subcategories including fine champagne, luxury brandy and cognac and luxury whiskies. As champagne continued to experience strong growth in the US, LVMH’s Veuve Clicquot and Moët & Chandon brands grew in stride, buoyed by strong social media presences and marketing campaigns featuring local influencers.

Grocery retailers remain dominant channel, but e-commerce grows

E-commerce continued to be the fastest growing channel for fine wines/champagne and spirits in the US as a plethora of new, internet-enabled delivery services joined established internet and store-based retailers in facilitating the purchase of alcohol online, and then delivering it to households. Although alcohol delivery options vary between markets, they are most common in major US cities including New York and Chicago, where services including Drizly and GoPuff offer delivery to households in under an hour.

Tariffs and cannabis pose looming threats to fine wines/champagne and spirits

Despite the strong growth enjoyed in recent years, fine wines/champagne and spirits producers are now bracing for the effects of potential disruptions to the US market, especially those as a result of trade tariffs and cannabis legalisation. In October 2019, the US government announced a 25% tariff on all single malt Scotch whisky imports, as part of a wider set of tariffs on goods imported to the US from Europe.

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