Roaring inflation has not dampened consumer spending on one item — luxury sprits.
Luxury spirits brands grew 15% in the third quarter compared to a year ago even as rising prices force Americans to cut back on discretionary spending, according to the Distilled Spirits Council’s latest Luxury Brand Index. The index analyzes sales of high end spirits brands and tracks the performance of brands with a 750ml retail price of at least $50.
Due to inflation and overall lackluster growth in economic activity, the growth rate in 2022 was slower compared to the 50% year-over-year growth rate that we saw in 2021, according to the report. Still, the data shows that luxury spirits “exhibited healthy growth” during the quarter even in the midst of a challenging economic environment, according to the index.
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This growth, albeit at a slower rate, underscores how resilient the sector is even in the face of persisting inflation, high interest rates and growing fears of a recession.
Prices for alcoholic beverages rose 5.5% on an annual basis in November, less than the 7.1% gain in the overall consumer price index.
Consumers still see liquor as “an attainable luxury,” Distilled Spirits Council Chief of Policy and Strategy Christine LoCascio said in a statement.
“Sales of luxury spirits are also being buoyed by the resurgence of restaurants and bars coming out of the pandemic, as well as consumers elevating their cocktail experiences and bars at home,” LoCascio said.
It’s a positive sign heading into the holidays, which is a “critical selling season for beverage alcohol retailers,” according to Lisa Hawkins, senior vice president of public affairs at Distilled Spirits Council.
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Sales for liquor stores in December are typically 40% higher than the monthly average throughout the rest of the year, according to Hawkins.
Overall, American Whiskey had the largest increase during the third quarter, growing 33% year-over-year. It may not come as a surprise given the fact that sales of luxury American Whiskeys have skyrocketed almost 500% over the past five years, according to Hawkins.
“The American Whiskey boom in the U.S. is being driven by a number of key factors,” Hawkins said. This includes millennials’ heightened interest in cocktails and new experiences as well as the return of classic American Whiskey cocktails such as the Manhattan and the Old Fashioned and consumer fascination with the heritage of spirits.
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The trend of celebrities debuting their own signature American Whiskey brands and the phenomenal growth in craft distilling is also aiding its popularity. For instance, the number of distilleries in the nation has surged from less than 100 to more than 2,300 over the past 15 years, Hawkins added.
“The growth of small distilleries is boosting distillery tourism and introducing new adult consumers to American whiskey in towns and cities across the country,” she said.
According to the index, tequila had the second-largest growth during the quarter, increasing 29% annually.
However, both Japanese and Irish whiskey saw solid growth, increasing 20% and 17%, respectively, the data showed.
Hard liquor isn’t the only thing seeing such success. According to Wine Spectator senior editor Alison Napjus, consumer demand for Champagne has also reached an-all time high.
Imports to the U.S. has surged 33% in 2021 compared to 2019, Napjus said, adding that this demand is continuing into 2022 as well.
Napjus pointed to LVMH Möet Hennessy which reported that its Champagne business grew 16% in the first half of the year.
Its brands include Krug, Dom Pérignon, Ruinart, Veuve Clicquot and Möet & Chandon Champagnes. The atter two account for roughly two-thirds of the U.S. Champagne market, according to Napjus.
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