Two recent reports on spirits consumption in the US indicate whiskey lovers won’t be backing over their favorite beverage anytime soon.
According to research firm Technomic’s “On-Premise Whiskey: Growth Opportunities & Challenges in Restaurants & Bars Study,” expanding whiskey selections on bar and restaurant menus and on back bars – and continued interest from Millennial consumers – are the main drivers of strong sales trends.
But that large whiskey category is also the most complex for consumers to navigate and on-premise operators to manage, says the report. Whiskey is gaining more space on the back bar and on menus at many establishments, but the number of brands, types and expressions presents challenges.
“Restaurant and bar operators are eager to present a compelling whiskey selection, and the research shows they’re moving some other spirits off the back bar to make more room for whiskey. But many say it’s difficult to strike the proper balance of well-known brands, new offerings and local bottlings that can differentiate their establishments,” reports Donna Hood Crecca, study author and associate principal at Technomic. “Patrons are noticing the expanding selection and for some it’s overwhelming. They indicate it complicates the drink decision. However, engagement with the category is high and we see continued growth.”
The report also found that young consumers are highly engaged with whiskey in restaurants and bars, and are more likely than older counterparts to be actively exploring the spirit; and that vodka is ceding back bar space to whiskey, according to bartenders. Bartenders also reported to Technomic that American whiskey is performing well in all segments, while flavored whiskey and Japanese whisky are notably trending up in select segments of the on-premise channel.
Meanwhile, craft spirit growth is outpacing that of craft beer in the US, registering a compound annual growth rate (CAGR) of 13% compared to 6%, with premiumization and activity in the on-premise driving its emergence, according to Beverage Marketing Corporation (BMC) research.
Craft spirits may be a rapidly moving segment, but that’s off a small base and the producers account for only about just 2.5% of spirits sold. It’s also highly concentrated market – merely 2% of producers move 60% of volume, according to BMC. The firm estimates the number of craft spirits suppliers will hit 3,422 by 2021, compared to 1,564 craft beer producers.
Like the Technomic report, BMC says American and Irish whiskey are the key forces in category growth. American whiskey grew by 5% in 2016 aided by the strength of rye whiskey and small batch and single barrel offerings, the fourth consecutive year whiskey equaled or surpassed the growth of other spirits.