SipSource: "Spirits are Really Winning Right Now"

Dear Client:

Industry members predict that spirits volumes will continue to grow modestly this year between 2%-5%, with wine volumes mostly flat (0%-2%) and beer volumes will continue to decline (-2%-0%), according to a SipSource survey.

Turns out the industry is more optimistic about growth than current data indicates and expects retail to outperform current trends.

WHAT IS SIPSOURCE? SipSource was launched by Wine & Spirits Wholesalers of America (WSWA) earlier this year. It includes real depletion data from distributor partners (no projections or estimates), including Southern Glazer’s Wine & Spirits, Republic National Distributing Co., Breakthru Beverage Group, Young’s Market Co., Lipman Bros., and just this week added six new partners: Fedway Associates, Great Lakes Wine & Spirits, Major Brands, Martignetti Companies, Moon Distributors, Opici Family Distributing and Virginia Imports.

They also partnered with Nielsen, NABCA, Sovos, Wines Vines Analytics, Headset, Nielsen, and A.T. Kearney to conduct surveys and provide contextual data.

SipSource currently measures 71,000 wine SKUs and 28,000 spirits SKUs as well as 327,000 total outlets (195,000 on-premise and 132,000 off-premise), and counting.

“Everything that we report is 12 months rolling averages,” SipSource analyst Dale Stratton tells WSD. “So any noise that might be in there about timing is eliminated on this. At this point in time I don’t think there is a better predictor of what the actual sales trends are in volume for wine and spirits in the marketplace.”

A few highlights from the inaugural report include:

• In 2018, depletion growth on spirits softened from 3.6% growth to 2.3%.

• Wine depletions fell from 1% to -0.4% in 2018.

• 84% of respondents said packaging will be a significant/very significant product innovation area in the next 12 months.

We teased a bit more insight out of Dale.

When asked what surprised him about the inaugural data and survey, Dale said, “The biggest surprise to me is the level to which spirits are really winning right now,” adding, that there’s evidence that that growth is coming from the wine and beer categories. “We see this in the on-premise especially.”

In fact, on-premise spirits depletions grew nearly 4% in 2018, and “that’s off a big base,” says Dale.

In a similar vein, wine depletions are flat in the dining channel, while spirits are “growing very aggressively” in the segment.

Dale also pointed out that low-end sparkling wines are growing like gangbusters on-premise. “They’re our largest brands within the on-premise channel, and that’s really all about bottomless mimosas and Champagne brunch promotions…and that’s pretty impactful,” he says.

Private label wines are growing as well. “There’s a couple of private label brands in the wine business that are stronger than I would have thought they are.”

Jo Moak