Shanken's Impact Newsletter October 1, 2018

AMID A COMPETITIVE AND CROWDED U.S. drinks industry, it’s increasingly difficult for brand-builders to establish and maintain a solid foothold. Accomplishing that goal for the long-term is even more challenging, and Impact’s Blue Chip brands have achieved that elusive goal. All of Impact’s Blue Chip brands must meet the following criteria: at least 10 consecutive years of volume growth (or average annual compound growth of at least 0.5% from 2007 through 2017 with positive growth in at least eight of those 10 years), and gross margins of at least $25 million last year. Many of the brands on the Blue Chips list are returnees, but there’s a full slate of newcomers as well. In distilled spirits, whiskies continue to dominate the field. Of this year’s 24 Blue Chip spirits, 11…

AS WITH MANY INDUSTRIES TODAY, THE BEER BUSINESS’S DISTRIBUTOR TIER IS COMpeting in an era of disruption. Volume gains are restrained as younger consumers opt for wine and spirits, which were once largely the preserve of older drinkers. Wholesalers are also seeing turbulence within the three-tier system itself, as the separation of tiers continues to blur. Distributors are now competing against brewers, and brewers are challenging retailers with direct-to-consumer beer sales. And some wholesalers are finding new opportunities outside the beer category. The emergence of brewery tasting rooms is pitting brewers against distributors—not to mention retailers. Tasting rooms, or taprooms, allow breweries to sell direct, allowing for on-site consumption and sometimes take-away sales. Total volume at taprooms is still low, but with the explosion of craft breweries around the country…

WITH SO MUCH ATTENTION BEING PAID TO THE INFLUX of new brands flooding the drinks industry, it’s easy to overlook the strong, steady performances of the major players. But a look at Impact’s “Blue Chip” Brands list, featured in this issue, reveals that a host of established franchises are not only maintaining their positions, but thriving in the current drinks landscape. The Blue Chip list details the long-term growth of stalwart brands that have rightfully become household names among U.S. consumers. But even as the Blue Chip awards highlight the achievements of the industry’s leading players over the long haul, they also show that many of the honorees continue to drive not only consistent, but also dynamic growth. In spirits, a large contingent of the Blue Chip winners also earned…

AT PRESS TIME, THE WORLD’S LARGEST spirits marketer was reportedly eyeing deals to enter the cannabis market. Citing people close to the situation, Canada’s BNN Bloomberg TV reported that Diageo has held discussions with at least three Canadian cannabis producers about potential deals. While Diageo didn’t comment on the report, Diageo North America president and CEO Deirdre Mahlan told Impact earlier this year that the company is monitoring the cannabis space. “This is an area we’re watching closely,” Mahlan said. “When we talk about the future of socializing, of course we should be interested in what other products people use on social occasions. I won’t comment specifically on plans we may or may not have, but that category is going to continue to develop. We see that happening as it…

BRANDS PRICED AROUND $15 HAVE BEEN LEADING THE CHARGE IN THE DOmestic sparkling wine segment. Now, as the category nears the 11-million-case mark in the U.S., California-based luxury producer Schramsberg is looking to turn consumers’ eyes to higher price points. Schramsberg produces around 85,000 cases of sparkling wine annually, with the flagship Blanc de Blancs ($35) its largest seller at 35,000 cases. Wilson Daniels handles Schramsberg’s U.S. distribution. “There aren’t many domestic producers of ultra-premium sparkling wines,” says Schramsberg president and CEO Hugh Davies. “We’re slowly building a fan base that’s really enthusiastic about high-quality sparklers made in the U.S.” Last year, 28% of Schramsberg’s revenue came from sparklers priced at $55-$175 a 750-ml., according to Davies. Among the high-end offerings making gains are the Chardonnay-focused J. Schram ($120), a…

PACIFIC HIGHWAY WINE & SPIRITS, the North Carolina-based importer jointly owned by New Zealand’s Giesen and Australia’s Oatley families, saw double-digit progress in both volume and value in its fiscal year ended in June. Led by New Zealand-sourced Giesen, its largest brand, Pacific Highway’s volume rose by 27% to 335,000 cases during the year, while revenue jumped 36% to $30 million. Pacific Highway is aiming to double revenue by 2021 while expanding its range. Pacific Highway president Mark Giordano tells Impact that the company plans to fill in gaps in both the domestic and imported wine segments. “This isn’t a rush—it’s a careful process and is a critical part of our growth over the next two years,” he says. “We’re looking at Spain, Italy, Napa, Sonoma, and Washington for partnership…