Shanken's Impact Newsletter December 1, 2018

THE U.S. LIQUEURS CATEGORY HAS BEEN in overall decline in recent years, but there are pockets of excitement, with bitter liqueurs and super-premium players outpacing the value end. Specialized brands like Aperol are carving out larger niches within the cocktail segment, while overextended brands with dozens of flavors struggle to hold their ground. In addition, new occasions are being created for key brands like Baileys and Disaronno, with year-round consumption being promoted in a variety of new serves. The liqueurs category in the U.S. was down 0.2% to just under 19.2 million cases last year, according to Impact Databank. Among the top five brands, all but Baileys declined last year. Still, the category’s essentially flat performance marks an improvement compared with longer-term trends, which have seen liqueurs’ total volume shed…

DESPITE A TUMULTUOUS YEAR IN WHICH TRADE WARS WITH ITS SOUTHERN NEIGHBOR dominated the headlines, the Canadian economy is expected to finish the year at a 2% growth rate. With the former NAFTA trade accord replaced by the new USMCA deal, which was signed last month, trade uncertainties have somewhat subsided, leading to expectations of accelerated wages amidst labor shortages, the stabilization of the housing market, and generally positive signs from businesses about investment, according to the National Bank of Canada. Another factor expected to influence the Canadian economy is the recent legalization of recreational cannabis. While medical marijuana has been legal in Canada since 2001, recreational use is projected to expand total sales to more than $7 billion over the next year, according to some estimates. Canada is the…

WITH THE LEGALIZATION OF RECREATIONAL CANNAbis sales in Canada on October 17, a potentially disruptive new era is at hand for the Canadian drinks market. But with the value of annual sales currently estimated at C$5.9 billion ($4.5b) by Statistics Canada, it’s no surprise that beverage alcohol producers and distributors see not only challenges but also enormous opportunities stemming from the cannabis movement. Indeed, Constellation Brands sees so much upside in cannabis that it recently invested $4 billion in Canopy Growth, one of Canada’s top producers, which is busy developing cannabis drinks within its innovation pipeline. Other drinks players, including wholesalers like Southern Glazer’s and Breakthru Beverage, are also active in the category north of the border, and appear to be well-positioned to enter the business in the U.S. if…

THE ONGOING NATIONAL DEBATE over interstate retailer shipping took another twist in recent weeks, as a federal appeals court reversed an earlier decision that had allowed Illinois to bar shipments from out-of-state retailers. The U.S. Court of Appeals for the Seventh Circuit found that the earlier district court decision in favor of Illinois failed to adequately examine the state’s justifications for the law, which was challenged on Commerce Clause grounds by Indiana chain Cap n’ Cork (Lebamoff Enterprises). But while it overturned the ruling, potentially opening the door to shipments into Illinois from out-of-state, the federal appeals court noted that the looming Tennessee v. Byrd case before the U.S. Supreme Court could have significant implications for this and other similar cases looking ahead. The Illinois case stems from the state’s…

BARDSTOWN, KENTUCKY’S HEAVEN Hill Distillery is investing $65 million to bolster capacity and its visitor experience. The outlay includes a $17 million renovation, expansion, and rebrand of the distillery’s Bourbon Heritage Center. The newly renovated visitor center will focus on Heaven Hill’s history and portfolio, as well as the founding Shapira family’s impact on the company. Immersive, educational experiences, including one where guests will have the chance to bottle their own Bourbon, will accompany a new rooftop bar and enhanced retail space. Heaven Hill is also investing $47.5 million in new barrel warehousing, bottling line, and equipment upgrades, and increased holdings of aging Bourbon. Its key Bourbons include Evan Williams, Elijah Craig, and Larceny. Meanwhile, Stoli Group is moving forward with its Kentucky Owl Park distillery project, announcing that Shigeru…

EDRINGTON HAS SOLD CUTTY SARK Scotch whisky to French company La Martiniquaise-Bardinet. The deal, for which no sales price was disclosed, is expected to be completed within a month. Cutty Sark sells approximately 107,000 cases a year in the U.S. and roughly 600,000 cases worldwide, according to IMPACT DATABANK. Jean-Pierre Cayard, president of La Martiniquaise-Bardinet, called the acquisition “a major step forward to accelerate our international expansion. It will strengthen our position in Europe and boost our presence in markets such as the U.S. and Japan.” La Martiniquaise’s other Scotch brands include Label 5 and Glen Moray, both of which are handled stateside by Prestige Beverage Group. Its other brands include Poliakov Vodka, Porto Cruz, and Saint James rum. La Martiniquaise-Bardinet has annual turnover of €1 billion ($1.1b).…