Shanken's Impact Newsletter January 1-15, 2021

LOOKING OVER THE PERFORMANCE OF the U.S. market’s top 25 spirits brands in 2020, it’s incredible to think that last year was characterized by unprecedented upheaval in the drinks business, including historic challenges like a global pandemic, an on-premise shutdown, and tariffs on key categories. According to Impact Databank’s estimates, every member of the top 25 enjoyed positive volume growth last year, with more than half of them advancing by double-digit rates. Encouragingly, premiumization in the spirits category has recently been “accelerating above pre-Covid levels,” according to Diageo North America president Debra Crew, who added that she expects that positive trend to continue, with super-premium offerings taking increasing share. Tito’s remains the hottest spirits brand in the U.S. market—and as of the end of last year it became the largest…

AFTER A FRENETIC AND HIGHLY CHALLENGING YEAR in the drinks business, the sun has finally set on 2020 and we’re off and running into 2021. With vaccines being distributed around the world to combat the pandemic, business prospects appear brighter now than at any time since early last year. While a full recovery—especially for the on-premise—remains a ways off, the early numbers show that key spirits brands continued to connect with consumers throughout the pandemic, which necessitated a massive shift to the off-premise. According to Impact Databank, the top 25 spirits franchises by volume in the U.S. jumped by an estimated 14% to an aggregate 110 million 9-liter cases last year, comprising nearly 44% of the total spirits market. Tito’s attained the top slot among all spirits in volume terms…

IT’S BEEN A LONG TIME COMING, BUT E.&J. Gallo has closed its acquisition of more than 30 wine brands and five wineries from Constellation Brands. The final price was approximately $810 million, consisting of approximately $560 million in cash paid at closing and up to $250 million in earnouts if brand performance targets are met over a two-year period following closing. The acquisition includes well known wine brands such as Arbor Mist, Black Box, Clos du Bois, Estancia, Franciscan, Hogue, Manischewitz, Mark West, Ravenswood, Taylor, Vendange, and Wild Horse that will join the Gallo portfolio. With the acquisition, Gallo will also expand its operational footprint with the addition of five wineries located in California, Washington, and New York, along with Constellation’s Polyphenolics business. Gallo is also acquiring the Nobilo New…

THE DRINKS INDUSTRY HAS FACED ITS share of challenges lately, and as it turns out, 2020 had one more surprise to deliver before giving way to 2021. U.S. Trade Representative Robert Lighthizer has announced new 25% tariffs on Cognac and certain non-sparkling wines from France and Germany, effective January 12. Cognac has been a key growth driver in the U.S. spirits market lately, with the upscale category surpassing 7 million cases for the first time ever last year, according to IMPACT DATABANK. “These tariffs not only harm E.U. spirits producers, they also disrupt and negatively impact the entire U.S. hospitality industry supply chain,” DISCUS said in a statement. “Hospitality businesses and our consumers, as well as producers, wholesalers and importers of distilled spirits are collateral damage in a dispute wholly…

REPUBLIC NATIONAL DISTRIBUTING CO. HAS ANnounced that board member and industry legend Alan Dreeben is retiring. His son-in-law Marc Sachs has taken his place on the board. “I am proud of all we accomplished at RNDC,” Dreeben said. “We became a national powerhouse while maintaining our commitment to our suppliers, customers, and associates. Through it all, we maintained the family-focused environment and continue to grow to be the national distributor of choice.” “Alan’s contributions to the industry are unsurpassed,” said RNDC president and CEO Tom Cole. “I have known him and his wife Barbara my entire career and he made a significant impact on me from the beginning. I wish him well in his retirement and thank him for helping put RNDC on an accelerated growth trajectory. Alan will be…

WILLIAM GRANT & SONS HAS REvealed that its turnover increased 7.5% to £1.43 billion ($1.92b) in 2019, generating profits up 20.7% to £314 million ($424m). But the company says that the pandemic and resulting economic deterioration stunted progress in 2020, “causing major disruption for the business, the spirits industry, and society as a whole.” William Grant currently estimates that its 2020 performance will show a sales decrease of “around 15% and, despite significant reductions in advertising spends and other costs, a decline in profit after tax of over 30%.” William Grant & Sons’ U.S. volume is estimated at 3 million cases, according to IMPACT DATABANK. “The performance during 2019 delivered another year of growth with a continued focus on our premium brands even in the face of increased competition from…