Distilled Spirits: Volume II - White Spirits - US - February 2005

SUMMARY

The U.S. distilled white spirits market has enjoyed prosperity and continued growth in salessince 1999. White spirits have been positively affected by the continued interest of younger adults,who are supplementing or bypassing beer and wine with white spirits drinks, especially those madewith flavored products. Manufacturers have been quick to respond, especially in the leading segmentof vodka, and there are now dozens of varieties of flavored spirits available to consumers,including numerous fruits, vanilla, chocolate and espresso. While spirits consumption declines withage, as it does with most alcoholic beverages, older consumers are turning to premium products asaffordable luxuries. The low-carb interest has had a positive effect as well, with white spiritsbeing carb-free and many manufacturers quick to market their products on that basis.

The only segment not benefiting from these events is gin, which has declined slightly whilevodka, rum and tequila have continued to grow. Gin has not been as quick to reposition itself withnew products and has consequently lost ground.

For the purposes of this report, the following definitions have been used:

White spirits are colorless distilled spirits, including vodka, gin, rum, and tequila. Althoughtequila and rum may also be dark or golden, few statistics are available that separate out thesetypes, therefore this report covers all types of rum and tequila. However, distinction between lightand dark rum has been made in The Consumer section, with light rums as a white spirit and dark rumsfalling under the dark spirits category. In addition, white spirits include those that have beenflavored, such as citrus-flavored vodka.

Spirits-based RTD cocktails, such as margaritas and FABs (flavored alcoholic beverages) bearingspirit names such as Bacardi O and Smirnoff Silver, are excluded.

TABLE OF CONTENTS

Introduction and Abbreviations

• Introduction
• Other relevant reports
• Definition
• Abbreviations & terms
• Abbreviations
• Terms

Executive Summary

• Younger consumers turning to white spirits
• New flavors continue to be added
• White spirits and low-carb diets
• Vodka is the market leader
• Consumer preferences
• A strong future

Market Drivers

• Young consumers driving market
• Figure 1: White spirits consumers, by type of spirit consumed, by age, May 2003-April 2004
• Figure 2: U.S. population projections, by age groups, 2000-10
• Flavor innovation
• Low-carb
• Figure 3: Carbohydrate content in selected alcohols

Market Size & Trends

• Figure 4: U.S. sales of white spirits for off-premise consumption, at current and constantprices, 1999-2004
• Figure 5: Graph: U.S. sales of white spirits for off-premise consumption, at current andconstant prices, 1999-2004*

Market Segmentation

• Overview
• Figure 6: FDM sales of white spirits, segmented by product type, 2002 and 2004
• Figure 7: Graph: FDM sales of white spirits, segmented by product type, 2004
• Vodka
• Figure 8: FDM sales of vodka, 1999-2004
• Rum
• Figure 9: FDM sales of rum, 1999-2004
• Tequila
• Figure 10: FDM sales of tequila, 1999-2004
• Gin
• Figure 11: FDM sales of gin, 1999-2004

Supply Structure

Foreign trade

• Figure 12: Total U.S. white spirits imports*, 1999-2004*
• Figure 13: U.S. white spirits imports, top originating countries, 2002 and 2004
• Figure 14: Total U.S. white spirits exports*, 1999-2004
• Figure 15: U.S. white spirit exports, top destination countries, 2002 and 2004

Companies and brands

• FDM brand sales by segment
• Vodka
• Figure 16: FDM brand sales of vodka, 2002 and 2004
• Rum
• Figure 17: FDM brand sales of rum, 2002 and 2004
• Tequila
• Figure 18: FDM brand sales of tequila, 2002 and 2004
• Gin
• Figure 19: FDM brand sales of gin, 2002 and 2004

Advertising & Promotion

• Overview
• Diageo
• Future Brands
• Allied Domecq Spirits & Wine USA
• Bacardi USA
• Others

The Consumer

• Introduction
• White spirits consumers
• Figure 20: White spirits consumed, December 2004
• Figure 21: White spirits consumed, by household income, December 2004
• Vodka
• Vodka drinkers
• Figure 22: Vodka drinkers, May 2003-April 2004
• Figure 23: Vodka drinkers, by age, May 2003-April 2004
• Figure 24: Vodka drinkers, by age and brands of vodka consumed, May 2003-April 2004
• Figure 25: Vodka drinkers, by race/Hispanic origin, May 2003-April 2004
• Frequency of vodka drinking
• Figure 26: Frequency of vodka drinking, December 2004
• Figure 27: Frequency of vodka drinking, by age, December 2004
• Gin
• Gin drinkers
• Figure 28: Gin drinkers, May 2003-April 2004
• Figure 29: Gin drinkers, by age, May 2003-April 2004
• Figure 30: Gin drinkers, by age and brands of gin consumed, May 2003-April 2004
• Frequency of gin drinking
• Figure 31: Frequency of gin drinking, December 2004
• Figure 32: Frequency of gin drinking, by age, December 2004
• Rum
• Rum drinkers
• Figure 33: Rum drinkers, May 2003-April 2004
• Figure 34: Rum drinkers, by age, May 2003-April 2004
• Figure 35: Rum drinkers, by age and brands of rum consumed, May 2003-April 2004
• Frequency of rum drinking
• Figure 36: Frequency of rum drinking, December 2004
• Figure 37: Frequency of rum drinking, by age, December 2004
• Types of rum consumed
• Figure 38: Types of rum consumed, December 2004
• Tequila
• Tequila drinkers
• Figure 39: Tequila drinkers, May 2003-April 2004
• Figure 40: Tequila drinkers, by age, May 2003-April 2004
• Figure 41: Tequila drinkers, by race/Hispanic origin, May 2003-April 2004
• Figure 42: Tequila drinkers, by age and brands of tequila consumed, May 2003-April 2004
• Frequency of tequila drinking
• Figure 43: Frequency of tequila drinking, December 2004
• Figure 44: Frequency of tequila drinking, by race/Hispanic origin, December 2004
• Cross-consumption of white spirits
• Figure 45: Cross-consumption of white spirits, May 2003-April 2004
• Attitudes towards white spirits
• Figure 46: Attitudes towards white spirits, December 2004
• Figure 47: Attitudes towards white spirits, by gender, December 2004
• Price influence
• Price range of spirits purchased
• Figure 48: Price range of spirits purchased, December 2004
• Figure 49: Price range of spirits purchased, by gender, December 2004
• Price range preferences by occasion
• Figure 50: Price range based on occasions, December 2004
• Figure 51: Price range based on occasions, by gender, December 2004
• Conclusion
• Younger Consumers and Women
• Older Consumers and Men
• Ethnic Differences

Future & Forecast

FUTURE TRENDS

• More young consumers reaching the legal drinking age
• Premium spirits continue to grow in popularity
• More flavors
• Low-carb meets energy drinks

MARKET FORECAST

• White spirits for off-premise consumption
• Figure 52: Forecast of total U.S. sales of white spirits for off-premise consumption, at currentand constant prices, 2004-2009
• Figure 53: Graph: Trends of U.S. sales of white spirits for off-premise consumption, at currentprices,1999-2009
• Vodka
• Figure 54: Forecast of U.S. FDM sales of vodka, at current and constant prices, 2004-2009
• Rum
• Figure 55: Forecast of U.S. FDM sales of rum, at current and constant prices, 2004-2009
• Tequila
• Figure 56: Forecast of U.S. FDM sales of tequila, at current and constant prices, 2004-2009
• Gin
• Figure 57: Forecast of U.S. FDM sales of gin, at current and constant prices, 2004-2009
• Forecast Factors

Appendix: Trade Associations

Appendix: New Product Briefs

• Todhunter Imports: Cruzan Rasberry Rum
• 42 Below Vodka
• Hood River Distilleries: Yazi Ginger Flavored Vodka
• TC Specialty Brands: Sex Vodka
• Destileria La Fortuna: Herencia Mexicana Limited Edition Tequila
• Tequila Cazadoras de Arandas: Corzo Super Premium Tequila Silver
• Phillips Distilling: UV Citruv Vodka
• The Patron Spirits Co,: Gran Patron Platinum Tequila
• Seagram: Seagrams Platinum Select Vodka
• Third Coast Imports: Zuidam Gin

Appendix: Research Methodology

• Consumer Research
• Sampling & Weighting
• Presentation & Definition
• Further Analysis
• Trade Research
• Informal trade research
• Formal trade research
• Desk & Internet Research
• Sources
• Definitions
• Forecasts

Appendix: What is Mintel?

• Mintel Reports
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