Distilled Spirits: Volume III - Dark Spirits - US - March 2005

SUMMARY

The U.S. dark spirits market, which exceeded $9 billion in 2004, has enjoyed steady if modestannual growth since 1999. The growth has not been as robust as the white spirits market, due largelyto the fact that dark spirits tend to be an acquired taste. Young drinkers have turned more towardsthe sweeter and fruitier drinks supplied by white spirits manufacturers, and dark spirits companieshave been slow to add flavored brand extensions, something difficult to do with some of the morestrong-tasting whiskeys and brandies. However, a few products have been introduced (such as flavoredCognac) that show potential to help the market.

Whiskey is produced in many parts of the world, however, the only significant whiskeys in theU.S. market are those produced in Scotland, Ireland, Canada, and the United States. Whisky (no"e") means Scottish and Canadian whisky, whereas whiskey (with an "e") is usedto denote Irish or American brands.

The 2003 update on Mintels Distilled Spirits 2001 report was expanded to includeliqueurs/cordials and all brandy categories. The 2003 report was limited to brandy distilled fromgrape wine, but this report encompasses other types of brandy, such as Calvados and Eau de Vie,which are produced from apples, pears or other fruits. Grape brandy which has been flavored, such ascherry brandy, has traditionally been regarded as a liqueur and is also included in this report.This report covers the two prestigious brandies, cognac and Armagnac, both of which are produced instrictly delineated areas of France, and other grape brandies, which also come mostly from France,although brandies from Germany, Greece, Spain, and the U.S. are also available. Almost all Americanbrandies come from California.

The liqueurs/cordials category, which is often referred to as "specialty spirits," isincluded in this report because it is a significant portion of the U.S. distilled spirits market. Noattempt at further classifying liqueurs and cordials by color ("white" or"dark") has been made, yet as a general category, liqueurs and cordials are covered in theDark Spirits volume of this report series. However, Mintel does recognize that many of the spiritsin this category are light or white in color.

Rum is distilled from molasses or sugar cane residue, mainly in the Caribbean. Officialstatistics make no distinction as to the coloring of rum, which is often achieved by the addition ofan agent such as caramel. Both the industry and consumers have, however, traditionally regardedwhite and dark rum as distinct drinks. In the Consumer section, distinction is made between dark andlight rums; however, in market segmentation and market size data, rums have been grouped under thewhite spirits category and are covered in Volume II of this report.

Excluded from this report are spirit-based RTD cocktails such as margaritas or flavored alcoholicbeverages (FABs) such as Jack Daniels Country Coolers. For market information about these productssee Mintels U.S. Malternatives (FABs), April 2003, due to be updated in May 2005.

TABLE OF CONTENTS

Introduction and Abbreviations

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

Executive Summary

• Older consumers still drive the market
• Younger consumers poised to make a difference
• More regulations and resistance
• Slow but steady
• Whiskey continues to lead
• Selected imports and sweeter drinks remain steady
• Older males, occasional drinkers
• Growth to continue

Market Drivers

• An aging and affluent male consumer base
• Figure 1: U.S. population, by generation and gender, 2004
• Younger consumers seek lighter flavor, variety
• Increased industry regulation
• Taxes
• Online regulations
• Nutrition labels
• Decrease in beer sales
• Low carb diets

Market Size and Trends

• Figure 2: U.S. sales of dark spirits for off-premises consumption, at current and constantprices, 1999-2004
• Figure 3: Graph: U.S. sales of dark spirits for off-premise consumption, at current and constantprices, 1999-2004

Market Segmentation

• Slow FDM growth for dark spirits
• Figure 4: FDM sales of dark spirits, segmented by types of spirits, 2002 & 2004
• Figure 5: Graph: FDM sales of dark spirits, segmented by types of spirits, 2004
• Whiskeys
• Figure 6: FDM sales of whiskeys, at current and constant prices, 1999-2004
• Liqueurs and cordials
• Figure 7: FDM sales of liqueurs and cordials, at current and constant prices, 1999-2004
• Brandies and cognac
• Figure 8: FDM sales of brandies and cognac, at current and constant prices, 1999-2004

Supply Structure

Foreign trade

• Figure 9: Total U.S. dark spirits imports*, 1999-2004**
• Figure 10: U.S. dark spirits imports-top originating countries, 2002 and 2004*
• Figure 11: Total U.S. dark spirits exports*, 1999-2004**
• Figure 12: U.S. dark spirit exports-top destination countries, 2002 and 2004**

Companies and brands

• Whiskey
• Figure 13: Manufacturer FDM sales of bourbon in the U.S., 2002 and 2004
• Figure 14: Manufacturer FDM sales of Canadian whisky in the U.S., 2002 & 2004
• Figure 15: Manufacturer FDM sales of American whiskey in the U.S., 2002 & 2004
• Figure 16: Manufacturer FDM sales of Scotch whisky in the U.S., 2002 & 2004
• Figure 17: Manufacturer sales of Irish whiskey in the U.S., 2002 & 2004
• Brandy and cognac
• Figure 18: Manufacturer FDM sales of brandy in the U.S., 2002 & 2004
• Figure 19: Manufacturer FDM sales of cognac in the U.S., 2002 & 2004
• Liqueurs and cordials
• Figure 20: Manufacturer FDM sales of liqueurs and cordials in the U.S., 2002 & 2004
• Figure 21: Manufacturer FDM sales of cordials in the U.S., 2002 & 2004

Advertising and Promotion

• Diageo
• Future Brands
• Brown-Forman
• Allied Domecq Spirits & Wine USA
• Bacardi USA

The Consumer

• Introduction
• Figure 22: Summary of dark spirit consumption in past 30 days, May 2003-April 2004
• Bourbon consumption
• Figure 23: Frequency of bourbon consumption in past 30 days, May 2003-April 2004
• Figure 24: Bourbon consumption in past 30 days, by age, May 2003-April 2004
• Canadian whisky consumption
• Figure 25: Frequency of Canadian whisky consumption in past 30 days, May 2003-April 2004
• Figure 26: Frequency of Canadian whisky consumption in past 30 days, by age, May 2003-April 2004
• Figure 27: Consumption of Canadian whisky, by brand and age, May 2003-April 2004
• Blended whiskey consumption
• Figure 28: Frequency of blended whiskey consumption in past 30 days, May 2003-April 2004
• Figure 29: Blended whiskey consumption, by brand and age, May 2003-April 2004
• Scotch whisky consumption
• Figure 30: Frequency of Scotch whisky consumption in past 30 days, May 2003-April 2004
• Figure 31: Scotch whisky consumption, by brand and age, May 2003-April 2004
• Irish whiskey consumption
• Figure 32: Frequency of Irish whiskey consumption in past 30 days, May 2003-April 2004
• Figure 33: Irish whiskey consumption, by brand and age, May 2003-April 2004
• Brandy or Armagnac consumption
• Figure 34: Frequency of brandy or Armagnac consumption in past 30 days, May 2003-April 2004
• Figure 35: Brandy or Armagnac consumption, by brand and age, May 2003-April 2004
• Cognac consumption
• Figure 36: Frequency of cognac consumption in past 30 days, May 2003-April 2004
• Figure 37: Frequency of cognac consumption in past 30 days, by race/Hispanic origin, May2003-April 2004
• Figure 38: Cognac consumption, by brand and age, May 2003-April 2004
• Cordials and liqueurs consumption
• Figure 39: Frequency of cordials and liqueurs consumption in past 30 days, May 2003-April 2004
• Figure 40: Cordials and Liqueurs consumption, by age and brand, May 2003-April 2004
• Cross tabulation of types of spirits consumed
• Figure 41: Cross tabulation of dark spirits consumed, May 2003-April 2004 (part 1)
• Figure 42: Cross tabulation of dark spirits types of spirits consumed, May 2003-April 2004 (part2)
• Patterns of consumption/non-consumption of dark spirits
• Figure 43: Patterns of consumption/non-consumption of dark spirits, January 2005
• Figure 44: Patterns of consumption/non-consumption of dark spirits, by gender, January 2005
• Figure 45: Patterns of consumption/non-consumption of dark spirits, by age, January 2005
• Attitudes toward dark spirits
• Figure 46: Attitudes toward dark spirits, January 2005
• Figure 47: Attitudes toward dark spirits, by gender, January 2005
• Figure 48: Attitudes toward dark spirits, by age, January 2005
• Figure 49: Attitudes toward dark spirits, by household income, January 2005
• Reasons why consumers do not drink dark spirits
• Figure 50: Reasons for not consuming dark spirits, January 2005
• Figure 51: Reasons for not consuming dark spirits, by gender, January 2005
• Figure 52: Reasons for not consuming dark spirits, by age, January 2005
• Conclusion

Future and Forecast

Future trends

• The aging of America continues
• Figure 53: U.S. population projections, by age groups, 2000-2010
• Younger consumers influence the market
• Increased industry regulation

MARKET FORECAST

• Dark spirits for off-premise consumption
• Figure 54: Forecast of total U.S. sales of dark spirits for off-premise consumption, at currentand constant prices, 2004-2009
• Figure 55: Graph: Trends in sales of U.S. dark spirits for off-premise consumption, at currentprices, 1999-2009
• Whiskeys
• Figure 56: Forecast of U.S. FDM sales of whiskeys, at current and constant prices, 2004-2009
• Liqueurs and cordials
• Figure 57: Forecast of U.S. FDM sales of liqueurs and cordials, at current and constant prices,2004-2009
• Brandies and cognac
• Figure 58: Forecast of U.S. FDM sales of liqueurs and cordials, at current and constant prices,2004-2009
• Forecast Factors

Appendix: Trade Associations

Appendix: New Product Briefs

• Brown Forman: Canadian Mist Blended Canadian
• Fielding & Jones: Starbucks Coffee Liqueur
• Schieffelin & Somerset: Grand Marnier Gift Tubes
• Lidl: Queen Margot Fine Scotch Whisky
• Ruavieja: Ruavieja Aguardiente de Orujo Brandy
• The Macallan Distillery: Macallan Fine Oak 12 Whisky
• Allied Domecq: Courvoisier Succession J.S. Cognac

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
• Global New Products Database
• Comperemediaｮ
• Mintel Services
• POS+
• Mintel Consultancy