The tariffs implemented in October continued to have
significant (and worsening) impacts on specific categories of Imports in
French Red Wines down -63% to $17.7 million in
Dec. (compared to down -51% in Nov.).
French White Wines down -44% to $12.6 million in
Dec. (compared to down -32% in Nov.).
French Rose Wines down -58% to $4.4 million in
Dec. (compared to down -4% in Nov.)
German White Wines down -44% to $3.4 million in
Dec. (compared to up +8% in Nov.).
Spanish Red Wines down -51% to $5.5 million in
Dec. (compared to down -33% in Nov.).
Scotch Whisky down -42% to $88.0 million in Dec.
(compared to down -36% in Nov.).
Total Beverage Alcohol:
Total beverage alcohol imports (including bulk
and packaged) grew +6.60% by value over the last twelve months and declined
-0.900% by value over the last three months. 26.5% of all imported beverage
alcohol by value came from Mexico over the last twelve months.
Total beverage alcohol exports (included bulk
and packaged) declined -6.60% by value over the last twelve months and grew
+5.50% by value over the last three months. 20.5% of all exported beverage
alcohol by value went to Canada over the last twelve months.
Each of the bw166 Import and Export Reports (for Beer,
enable tracking Beverage Alcohol imports and exports on a monthly basis for
volume, value in USD, and value in local currency for all major trading
Imported beer grew +1.80% by volume and grew
+5.10% by value over the last twelve months. Over the last three months imports
grew +2.50% by volume and grew +7.50% by value. 70.5% of imported beer by value
comes from Mexico.
Exported beer declined -22.0% by volume and grew
+19.8% by value over the last twelve months. Over the last three months exports
declined -1.20% by volume and grew +44.4% by value. 21.0% of exported beer by
value goes to Chile.
Beer: 41.3K products approved over the L12M
(+9.1% vs. last year) and 10K over the L3M (+11.9% vs. last year)
Spirits: 16.1K products approved over the L12M
(+10.7% vs. last year) and 4.9K over the L3M (+39.3% vs. last year)
Wine: 123K products approved over the L12M
(+2.3% vs. last year) and 27K over the L3M (+13.8% vs. last year)
Domestic: 88.8K products approved over the L12M
(+7.2% vs. last year) and 20.6K over the L3M (+16.2% vs. last year)
Imports: 91.5K products approved over the L12M
(+2% vs. last year) and 21.2K over the L3M (+15.4% vs. last year)
For more information regarding Product Approvals
including detailed category breakdowns and origin information (State for
Domestic products and Country for Imported products), subscribe to the bw166 Product
On January 13th, IWSR issued a press release that pronounced “Wine Consumption in the U.S. Declines for First Time in 25 Years”. Past statements from IWSR suggest that the U.S. wine market was about 360 million 9L cases in 2019. However, based on available tax collection data, bw166 projects that the U.S. wine market in 2019 was 409 million 9L cases*, an increase of +1.1%. This discrepancy of 49 million cases is the equivalent of 588 million bottles of Wine.
Key Highlights of the U.S. Wine Market
The market is highly fragmented with the TTB approving over 123,000 wine labels in 2019
Due to this fragmentation, bw166 uses tax paid data to track the size of the U.S. Beverage Alcohol market accurately. Tax Paid Shipments is the only measure that adequately measures all products entering commerce – as it reflects the point at which suppliers recognize revenue on their financial statements.
Traditional industry sources have reported on the Wine Market for several years. Looking at the trends of one of these Traditional Sources versus tax paid shipments since 2005 shows an interesting comparison and discrepancy.
Tax Paid Shipments of Wine have had a CAGR of +2.6% per bw166 versus +1.2% per a traditional source
As an additional point of comparison, bw166’s Tax Paid Shipment CAGRs for Beer and Spirits (flat and +2.4% since 2005, respectively) are nearly identical to those of the traditional sources, providing evidence that bw166’s methodology is sound and highlights the discrepancy in the traditional sources’ Wine numbers.
One possible explanation is that these traditional sources are overly reliant on surveys and data of the largest suppliers and wholesalers and do not adequately capture the fragmentation in the wine market nor the evolving consumer landscape into channels such as DTC and private label products. For Beer and Spirits, where there is less fragmentation than Wine, that approach appears more accurate.
One verification method bw166 uses is comparing theoretical excise tax collection with actual tax collections reported by the TTB. Generally, actual tax collections are slightly less than the theoretical tax collections due to small producer credits.
As further verification of volumes entering the market, bw166 has been working on a project to look deeply at tax paid shipments by state. This project is over 90% complete, and the results are validating the national tax paid numbers.
Please find a link to a short deck highlighting information on the U.S. Beverage Alcohol Market here. This deck also includes long term charts for volumes, share of servings, the bw166 Serving Index, and Consumer Spending on Beverage Alcohol.
* The bw166 wine data expressly excludes Cider but includes Table Wines, Sparkling Wines, Fortified Wines, Sake, Vermouth, and Other Wine (which includes Sangria, Wine Coolers, Wine Based Cocktails, and Wine with Fruit). This latter group accounts for only 17 million of the 409 million cases.
But, first, some highlights from the tariffs imposed on October 13, 2019:
The primary beverage alcohol imports impacted by the tariffs are French, German and Spanish Wines less than 14% ABV in 2L or smaller containers, Irish or Scotch Single Malt (or straight) Whisky, and German, Spanish, UK Cordials and Liqueurs.
Collectively the imports of these products were down -10% in volume and -30% in value in November 2019 versus November 2018.
French wines and UK Whisky account for roughly 75% of the Value of these imports.
French Wines were down -18% by volume and -42% by value in November 2019 versus November 2018.
UK Whiskies were down -9% in volume and -36% in value in November 2019 versus November 2018.
Given the timing of orders and shipments it is likely that there were orders in suppliers systems that were not possible to change and were impacted by the tariffs in November 2019.
Average case prices for French wines and UK whisky both declined significantly, roughly -30% – implying either some price decreases were implemented to reduce the cost of the tariffs or mix was significantly impacted.
And now, the regular longer-term updates.
Beer, Spirits, & Wine – Packaged Imports Grow +7.40% By Value Over Last Twelve Months through November 2019, Packaged Exports Decline -7.20%
Total Beverage Alcohol:
Total beverage alcohol imports (including bulk and packaged) grew +7.90% by value over the last twelve months and grew +8.70% by value over the last three months. 26.3% of all imported beverage alcohol by value came from Mexico over the last twelve months.
Total beverage alcohol exports (included bulk and packaged) declined -10.0% by value over the last twelve months and declined -2.20% by value over the last three months. 20.7% of all exported beverage alcohol by value went to Canada over the last twelve months.
Each of the bw166 Import and Export Reports (for Beer, Spirits, and Wine) enable tracking Beverage Alcohol imports and exports on a monthly basis for volume, value in USD, and value in local currency for all major trading countries.
Imported beer grew +2.40% by volume and grew +5.40% by value over the last twelve months. Over the last three months imports grew +7.20% by volume and grew +11.5% by value. 70.8% of imported beer by value comes from Mexico.
Exported beer declined -20.5% by volume and grew +17.8% by value over the last twelve months. Over the last three months exports grew +3.70% by volume and grew +48.0% by value. 21.2% of exported beer by value goes to Chile.
bw166 released The Total Beverage Alcohol report for twelve months through November 2019.
Key points over the past twelve months include:
The bw166 TBA Serving index increased +1.4% to 123.3 versus last year (this index represents the change in servings of beverage alcohol entering the U.S. market).
Consumer expenditures for beverage alcohol total $266 billion, an increase of +3.6% driven more in the On Premise than the Off Premise.
Legal Drinking Age population is up +1.0% compared to servings growth of +1.4% – indicating that recent surveys showing a reduction in consumption are not apparent in the statistics of the market.
Over 80% of the growth in the Legal Drinking Age population is coming from those over 60.
Servings growth is dominated by Spirits, which is gaining share from both Beer and Wine. Beer servings show continuing declines while Wine servings are growing slightly.
Beer is seeing growth from Hard Seltzers and Mexican Imports though this growth is not offsetting declines in traditional beer sub-categories.
Sparkling Wine is the primary driver of growth in the Wine category.
Spirits servings are growing across sub-categories, especially Whisky, Tequila, and Cordials. Vodka is flat, even with the continued strong growth of Tito’s.
Jon Moramarco, the Managing Partner of bw166, is also a partner in and the editor of The Gomberg & Fredrikson report. Gomberg & Fredrikson has been tracking the U.S. wine market since 1948. Jon will be presenting a webinar for Gomberg and Fredrikson on Wednesday, January 15 at 9:00 AM Pacific time, which will be open to both Subscribers and Non-Subscribers. The content will include an update on the overall beverage alcohol market for 2019, key data points on the wine market for 2019, and an overview of how demographics have tracked with the beverage alcohol market over time and projections of how these will interact moving forward. Parties interested in joining the webinar may register at https://gfawine.us12.list-manage.com/track/click?u=a4ec6df009d36ae225ba743b1&id=75f868c9dd&e=72513e6e77.