According to GuestMetrics, the overall average price for spirits in full-service restaurants and bars accelerated during the first quarter of 2013, the result of consumers trading up to more expensive brands in the Bourbon, Scotch, Tequila, and Vodka categories, as well as incremental pricing being taken in the majority of the spirits categories.
“While spirits’ price/mix was up 2.5 percent during 2012 compared to the prior year, that accelerated to 3.2 percent during 1Q13,” says Bill Pecoriello, CEO of GuestMetrics .
“There has been a “hollowing out” taking place in the spirits category, with consumers migrating away from the Premium tier in favor of High End & Super Premium brands, as well as value brands. This is likely a reflection of the impact of creative marketing for top tier brands causing trade-up, and simultaneously, a consumer base that continues to be under economic pressure causing trade-down to less expensive brands.”
Based on data from GuestMetrics, Super Premium’s share of spirits sales increased from 32.1 percent in 2011 to 32.6 percent in 2012 and has accelerated to 33.8 percent in 1Q13; High End Premium’s share increased from 52.3 percent in 2011 to 53.0 percent in 2012 to 53.8 percent in 1Q13; and at the other end of the pricing spectrum, the Value segment increased from 21.9 percent in 2011 to 22.3 percent in 2012 to 22.5 percent in 1Q13. Those gains came at the expense of the Premium segment, which contracted from 25.7 percent in 2011 to 24.7 percent in 2012 to 23.7 percent in 1Q13.
“In terms of changes in price/mix across the various spirits categories, eight of the 10 main spirits categories saw an acceleration in their year-over-year price/mix from 2012 to 1Q13, and only Bourbons and Brandy/Cognac saw any deceleration,” says Peter Reidhead, vice president of strategy and insights at GuestMetrics.
Based on data from GuestMetrics, year-over-year growth in price/mix for Vodka accelerated from 2.0 percent in 2012 to 3.8 percent in 1Q13; Tequila accelerated from 2.0 percent to 3.1 percent; Scotch accelerated from 4.6 percent to 5.5 percent; Rum accelerated from 2.4 percent to 3.1 percent; Irish accelerated from 1.2 percent to 2.6 percent; Gin accelerated from 3.4 percent to 3.6 percent; Cordials accelerated from 3.1 percent to 3.9 percent; and Canadian accelerated from 3.2 percent to 3.5 percent. Price/mix for Bourbons and Brandy/Cognac remained in positive year-over-year territory, but both decelerated slightly: Bourbons from 2.1 percent to 1.5 percent, and Brandy/Cognac from 1.5 percent to 0.7 percent.
“Looking at the spirits categories that saw the largest shifts in price segments, Bourbons has seen the most dramatic hollowing out effect. Super Premium’s share of Bourbon sales increased from 14 percent in 2011 to 15 percent in 2012 and reached 16 percent in 1Q13, while Value’s share increased from 9 percent in 2011 to 12 percent in 2012, and is now almost 16 percent in 1Q13,” says Brian Barrett, president of GuestMetrics. “Super Premium in Scotch saw its sales share increase from about 58.5 percent in 2011 to 60.5 percent in 1Q13, and in Tequila, increased from about 14 percent of sales in 2011 to about 16 percent in 1Q13. The largest spirits category, Vodka, has also seen some premiumization take place, with Super Premium and High End brands together gaining about 1.5 points of share from 2011 to 1Q13.”