COVID growth rates couldn't keep going forever. Indeed, US spirits volume growth is slowing to flat in the latest Nielsen and NABCA data sets. NABCA data shows rolling three month spirits volumes to April up just 0.2%, and spirits volumes were up 1.7% in the 12 weeks ended May 21 in NielsenIQ-measured channels.
"2022 YTD has seen approximately flat volumes (on a very weak January)," writes Bernstein analyst Trevor Stirling in a recent note. "If this continues, it could challenge our previous assumption that spirits would grow at the pre-COVID rate off the new higher base."
By category, tequila and prepared cocktails were the biggest contributors to growth in both Nielsen and NABCA data, offsetting the declines of brandy/Cognac and vodka.
By major spirits company, Sazerac, Proximo Spirits (Cuervo's US subsidiary) and Heaven Hill Brands were top performers in terms of volume growth, according to NABCA. Brown-Forman was flattish, while Diageo, Campari, Pernod Ricard, Remy Cointreau and Moet Hennessy were lagging the overall spirits market.
Digging further into the companies that Bernstein tracks:
Diageo is underperforming "after a long period of outperformance." Casamigos is still posting impressive growth (up 90%) and Don Julio as well (up 21%). Meanwhile, Smirnoff is down 7%, Ketel One is down 1%, and Ciroc is down 22%.
Campari, too, finds itself in decline for the first time in a while. The deceleration is likely "mainly due to tough comps. but one to watch," writes Trevor. Skyy vodka and Wild Turkey were down 12% and 5%, respectively. Aperol growth slowed to 27%, while Espolon tequila continues to grow (up 17%) despite supply constraints.
Pernod Ricard is also lagging the market for the latest quarter. Jameson is still growing (up 7%) "but we would have expected more of a rebound" in line with on-premise reopening, he writes. Malibu and Absolut are down as well, at -3% and -4%, respectively. Interestingly, Pernod's tequila brands, Avion and Olmeca Altos, are also in decline.
Meanwhile, Remy Cointreau and Moet Hennessy are negatively impacted by supply constraints and shipment phasing of brandy/Cognac.
In the long term, Bernstein expects the US spirits market to grow around 5% in value, "driven broadly by equal improvement in volume and price-mix," which is in line with pre-COVID trends. The firm also expects 2.5% volume growth as well as relatively weak pricing, but with strong mix.