Distribution is Key to Spirits Success
According to GuestMetrics, the top two spirits share gainers achieved their gains in the category through a combination of increased distribution and sales per point of distribution, while the next two largest share gainers grew their share almost exclusively through organic growth.
“In analyzing our data of the on-premise sector, Fireball Cinnamon Whisky, Tito’s Vodka, Jameson Irish Whiskey, and Makers Mark were the top four share gainers in 2Q13 compared to the same period in the prior year. However, to gain a better understanding of these gains, we’ve looked at the underlying drivers, and it paints an interesting picture,” says Bill Pecoriello, CEO of GuestMetrics LLC. “In analyzing over five thousand different brands we track in our system in terms of the portion of restaurants and bars they were sold in during 2Q13 versus the prior year, Fireball and Tito’s achieved the largest increase in distribution by a fairly wide margin, with Fireball seeing a 16-point increase in its distribution and Tito’s about a 13-point gain. In addition to wider distribution, however, Fireball’s sales per point of distribution nearly doubled in 2Q13 compared to the prior year, and Tito’s increased about 20 percent, which we view as a positive sign that in addition to increased demand among operators, there is also healthy growth in consumer demand for these brands.”
“In contrast to this, we see a very different growth profile for Jameson and Makers Mark,” says Peter Reidhead, vice president of Strategy and Insights at GuestMetrics. “Unlike Fireball and Tito’s, which experienced significant increases in distribution, Jameson and Makers Mark are already fairly mature brands with distribution penetration in the mid-80s. So while they achieved relatively minimal increases in distribution in 2Q13 compared to the prior year, the share gains achieved by Jameson and Makers Mark came almost exclusively from growth in their sales per point of distribution, driven by strong brand equity backed by creative marketing campaigns that are continuing to resonate with their consumers. Net of these factors, increased distribution accounted for about 90 percent of Tito’s gain in unit share and about 65 percent of Fireball’s gain, and in stark contrast to this, gains in distribution only accounted for about 2–3 percent of Jameson and Makers Mark’s unit share gains.”
“These brands stand out as examples of success, and thus far in 2013, are showing no signs of slowing,” says Brian Barrett, president of GuestMetrics. “Fireball’s units grew over 300 percent in 1Q13 and about 270 percent in 2Q13, and Tito’s growth accelerated from about 51 percent in 1Q13 to 64 percent in 2Q13. Jameson and Makers Mark are obviously growing off a larger base, but nonetheless are also achieving robust growth, with Jameson growing in the 13–14 percent range both in 1Q13 and 2Q13, and Makers Mark’s growth accelerating from about 9 percent in 1Q13 to 11 percent in 2Q13. As impressive as these growth rates are, they are actually a bit lower than the off-premise growth rates during the same period, due to the higher base these four brands already had in on-premise. Given the challenging trends in on-premise currently, we have been actively advising our operator clients on the best ways to design their menu offerings to optimize sales, harnessing strong growers like these brands.”