Earlier this week, Brown-Forman added to its gin presence, acquiring the Spanish brand Gin Mare from Vantguard and MG Destilerías. With a weighting in favour of its home market, Brown-Forman will utilise its solid US footprint to drive the future performance of the 12-year-old brand.
When the headline is that gin is in decline in the US, though, why is Brown-Forman – and the rest of its international peers – wrestling for position in the category? A scratch below the surface delivers an obvious answer.
According to figures from trade association The Distilled Spirits Council of the US (DISCUS), the category saw US volumes dip last year by almost 2% – that was against 2020, when volumes bucked the sliding trend as consumers looked to stay well-stocked at home during pandemic-induced lockdowns in the country. Indeed, 2020’s volumes for gin were the highest since 2013.
Historically, US consumers have focused their gin intentions at the ‘value’ end* of the price ladder. With a tendency to tolerate poor-quality ice and mixer, the general wisdom has been to keep gin spend low as well. Consequently, ‘value’ gin has dominated – and continues to do so.
But, here’s the rub.
The more expensive the bottle of gin, the faster the rate of growth. In volumes terms, both 'high-end premium' and 'super premium' were up in the US last year, against the anomaly of COVID 2020.
The same pattern appears in sales by retail value.
Earlier this Century, according to DISCUS, supplier revenues of 'super premium gin' were static at around $9m a year (2003-2009). The acceleration at the more-expensive end really kicked in eight years ago: In 2014, revenues for the price bracket hit $16m.
Since then, the speed has been meteoric, riding roughshod over the down-up-down pattern experienced by 'value' gin from 2019 to 2021. Indeed, supplier revenues for 'super premium' last year more than doubled against 2020, soaring almost 123% to $103m.
The well-established drinks trend of 'premiumisation' can account for part of the explanation, but not all. While it may be over-stating the role of new, more expensive entrants in driving dearer gin (although Bulldog, founded in 2007 by former banker Anshuman Vohra and bought by Campari Group ten years later, is a valid case study), they've certainly played their part - as have celebrities such as actor Ryan Reynolds, who bought into Aviation American Gin owner Davos Brands two years before Diageo came knocking.
Then, there have been renewed efforts in the country's on-premise to 'put down the gun', eschewing mixers from a tap in favour of charging - and earning - more for a bottled tonic with a story; Fever-Tree is our 'Exhibit A', jumping from sales of GBP59.3m (then-US$88m) in 2015 to GBP311.1m ($406m) last year, thanks in no small part to the US.
Citing IWSR Drinks Market Analysis, Brown-Forman expressed pride yesterday in snaring "the largest ultra-premium gin brand in the world". Given the numbers for gin in the US, M&A announcements like this week's won't dry up any time soon.
* DISCUS price segment definitions are for the per-nine-litre-case price paid to suppliers by wholesalers:
Value - <$75 - Seagram's, Gordon's, Gilby's
Premium - $75 to $130 - Beefeater, Bombay Original
High End Premium - $130 to $200 - Tanqueray, Bombay Sapphire, Malfy
Super Premium - $200+ - Hendrick's, The Botanist, Tanqueray 10, Roku, Monkey 47
On-premise recovery turbocharges super-premium gin – Category Intel
