After Years Of Decline, Canadian Whisky Is Holding Its Ground In 2016

For many years—from the early 1990s through 2010—Canadian whisky was a two-faceted category. One side was characterized by a cluster of big-volume brands that were mired in long-term slumps as American tastes shifted to white spirits. On the other side was a single brand—category leader Crown Royal—that defied Canadian whisky’s downward trend by achieving one of the strongest growth curves in industry history.

In recent years, a new dichotomy has emerged. On one side are the core, non-flavored Canadian whisky brands, all struggling to add volume. On the other side are flavored Canadian whiskies, which are showing torrid growth.

Excluding flavors, Canadian whisky is at nearly 14 million cases in the U.S. market—not all that far off from Bourbon, whose volume stands at just under 19 million cases. Non-flavored Canadian whisky far outstrips Scotch (7.6 million cases) and Irish whiskey (3 million cases). Flavored Canadian whiskies, meanwhile, account for an additional 6 million cases in total, and grew by about 30% last year.

The flavored segment has been on fire over the past several years, led by Fireball (up 11% in 2015 to 4.4 million cases) and Crown Royal Regal Apple (up nearly a million cases to hit 1.25 million cases). The top five flavored Canadian whisky labels, which also include smaller players Black Velvet Toasted Caramel, Crown Royal Maple and Piehole, posted aggregate growth of 32% last year, to 5.8 million cases.

Those trends are continuing this year. In control state and Nielsen channels, Fireball and Regal Apple have pushed the Canadian whisky category into growth. Canadian whisky was up by 2.2% in control states through the first nine months of 2016 while enjoying a 3.2% gain in Nielsen channels for the 52 weeks ending November 5. With flavors removed from the equation, however, Canadian whisky’s increases are essentially wiped out.

Still, the fact that Canadian whisky is finally stable is a positive indicator for a category whose annual U.S. sales have eroded by around 1 million cases since 2010 and was mired in long-term decline well before then.

U.S. - Top Five Canadian Whisky Brand Families1 (millions of nine-liter case depletions)
Rank	Brand Family1	Importer	2014	2015	Percent Change3
1	Crown Royal	Diageo North America	4.4	5.2	18.0%
2	Fireball	Sazerac Co Inc	3.9	4.4	11.0%
3	Black Velvet	Constellation Brands	2.1	2.0	-1.2%
4	Canadian Mist	Brown-Forman Beverages Worldwide	1.5	1.4	-9.0%
5	Canadian Club	Beam Suntory Inc	1.2	1.2	3.5%
Total Top Five			13.1	14.2	8.5%
Other Brand Families			5.6	5.5	-3.0%
Total Canadian Whisky1, 2			18.7	19.7	5.0%
1 includes flavors and rye 2 addition of columns may not agree due to rounding 3 based on unrounded data Source: IMPACT DATABANK

Huneeus Vintners Acquires Napa Valley’s St. Clement Vineyards From Treasury

Huneeus Vintners, owners of Quintessa in Napa Valley and Veramonte in Chile, have purchased Napa Valley’s St. Clement Vineyards from Treasury Wine Estates (TWE). The sale includes the tasting room, winery and a half-acre estate vineyard, but not the St. Clement brand. The sale price wasn’t disclosed.

The St. Clement purchase gives Huneeus some prime real estate along the tourist-busy Highway 29, as well as a rare opportunity to acquire developed Napa Valley vineyard land and a winery with an existing permit.

Agustin Huneeus Jr. told Wine Spectator that he’s excited to become the steward of this historic property just north of St. Helena. “I think what’s amazing about (St. Clement) is where it is,” he said. “And it has incredible views and it’s one of the oldest wineries in Napa.” He hinted at renovation and suggested the former St. Clement tasting room will reopen by summer 2017, for a yet-to-be-named venture. Wine Spectator has more on this story.

News Briefs:

•Casa Cuervo has put its planned initial public offering on hold amid market uncertainty following the recent U.S. presidential election. The family-held Cuervo had been planning to float 15% of the company on the Mexican Stock Exchange this fall, with the aim of raising around $1 billion to put toward M&A activity. According to Bloomberg, the Mexico City-based Cuervo was set to kick off an investor roadshow this week. However, with Mexico’s benchmark stock index down by more than 5% since Donald Trump was elected president, and enthusiasm for the IPO apparently lukewarm, Bloomberg reports that Cuervo has tabled the offering, intending to reassess in early 2017.

•Gruppo Campari has exited the Italian still wine business, selling its Sella & Mosca and Teruzzi & Puthod wineries to Italian wine distributor Terra Morretti for €62 million ($65.7m). The sale includes the trademarks, as well as the vineyards, vinification and production plants, inventory and real estate assets of both the Sardinia-based Sella & Mosca and the Tuscany-based Teruzzi & Puthod. The purchase price values the two wineries at 13.9 times pro-forma EBITDA for 2016. They achieved aggregate net sales of €21.4 million ($22.7m) in 2015. While Campari has been an aggressive acquirer in recent years—it obtained Grand Marnier earlier this year—the Italian drinks marketer has also made a concerted effort to shed non-core assets. Last year, it began moving away from Italian still wine with the sale of Enrico Serafino.

Recently in the News:

• Walsh Whiskey Looks To Lead The Irish Innovation Push
• Interview: K&L’s Spirits Buyer David Driscoll Talks Scotch Whisky Trends
• Diageo Launches “Whiskey 5” Retail Program In Bid To Demystify Category