SHANKEN’S

GLOBAL NEWS

IMPACT NEWSLETTER
AND RESEARCH
FOR THE DRINKS
EXECUTIVE
NOVEMBER 1, 2020

Category Report
INTERVIEW
Marc Taub, CEO, Liqueurs Look To Capitalize On
Taub Family Cos. 12
Growing Home Cocktail Trend
MAJOR CHANGE
New top editors at Wine LIQUEURS AND CORDIALS HAVE BEEN cordials than within. The top 10 brands
Spectator, Whisky Advocate 6 eking out modest U.S. growth recently, amid combined accounted for a total 8.8 million
uneven conditions across the category. Over- cases in 2019 and scant 0.2% growth, below
DEARIE TO LEAD SMWE all, liqueurs advanced 0.6% in the U.S. last the category’s five-year average annual
Jim Mortensen retires as year to rise above the 18-million-case mark, compound growth of 0.5%. Meanwhile, the
Ste. Michelle CEO 7 according to Impact Databank, reversing rest of the field rose to 9.2 million cases
negative growth from the prior few years. combined on 1% growth, a significant
BANKING ON TEQUILA That tally excludes flavored whiskies but improvement over its five-year trend of -1%.
Cuervo firing on all includes flavored brandy, bitters, anise and Since 2014 the top 10 have drawn closer to
cylinders in U.S. 7 pastis, and spirits-based aperitifs. a 50/50 split with other brands, but remain
Unlike numerous other beverage alcohol just shy of that marker.
GAME FOR THE CHASE categories in which the top brands have Beam Suntory’s DeKuyper brand contin-
Diageo acquires U.K. taken increasing market share, growth was ues to lead the category despite struggling
craft distiller 7 stronger outside the top 10 liqueurs and page 8 >>>

U.S. RESILIENCE
Pernod sees renewed gains Rapid Rebound
in U.S., China 7

IMPROVING FORTUNES
China Sees Swift Return To Growth
Campari sales lift, but IN A YEAR OF GLOBAL TURBULENCE AND ECONOMIC SHOCKS, CHINA HAS EMERGED
uncertainty continues 7 from the pandemic in a unique position. The country was the site of the first outbreak of
Covid-19, but its aggressive lockdown and the government’s investment in state-sponsored
MANAGEMENT MOVES industries like steel have allowed its economy to reset and return to growth after a first
Hunt steps down at Grant, quarter contraction of 6.8%. As Western European nations and the U.S. struggle to con-
Vergara to lead Patrón 18 tain the virus and stabilize their economies, China’s GDP increased 4.9% in the third
quarter. During that time, the restaurant industry narrowed its decline to about 3%, while
IN MEMORIAM consumer-goods spending rose 4%, according to the country’s National Bureau of Statis-
Oregon wine pioneer tics. Both the service and retail industries still face challenges, but China’s well-established
Ken Evenstad 18 e-commerce channel has helped stabilize its economy, including the beverage industry.
Platforms like Alibaba have been critical in the recovery of wine and spirits sales, especially
in a market normally reliant on on-trade and special occasion consumption.
With the changing tastes of middle class consumers, who are drawn to more premium
labels as well as Western brands and categories, wine and spirits marketers are confident in
Sign up for Shanken News Daily,
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the country’s economic return. This year’s turbulence follows a mixed performance last year
wine, spirits and beer industry. across China’s drinks market. Total wine volumes fell below 200 million 9-liter cases in
Go to: ShankenNewsDaily.com page 14 >>>
 CO M M E NTARY
IMPACT
VOL 50 NO 21

Editor and Publisher

Editorial Director
Marvin R. Shanken
Michael Moaba
An Era Of Change
Executive Editor David Fleming
Managing Editor Daniel Marsteller WITH CONDITIONS SHIFTING BY THE DAY, 2020 HAS
Associate Editor Shane English
Associate Editor Julia Higgins presented no shortage of challenges to the drinks industry. In many
Assistant Editor Danny Sullivan
Copy Editor Danielle Driscoll
ways the pandemic has hastened changes that were already in prog-
ress—such as the accelerating role of e-commerce—while in others
RESEARCH
Director of Research Juan Banaag it has forced marketers to adapt to starkly different circumstances
Sr. Market Research Manager Natalia Razzo
Market Research Analyst Callie Eidler
on the fly, as in the abrupt shift to the off-premise.
Market Research Analyst Daria Saenko
A wave of change is also underway at the executive level of top wine
ART
Vice President, Production Kevin Mulligan and spirits marketers. Pernod Ricard named Ann Mukherjee as its
Photo Editor Alexandra de Toth
North America chairman and CEO to start off the year, a move that
ADVERTISING was followed by Debra Crew’s appointment as president of Diageo’s
Vice President, Stephen Senatore
Advertising Director U.S. business this summer.
Sales Assistant Jenny Jaikaran
Vice President, Don Gatterdam
Shanken Creative Group Now, two more key players have made
CIRCULATION
changes at the top. William Grant & Sons
Senior Circulation Director Phylicia Bedoya announced in recent days that CEO
Assistant Circulation Manager Tina Ratwani
Circulation Coordinator Eugene Druzyakin Simon Hunt is stepping down, with his
permanent replacement yet to be named
M. SHANKEN COMMUNICATIONS
Marvin R Shanken Chairman and CEO at press time. And in Washington state,
Michael D Moaba Vice Chairman
Laura Zandi Executive Vice President Ste. Michelle Wine Estates has tapped
Mel Mannion Senior Advisor to the
Chairman
industry veteran David Dearie to replace
Connie McGilvray Senior Vice President, the retiring Jim Mortensen as CEO.
Advertising Sales
Administration
Lynn Rittenband Senior Vice President, We at M. Shanken are positioning for the
Events
Jessica Shanken Vice President, future as well. After a three-decade career with the company, Wine
Business Development
Steven Gordon Chief Financial Officer Spectator executive editor Thomas Matthews will step down at the
Sheena Dellanzo Executive Assistant to the
Chairman
end of the year and be succeeded by Whisky Advocate executive
editor Jeffery Lindenmuth. In turn, Impact executive editor David
Fleming will replace Lindenmuth at Whisky Advocate, adding to
Publications of M. Shanken Communications, Inc. include: Impact Newsletter, Market
Watch Magazine, Wine Spectator, Cigar Aficionado, Whisky Advocate and Impact
his purview.
Research Reports. M. Shanken Communications, Inc. also sponsors: Impact Marketing
Seminars, Wine Spectator’s New York Wine Experiences, Cigar Aficionado’s Big
Smokes, and Whisky Advocate’s WhiskyFests. Impact (ISSN: 0268-8212) is published
bi-weekly (24 times per year) by M. Shanken Communications, Inc. Impact is a
registered trademark of M. Shanken Communications, Inc. All rights reserved. Nothing
It’s been a tumultuous year, but that won’t stop us—or the drinks
may be reprinted or reproduced in whole or in part without written permission from
the publisher. Copyright 2020 M. Shanken Communications, Inc. industry as a whole—from planning for the next phase of growth.
IMPACT
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TO P U RC H A S E B AC K I S S U E S O F I M PAC T P L E A S E E - M A I L : I M PAC T B AC K I S S U E S @ M S H A N K E N . C O M NOVEMBER 1, 2020 5

 NEWS Highlights
Major Changes At Wine Spectator, Whisky Advocate

Jeffery Lindenmuth David Fleming Thomas Matthews

MARVIN R. SHANKEN, CHAIRMAN OF M. SHANKEN COMMU- Marvin has created and that Tom has cultivated during his
nications, Inc., has announced major new appointments at impressive tenure.”
the top of the masthead of both Wine Spectator and Whisky Stepping into Lindenmuth’s role as executive editor of
Advocate magazines. Whisky Advocate is David Fleming, who’s been with the
After a 33-year career at M. Shanken, Thomas Matthews company for 33 years. Fleming began at M. Shanken writing
is stepping down as executive editor of Wine Spectator. for Wine Spectator from Rome, Italy. He later oversaw the
Jeffery Lindenmuth, currently executive editor of sibling company’s London bureau for seven years, covering Scotch
publication Whisky Advocate, will succeed Matthews as whisky and other spirits. He’s been at the New York head-
executive editor of the world’s most widely read wine publi- quarters for more than two decades, leading M. Shanken’s
cation at the end of the year. trade editorial division—including Market Watch, Impact,
“As executive editor of Whisky Advocate, Jeffery Linden- and Shanken News Daily. A seasoned whisky connoisseur
muth has done an outstanding job propelling that title into and member of the Whisky Advocate tasting team, he’ll now
the most highly respected whisky magazine in the world. provide expert coverage of the whisky world for that publi-
Under his leadership the magazine has enjoyed significant cation’s growing consumer audience. “I discovered my
growth,” said Shanken. “Having worked closely with him, I passion for whisky while covering the world of Scotch from
believe he can take Wine Spectator to even greater heights. our London office,” Fleming said. “I’m thrilled to take on
He has a creative and enlightened understanding of consumer this new role at Whisky Advocate, where I look forward to
publications.” continuing the momentum built by Marvin and Jeffery.”
Lindenmuth joined M. Shanken Communications in 2000 Commenting on Matthews’ three decades of contributions
as a contributing editor on wine and spirits at Food Arts to Wine Spectator, Shanken said, “Tom has been an integral
magazine, a lifestyle trade publication for chefs and other part of the company for over 30 years and a true partner in
food professionals. In 2016, he was named executive editor so many ways. His contributions to the success of Wine Spec-
of Whisky Advocate. During his tenure, he has overseen tator cannot be overstated. Fortunately, he has agreed to con-
PETER GARRITANO; MICHAEL MARQUAND; RICK WENNER

major changes in content and design as the publication grew tinue in an advisory role, heading up our annual New York
dramatically. One cornerstone was instituting blind-tasting Wine Experience program as well as other special projects.”
methodology for whisky reviews, to conform with the Matthews joined Wine Spectator in 1988, working in the
philosophy of sibling publications Wine Spectator and Cigar London and then the New York offices. In 1999 he was pro-
Aficionado. moted to executive editor, overseeing print and digital opera-
“I’ve been reading Wine Spectator for at least two decades, tions as well as events and special projects. Matthews has also
and it has shaped my personal passion for wine, as it has for served as lead taster for the wines of Spain and a principal travel
millions of readers,” said Lindenmuth. “It’s an incredible and restaurant writer. During his tenure, Wine Spectator
honor to join this talented team and continue the legacy that became the most widely read wine publication in the world.

6 NOVEMBER 1, 2020
 NEWS Highlights
David Dearie Named CEO At SMWE Growth In U.S., China
STE. MICHELLE WINE ES- director of Brown-Forman Boosts Pernod Ricard
tates president and CEO Beverages for Western
Jim Mortensen retired on Europe and Africa, and as PERNOD RICARD LAUDED A RESIL-
November 1. He has been president and COO of ient performance in the U.S. and
replaced at the head of the Brown-Forman’s wine unit. China with bolstering its results in its
Washington state wine- Ste. Michelle saw first fiscal first quarter ended in September,
maker by industry veteran half revenues decline 12% with those two markets recording sales
David Dearie. to $277 million as the growth of 6% and 4% respectively.
Dearie was most recently company battled Covid-19 With ongoing disruptions across global
founder and managing and looked to reorient its travel retail (-64%), India (-13%), and
director of East Wind business on stronger foot- Europe (-5%), however, the drinks
David Dearie
Consulting Pty Ltd., pro- ing. Adjusted operating giant’s overall net sales fell 6% to €2.2
viding strategic, brand and income fell 18% to $28 billion ($2.6b). The company said it
financial advice to clients predomi- million in the first half of the year. Ste. expects the October-December period
nately in the wine and spirits sector. His Michelle’s shipment volume decreased to “be strongly impacted by Covid-19,
career also includes leadership positions by 15% to 3.3 million cases in the six- but sales to return to growth in H2.”
at Treasury Wine Estates where he month period, with higher pricing Pernod noted that the strong off-prem-
served as CEO, and as managing direc- partially offsetting lower volumes. ise environment has boosted U.S. sales
tor ANZ for Fosters Wine Group. Prior Mortensen held the CEO role for in recent months, as well as the partial
to that, he spent more than a about two years, taking the helm fol- reopening of the on-premise, and that
decade in senior executive roles at lowing the departure of longtime CEO sell-in ahead of the holiday season
Brown-Forman, including managing Ted Baseler. —Daniel Marsteller has been solid, although marked by
“adverse channel and category mix.”
Pernod said Jameson saw good Q1
Tequila Surge Drives Cuervo’s Gains gains for its Original Irish whiskey as
well as Cold Brew and Black Barrel.
ROBUST TRENDS IN THE TEQUILA AND RTD COCKTAIL CATEGORIES HELPED
catapult Cuervo’s third quarter net sales to a half-billion dollars on a 48% increase.
Volume leapt 26% to 6.6 million 9-liter cases, and operating income surged 169%
to $147 million. North America, accounting for about 72% of net sales, was the Diageo Set To Acquire
key growth driver for the company, with the region posting 79% sales growth to U.K.’s Chase Distillery
$360 million on volume gains of 51% to 4.4 million cases. Cuervo credited the
U.S. surge to “the strength of our largest brands within the region leading an DIAGEO HAS AGREED TO ACQUIRE
acceleration in depletions and shipments, and the Mexican peso depreciation against the U.K.’s Chase Distillery for an un-
the U.S. dollar on a year-over-year comparison.” Flagship brand Jose Cuervo disclosed sum. Chase is known for its
Tequila saw global net sales climb 62% to $198 million in the third quarter on Potato Vodka and Chase GB gin, as
volume up 28% to 2.3 million cases. The company also saw rapid growth for its well as flavored gin offerings like Pink
other Tequila labels—up a collective 47% to $133 million—and its RTD offer- Grapefruit & Pomelo, Seville Marma-
ings, which jumped 144% to $66 million. lade, and Rhubarb & Bramley Apple
Gin. The portfolio also includes
Campari’s U.S. Sales Rise 9% In Q3 Williams Elegant 48 Gin, made using
48 rare varieties of apple from 200-year-
CAMPARI GROUP POSTED NET SALES DOWN 2.8% TO €1.3 BILLION ($1.5B) FOR old orchards. Diageo says the Chase
the nine months through September, marking the first three quarters of its fiscal deal bolsters its range in the U.K.’s
JONATHAN LOCKWOOD SMITH

year, although the company reported a strong rebound in the most recent quarter, premium-plus gin segment, which has
in which sales increased by 13%. Adjusted EBIT for the nine-month period was been growing by strong double-digits
down 15% to €249 million ($294m), helped by an 11% jump in the third quar- in recent years. The transaction is
ter. Campari’s U.S. business was flat over the past nine months, but up 9% in the expected to close early next year.
third quarter, with depletions growing by double-digits and outpacing shipments.

T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M NOVEMBER 1, 2020 7
Liqueurs

Major Players Aim To Accentuate Burgeoning

Off-Premise Cocktail Movement Amid Pandemic
continued from page 1 >>>

to advance in recent years. The brand markets an extensive Southern Glazer’s, a total of $1 million to the United States
range of schnapps, brandy, and cocktail ingredients includ- Bartenders’ Guild Foundation Emergency Assistance Pro-
ing triple sec, curaçao, creme de menthe and amaretto. This gram and the Restaurant Workers Community Foundation,
spring it launched DeKuyper Classic Ol’ Fashion, a 30-proof along with working toward donations to various local orga-
liqueur intended to streamline the process of mixing an Old nizations. “Specifically through DeKuyper, we are working
Fashioned. The brand has been on a downward trajectory hand in hand with the trade,” Hidalgo said. “For example,
of late and lost 1.2% last year, hovering just above 2 million we’ve continued to sponsor trade events such as ‘Camp
cases in the U.S., having lost approximately 700,000 cases Runamok’ and ‘Tiki By The Sea’, which have moved online
from its high-water mark in the mid-aughts. this year given the circumstances.”
Ivan Hidalgo, senior director of rum, cordials and vodka Paul Masson Flavored Brandy also slipped last year. The
at Beam Suntory, says DeKuyper has seen solid performance Constellation brand, which is in the process of being sold
for its two largest variants, Triple Sec and Peachtree Schnapps. to Sazerac as part of a $255 million deal, had been in growth
Although cocktail ingredients have been hit hard by the dis- mode for several years, rising by more than 100,000 cases
ruptions of the Covid-19 pandemic, Hidalgo noted that from 2015-2018, before shedding 7,000 cases in 2019.
consumers have been experimenting more with cocktails at Sazerac will look to restore its former momentum.
home, lending boosts to DeKuyper offerings like Creme de Baileys has enjoyed renewed interest lately, adding nearly
Cacao and butterscotch-flavored Buttershots Schnapps. 100,000 cases and finishing last year at 1.5 million cases. It
Beam Suntory has been part of several initiatives to help grew 6.5%, the best of any leading brand. Its growth was
mitigate the economic toll of the pandemic on the on-prem- enough to overtake Jägermeister, making it No.-2 overall.
ise. The company recently pledged, in collaboration with The Diageo brand’s signature cream liqueur still accounts

U.S.—TOP TEN CORDIALS/LIQUEURS1

THOUSANDS OF 9-LITER CASE DEPLETIONS
Percent
Change2
Rank Brand Company Origin 2010 2015 2016 2017 2018 2019 ’18-’19
1 DeKuyper Beam Suntory Domestic 2,445 2,166 2,108 2,059 2,050 2,025 -1.2%
2 Baileys Diageo North America Ireland 1,305 1,262 1,274 1,351 1,409 1,500 6.5
3 Jägermeister Mast-Jägermeister US Germany 2,630 1,767 1,686 1,656 1,540 1,490 -3.2
4 Kahlúa Pernod Ricard USA Mexico 1,000 820 810 788 792 800 0.9
5 Hiram Walker Pernod Ricard USA Domestic 890 758 726 679 647 626 -3.3
6 Grand Marnier Campari America France 475 485 488 516 522 525 0.6
7 E&J Flavored Brandy E. & J. Distillers Domestic - 140 420 500 515 520 1.0
8 RumChata3 Agave Loco Brands Domestic 17 525 500 500 465 475 2.2
9 Paul Masson Constellation Brands Domestic - 345 395 410 447 440 -1.6
Flavored Brandy4
10 Kinky Prestige Beverage Group Domestic 380 428 417 425 427 430 0.7
Total Top Ten 9,142 8,697 8,824 8,883 8,814 8,830 0.2
Other Brands 10,164 9,684 9,326 9,122 9,141 9,235 1.0
5,6
Total Cordials/Liqueurs 19,305 18,381 18,150 18,005 17,955 18,065 0.6%
1
Excludes flavored whiskies
2
Based on unrounded data
3
Includes FrappaChata
4
Sale pending to Sazerac in 2020
5
Addition of columns may not agree due to rounding.
6
Includes flavored brandy, bitters, anise/pastis and spirits-based aperitifs Source: Impact Databank

8 NOVEMBER 1, 2020
 U.S.—LEADING LIQUEURS PRICED ABOVE $30 A 750-ML.
THOUSANDS OF 9-LITER CASES
Growth Percent
Rate1 Change2
Brand Company Origin 2014 2015 2016 2017 2018 2019 2014-2019 2018-2019
Grand Marnier Campari America France 472 485 488 516 522 525 2.2% 0.6%
Cointreau Rémy Cointreau USA France 240 252 263 270 282 306 5.0 8.3
St-Germain Bacardi USA France 99 113 116 96 108 108 1.7 -0.5
Fernet Branca Branca USA Italy 65 66 67 71 76 80 4.1 4.5
Chambord Brown-Forman France 74 74 71 68 70 71 -0.8 1.4
Beverages Worldwide
Godiva Diageo North America Domestic 68 62 60 55 59 61 -2.3 2.5
Drambuie William Grant & Sons Scotland 54 46 56 56 54 52 -0.6 -2.7
B&B Bacardi USA France 53 55 53 48 49 47 -2.6 -5.7
Total Leading Above $303 1,125 1,153 1,174 1,179 1,221 1,248 2.1% 2.3%
1
Average annual compound growth rate
2
Based on unrounded data
3
Addition of columns may not agree due to rounding Source: Impact Databank

for the bulk of its depletions but has been augmented in cases. Its fortunes may be even better this year if recent con-
recent years by seasonal and limited-edition offerings and trol state data is any indication, where Kahlúa is up 14%.
flavor innovations like Pumpkin Spice and Strawberries and Last month the brand added another line extension with
Cream. Baileys is the top liqueur brand in the U.S. priced Blond Roast Style, a coffee liqueur made with medium roast
between $15-$25. coffee containing hints of caramel, toffee, and citrus, and
“As dessert and treating trends have gained popularity, suggested to be served with tonic or coconut water.
Baileys thrived as the ultimate go-to indulgence because at “One of our successes last year was the launch of the brand’s
its core, Baileys is a real premium adult treat,” said Stacey first ready-to-drink convenience offering, the Kahlúa Style
Cunningham, brand director for Baileys and liqueurs at Espresso Martini,” said Rima Sawaya, senior brand manager
Diageo North America. “Since pivoting to a presence in the at Pernod Ricard. “The innovation uses a nitro widget that
everyday adult treating space several years ago, Baileys has creates nitro-foam when you pour into a martini glass, just
been able to focus on our key performance drivers, which like a Guinness.” Speaking about the pandemic, Sawaya
has resulted in continued momentum year over year.” noted, “The biggest challenge is trying to create a true sense
Baileys has also seen a boost from consumers filling time of connectivity through a virtual medium. Through all this,
at home this year by baking. Its use as a baking ingredient what we’ve learned is that brands have the uncanny ability
has lent a versatility that has served it well in quarantine. “As to act like the ‘glue that keeps people together.’ People in
a brand, we’ll continue to tap into relevant and timely bak- this time frame have looked to their favorite brands as a
ing, desserts and treating trends to build upon our extremely source of entertainment and escapism to rally behind and
strong brand awareness,” Cunningham said. In that vein, connect over.”
this May the brand partnered with Georgetown Cupcake to Prestige Beverage Group’s Kinky brand was up 0.7% last
create a limited edition Baileys-infused cupcake whose pro- year, reaching 430,000 cases. The brand launched its fifth
ceeds were donated to the Restaurant Workers’ Community line extension in 2019 with Kinky Ruby, a blend of grape-
Foundation, on top of $75,000 from the company. Addi- fruit, kiwi, and elderflower flavors. It followed Kinky Aloha
tionally, Baileys will release a series of baking videos online from 2018, which itself was spun off into Kinky Aloha Cock-
leading up to the winter holidays and donate to charities tails, a line of pineapple, coconut, and lime flavored malt
through the Baileys Holiday Baking Club. Diageo has beverages, in March of last year. Elsewhere, E&J Flavored
pledged more than $4.5 million to the bar and restaurant Brandy, from E&J Distillers, grew 1% to 520,000 cases.
community overall. Agave Loco Brands’ RumChata lineup advanced 2.2% to
Pernod Ricard is the only producer with two brands in the 475,000 cases. Earlier this year, RumChata added a Limon
top 10, Hiram Walker and Kahlúa. Fifth-ranked Hiram expression, a blend of Caribbean rum with dairy cream,
Walker lost 3.3% of its volume last year, dropping to 626,000 vanilla, and lemon, packaged in a bright yellow version of
cases in the U.S. Kahlúa, on the other hand, managed to the RumChata bottle and designed to be served on the rocks,
reverse its fortunes. After years of modest declines, the cof- in hot or cold coffee, or in cocktails.
fee liqueur grew 0.9% last year, inching back up to 800,000 French import Grand Marnier, from Campari America,

T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M NOVEMBER 1, 2020 9
 BITTERS/SPIRIT APERITIFS—TOP SEVEN BRANDS WORLDWIDE1
MILLIONS OF 9-LITER CASES
Percent
Change2
Rank Brand Company Origin 2010 2015 2016 2017 2018 2019 ’18-’19
1 Jägermeister Mast-Jägermeister Germany 6.6 6.9 7.1 7.2 7.5 8.5 12.5%
2 Aperol Campari Group Italy 2.0 3.0 3.4 4.0 4.9 5.3 7.8
3 Fernet-Branca Fratelli Branca- Italy 3.8 5.3 5.1 5.3 4.8 4.6 -4.2
Distillerie
4 Campari Campari Group Italy 2.8 3.2 3.3 3.4 3.3 3.4 3.0
5 Camparisoda Campari Group Italy 2.1 1.7 1.6 1.5 1.5 1.5 -
6 Ramazzotti Pernod Ricard Italy 1.2 1.3 1.2 1.2 1.0 1.1 9.3
7 Becherovka Pernod Ricard Czech Republic 0.6 0.7 0.6 0.6 0.6 0.7 4.2
Total Top Seven 19.1 21.8 22.3 23.2 23.6 25.0 5.7
Other Brands 8.4 7.6 7.5 7.5 7.5 7.7 2.8
Total Bitters/Aperitifs3 27.5 29.4 29.9 30.6 31.1 32.7 5.0%
1
Excludes cordials/liqueurs
2
Based on unrounded data
3
Addition of columns may not agree due to rounding. Source: Impact Databank

continues its steady growth. It rose 0.6% in 2019 as it reached

525,000 cases. The brand remains dominant in the over-$25 LIQUEURS—TOP SIX BRANDS
segment, and is the only top 10 brand at that price point. WORLDWIDE BY 2019 RETAIL VALUE
Its closest competitor in the $25-and-above arena is Coin- BILLIONS OF U.S. DOLLARS
treau, which is also on the rise at 306,000 cases, followed by
Campari, St-Germain, and Romana Sambuca, all of which
Baileys
are below 200,000 cases.
Campari America continues to see substantial gains for its
namesake brand, however, as well as Aperol. Campari was De Kuyper
up 13.6% last year to 159,000 cases and Aperol continued
its surge, advancing 50% to 241,000 cases. Campari’s U.S. Grand Marnier
business was flat over the past nine months, but up 9% in
the third quarter, with depletions growing by double-digits
Cointreau
and outpacing shipments as wholesalers continue to destock.
Campari noted that its off-premise sell-out trend is running
at about 31%, outpacing the 20% total market growth over Disaronno
the Covid period. Aperol and Campari are both up double-
digits in control states year-to-date, while Grand Marnier Kahlua
was up about 3% and is under some pressure this year due
to its reliance on the on-premise. $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75
No.-3 ranked Jägermeister lost ground last year as Baileys
Source: Impact Databank
surpassed it. Its 3.2% drop to just under 1.5 million cases
was an improvement over previous years but the brand has
now shed more than 1 million cases from its high of 2.6 mil- glassware can be a challenge. Jäger also launched a new Cold
lion cases a decade ago. Parent company Mast-Jägermeister Brew Coffee extension recently.
has increasingly looked to packaging and flavor innovations Littlefield noted that the brand has been resilient during
to reverse the brand’s fortunes; these line extensions have the pandemic and has gotten a big boost from e-commerce
proven successful according to Charles Littlefield, vice presi- partner Drizly, where original Jägermeister was up 516%
dent of brand marketing at Mast-Jägermeister US, who noted through July. The company has launched a number of phil-
that depletion growth of 10-pack Mini Meisters was up over anthropic initiatives through its Save the Night program,
40% following their 2018 launch and the 375-ml CoolPack which focuses on supporting nightlife communities. These
was appealing to consumers interested in sharing Jägermeis- initiatives include Meister Sessions, weekly interview seg-
ter at picnics, beaches, and other gathering places where ments on Jägermeister’s Instagram with creative personalities

10 NOVEMBER 1, 2020
 LIQUEURS—TOP 10 BRANDS WORLDWIDE1
MILLIONS OF 9-LITER CASES
Percent
Change2
Rank Brand Company Origin 2010 2015 2016 2017 2018 2019 ’18-’19
1 Baileys Diageo Ireland 6.7 6.2 6.4 6.8 7.0 7.3 4.0%
2 De Kuyper De Kuyper Royal Distillers Netherlands 4.3 3.7 3.6 3.5 3.5 3.5 -0.5
3 DiSaronno Illva Saronno Italy 1.7 1.6 1.6 1.6 1.6 1.6 1.5
4 Kahlúa Pernod Ricard Mexico 1.7 1.5 1.5 1.6 1.6 1.6 -0.2
5 Bols Lucas Bols Netherlands 1.4 1.5 1.5 1.6 1.6 1.6 -0.5
6 Lubelska Stock Spirits Group Poland 1.1 1.6 1.4 1.5 1.5 1.6 3.5
7 Cointreau Rémy Cointreau France 1.2 1.3 1.4 1.4 1.4 1.5 5.0
8 Zoladkowa Gorzka Stock Spirits Group Poland 1.2 1.3 1.2 1.1 1.2 1.3 5.5
9 Amarula Distell Group Ltd South Africa 1.2 1.3 1.3 1.4 1.3 1.2 -4.0
10 Choya Choya Umushu Co Ltd Japan 1.8 1.2 1.2 1.2 1.2 1.2 -3.2
Total Top 10 22.2 21.1 21.2 21.6 21.9 22.3 1.7
Other Brands 30.4 28.8 28.6 28.7 28.9 29.3 1.3
Total Liqueurs3 52.6 50.0 49.8 50.3 50.8 51.5 1.5%
1
Excludes flavored whiskies, bitters/aperitifs and anis/pastis.
2
Based on unrounded data.
3
Addition of columns may not agree due to rounding. Source: Impact Databank

benefiting a charity of the artist’s choice, and Bartender

Lunch Donations, which has generated approximately BITTERS/APERITIFS—TOP FOUR BRANDS
$70,000 in meals for bar workers. WORLDWIDE BY 2019 RETAIL VALUE
Among other players in the U.S. DiSaronno International BILLIONS OF U.S. DOLLARS
recently unveiled a nitro cold brew coffee cocktail under its
Tia Maria brand. The 4% abv Tia Maria Iced Coffee Frappé
debuted nationally in recent weeks, retailing for $11 a 4-pack Jagermeister
of 12-ounce cans. Earlier this year, DiSaronno International
aligned with RNDC-Young’s across nine Western markets,
switching from Southern Glazer’s. DiSaronno and RNDC-
Aperol
Young’s are also linked in Texas and other key states.
Bols, known for its eponymous range of liqueurs, recently
added Pallini Limoncello to its import lineup under Lucas
Bols USA. Family-owned Pallini’s range includes its name- Fernet Branca
sake Limoncello as well as Limoncello Cream, Peachello,
and Raspicello offerings. The national distribution agree-
ment with Lucas Bols runs for five years.
Campari
Global Outlook
Worldwide performance for liqueurs and aperitifs looks quite $0.50 $0.75 $1.00 $1.25 $1.50
different than in the U.S. The total liqueurs market world-
Source: Impact Databank
wide grew 1.5% to 51.5 million cases while bitters and aperi-
tifs grew a full 5% to 32.7 million cases. Baileys sells nearly
6 million cases outside the U.S., giving it 7.3 million cases grew 7.8% to 5.3 million cases. Besides Jäger, Italy domi-
overall. DeKuyper, on the other hand, adds only 1.5 million nates the global bitters market with five of the top seven
to its U.S. total, leaving it with 3.5 million overall. DiSa- brands; Aperol, Fernet-Branca, Campari, Camparisoda, and
ronno, from Illva Saronno, was up 1.5% at 1.6 million cases Ramazzotti all hail from the boot. Only Fernet-Branca saw
while Dutch label Bols lost 0.5%, also at 1.6 million cases. losses last year, slipping to 4.6 million cases. Fernet-Branca
Jägermeister leads globally among bitters brands at 8.5 recently opened Branca USA, a wholly-owned import unit,
million cases. It added 1 million cases worldwide last year, to bolster its momentum stateside.
making for 12.5% growth. It is followed by Aperol, which —Danny Sullivan

T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M NOVEMBER 1, 2020 11
 INTERVIEW

Marc Taub, President & CEO

Taub Family Companies

New York-based Taub Family launched Roscato cans in

Cos. encompasses Palm Bay March, and we’re seeing wide
International, known for mil- acceptance there.
lion-case players like Cavit and
Roscato, as well as fine wine IMPACT: Which other labels
unit Taub Family Selections, have good growth potential
housing a stable of higher- for Palm Bay?
end labels including Bertani,
Fontanafredda, Planeta, Fer- Taub: We’ve launched an-
rari, Mastroberardino, Sella & other sweet wine called
Mosca, Trimbach, Jean-Luc Confetti Sweet Pink through
Colombo, Champagne Boizel, Lafite Rothschild, Saget La Olive Garden restaurants, which have really outperformed
Perriere, Greysac, Invivo, and Taub Family Vineyards, among as they’ve done a terrific job of tilting toward takeout. We’ve
many others. Impact managing editor Daniel Marsteller recently also seen very positive trends on Vanderpump. The rosé is
spoke with president and CEO Marc Taub to get an update on continuing to show tremendous growth, and we’ve just added
trends within the portfolio and the state of play in the U.S. wine a Cabernet and Chardonnay from Sonoma to the line. We
market heading into the fall season. had a dramatic package change this year on Peter Yealands
from New Zealand, now known as Yealands. It’s a terroir-
IMPACT: What key developments have you seen in the Palm centric package that centers on the origin and heritage of
Bay portfolio this year? the Yealands vineyard on the coast outside of Marlborough.
And from California, we launched Mon Frère last year, with
Taub: Fortunately, we’ve seen tremendous resilience on the very even growth across the Cabernet, Chardonnay, and
part of our biggest brands, including an exceptional accel- Pinot varieties.
eration for Cavit. In the last 26 weeks we grew at 30%. In
the last couple of years, there was a misunderstanding of a IMPACT: What’s the situation at Taub Family Selections
change in the mindset of the 1.5-liter consumer. A lot of (TFS), your fine wine unit?
chains stopped promoting 1.5-liters to a certain degree,
because they were looking at the negative overall trend line. Taub: When you look up and down our fine wine portfolio,
But that included some very low-end 1.5s that had been anything that’s doing more than 25% of business on-premise
discontinued. With fewer 1.5s in distribution overall and is going to be down. In many cases, it’s more like 50% of
the brand recognition that Cavit represents, we’ve seen an the brand. We’re utilizing the strength of our retail teams to
incredible resurgence with all of our varieties. With Roscato, help bring those brands into the retail market, and many of
we’ve seen 40% growth in the last 26 weeks, and we added them are developing a natural pull. Trimbach has made up
RICK WENNER

a Moscato to the Roscato line earlier this year. We also more than 50% of their on-premise losses at retail. Los Vas-

12 NOVEMBER 1, 2020
 INTERVIEW

cos, a tremendous brand from

the Rothschild family from PALM BAY INTERNATIONAL—
Chile, is seeing a resurgence in KEY BRANDS IN THE U.S.
retail growth. With Bertani, THOUSANDS OF 9-LITER CASE DEPLETIONS
which depends heavily on the
on-premise for Amarone and Percent
Change1
Ripasso, we’re seeing good Brand Origin/Type 2016 2017 2018 2019 2018-2019
growth in Bertarose rosé and Cavit Italian Table 3,628 3,555 3,484 3,550 1.9%
Pinot Grigio. We’re shifting Roscato Italian Table 650 810 891 982 10.2
gears on Mastroberardino, Lunetta Prosecco 263 279 287 298 3.8
which we began bringing to Roscato Dark & Smooth Italian Table - - 53 64 20.8
market in the spring, to push it Yealands New Zealand Table 23 26 31 37 17.0
to retail as much as possible. Vanderpump Rose French Table - 6 19 33 72.9
Last year, we launched SJP by Drumshanbo Gunpowder Irish Gin - 5 20 30 50.0
2
Invivo, the Sarah Jessica Parker Total Key Brands 4,563 4,680 4,785 4,993 4.3%
Sauvignon Blanc from New 1
Based on unorunded data.
Zealand. That also was joined 2
Addition of columns may not agree due to rounding. Source: Impact Databank
by a rosé in the spring, and it’s
definitely working in the retail
market. Sella & Mosca’s Cannonau, from Sardinia, is also
doing phenomenally at retail right now. IMPACT: How’s progress at your Saracina property in
Mendocino?
IMPACT: You recently transitioned the TFS portfolio to your
Independence Wine & Spirits wholesale operation in New Taub: We’ve got a phenomenal property that we’re continu-
York. Why was that the right call? ing to reshape. We’re working on a long-term plan for a
visitor experience, and beyond our 100 acres of vineyards
Taub: It puts us in a position to be able to talk about our on the ranch we’re finding some great sources all over the
brands with the retail and on-premise communities first- valley. We’re also expanding the overall winery footprint to
hand every day. The market is changing, with a major shift accommodate production from other sites in California, and
toward the retail environment, and bringing distribution we’ve repackaged the brand with a whole new look and feel.
back into our own hands is the right move at just the right This year, we bottled a single-vineyard expression from the
time. New York retailers are familiar with my family and our Lolonis vineyard—the oldest Sauvignon Blanc vineyard in
history (at the wholesale tier) and I think will very much California, planted in 1942. We’re releasing that in the new
embrace our expanded role in the New York market. package and expanding into new markets with it, as well as
a Winter’s Edge field blend.
IMPACT: What’s the status of your foray into the California
wine business? IMPACT: What’s new on the spirits side of the business?

Taub: California is very exciting for us. The biggest difficulty Taub: Drumshanbo Gunpowder gin is the leader in our
right now is not being able to be out there as much as I would spirits stable and showing growth in excess of 50% this year.
like. On the Napa side, we’ve fully transitioned Heritance We’ve had a nice balance of on-premise and retail from the
to become Taub Family Vineyards. We’ve got partnerships beginning. We’re going to launch a single pot still Irish whis-
with Andy Beckstoffer and the Morisoli family in terms of key from Drumshanbo as well, staying in the very high end
sources for incredible wine, and added to that, a great source at a $65 retail price. We’re also in the process of bringing to
from Mount Veeder and Howell Mountain. My son, Jake, market Jacob’s Pardon, an American whiskey brand, first
introduced me to Jesse Katz from Aperture Cellars, spurring with two limited production, barrel-strength single cask ex-
another partnership. Last vintage, we began making wine pressions. These will be followed by a small batch offering,
with Jesse at his new state-of-the-art Aperture facility. Look- before we go into a broader line. Dos Maderas rum is seeing
ing ahead, we’re going to do a separate line of wines from excellent growth of 32% this year, and we’ve added to our
the Beckstoffer estate in cooperation with Jesse. Mexican portfolio with Gracias a Dios Mezcal.

T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M NOVEMBER 1, 2020 13
China

Marketers See A Rapid Turnaround In China,

With Cognac And Scotch Leading The Charge
continued from page 1 >>>

2019, while beer declined 4.3% to 376.5 billion hectoliters. starting from Southeast Asia, with potential expansion to
Meanwhile, baijiu, China’s largest spirits category, dipped other markets to follow at a later stage.
well below 1 billion cases in 2019. Leading Western spirits, Western spirits like Scotch and Cognac are gaining
though, had a positive performance last year, as Cognac traction from a value and volume perspective. Last year,
(+4.8%) and Scotch (+8.9%) imports both grew, excluding Cognac grew 4.8% to 1.98 million cases, excluding re-ex-
re-exports from Singapore, Hong Kong and Macau. How- ports from Singapore, Hong Kong and Macau. Meanwhile,
ever, wine imports fell 11% to 68 million cases. Scotch grew by 8.9% to 1.34 million cases, also excluding
re-exports, marking the category’s third straight year of
Baijiu Struggles as Cognac, Scotch Soar growth. According to the Scotch Whisky Association, the
Baijiu remains the largest category in China, holding more value of direct exports of Scotch to China has grown from
than 90% of total spirits consumption. Like China’s beer under £10 million in the early 2000s to around £89 million
market, though, baijiu continues to contract, falling 11.5% ($116.1m) last year. The Bureau National Interprofessional
to 810 million cases in 2019. A handful of Western market- du Cognac (BNIC) counted the Far East market as a key
ers have dabbled in baijiu, either through partnerships or driver for Cognac last year, with 27.5% of total shipments,
brand investment. Diageo was at the forefront, investing in or 59.5 million bottles, sent to this market, driven by China.
the Shuijingfang label, and most recently increasing its Martell remains the largest Cognac label in China, as
stake from 40% to just over 63% through a £768 million Pernod Ricard sells nearly half its global volume there and
($951m) investment. Meanwhile, in November 2019, has a market share above 50% of the category. While Covid
Pernod Ricard entered into a strategic partnership with hurt the key selling season of the Chinese New Year in Janu-
Wuliangye International (HK) Ltd., one of China’s largest ary 2020, Pernod has witnessed a resilient performance in
baijiu producers. The collaboration will include jointly China in its fiscal first quarter that ended in September, with
strengthening infrastructure, and developing regional sales a sales growth of 4%, due to on-trade recovery and sell-in
ahead of the Mid-Autumn Festival.
CHINA—COGNAC AND “Since the outbreak of the pandemic, e-commerce, social
commerce and online-offline integration have developed
SCOTCH WHISKY IMPORTS—2009-2019*
very strongly,” says Jean-Etienne Gourgues, managing direc-
MILLIONS OF 9-LITER CASES
tor at Pernod Ricard China, of the spirits market. “As China
Scotch Whisky Cognac has been the first major economy to recover, we’ve seen step-
2.00 by-step normalization of traffic in restaurants, night clubs
and KTVs.” He notes that Pernod continues to recruit new
Martell consumers through marketing programs like Gour-
1.75 met Theatre, launched in September 2020; its new retail
concept, L’Atelier Martell Shenzhen, which also opened in
September; and innovations like Martell Noblige Shenzhen
1.50
Limited Edition and Martell XXO, the first XXO Cognac
to be introduced into China, in December 2019.
1.25 Rémy Cointreau also saw a rebound of its Cognac busi-
ness in China during its fiscal first half ending September
30. Globally, Rémy Cointreau’s core Cognac business, led
1.00 by Rémy Martin, fell 18% to €305 million ($360m), but
only declined 2.5% in the second quarter, thanks to mo-
mentum in the U.S., and the recovery seen in mainland
0.75 China. Rémy points to the “remarkable growth” of its brands
’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19
Calendar Years during the Mid-Autumn Festival celebrations, which take
*Excludes re-exports from Singapore,
Hong Kong and Macau Source: Impact Databank place on October 1, as confirmation of China’s recovery.
Moët Hennessy also saw a decline in Cognac consump-

14 NOVEMBER 1, 2020
tion during its first fiscal half-year ending June 30 due to CHINA—BAIJIU MARKET
the pandemic, with Cognac sales down 21% and volumes BILLIONS OF 9-LITER CASES
down 15%. However, after the slowdown in demand at the
beginning of the year and the timing of the 2020 Chinese 1.4
New Year, Hennessy saw a strong rebound in China. Hen-
nessy’s growth in China during the second quarter was driven
1.2
mainly by e-commerce and off-trade retail sales, according
to the company.
Like Pernod, Hennessy is dedicated to courting Chinese 1.0
consumers through limited edition bottlings, brand experi-
ences, and Chinese-centric collaborations. In August, the
Cognac house opened an outpost of its Hennessy retail bou- 0.8
tique in China in the resort town of Hainan Island. Hen-
nessy has also collaborated with two prominent Chinese
artists this year, including Zhang Huan, who designed a new 0.6
bottling commemorating the Chinese Lunar New Year; and
Cai Guo-Qiang, who created daytime fireworks with his
0.4
signature gunpowder medium, with the event held at the 2005 2010 2015 2016 2017 2018 2019
Maison Hennessy in France, on the Charente River. Calendar Years

Scotch has also been rising again in China. “Broadly in Source: Impact Databank
sync with the country’s economic recovery trends, the inter-
national spirits market in China has emerged relatively
strongly from the depths of the pandemic and overall the DIAGEO AND PERNOD RICARD
market is nearly back to pre-Covid-19 levels,” says Mark
Edwards, managing director, Diageo China, noting that HAVE BENEFITED FROM
Scotch continues to be a growth driver. In its Greater China
region, Diageo’s net sales declined 7% for the fiscal year end- THE STRONG REBOUND
ing June 30. Strong performance in Scotch, liqueurs and
beer was offset by a decline in Chinese white spirits. Scotch IN CHINA’S SCOTCH WHISKY
growth of 3% was driven by single malts and Johnnie Walker
super-deluxe growth in mainland China along with contin- MARKET, WITH BLENDS AND
ued growth in Taiwan. Diageo has been leveraging Johnnie
Walker in the region, most recently through a special bot- SINGLE MALTS BOTH SHOWING
tling of Blue Label commemorating the Scotch brand’s 200th
anniversary in conjunction with the 600th anniversary of RENEWED GROWTH.
the Forbidden City. In addition, the company has extended
its ranges of Scotch on offer in China, including expressions
of The Singleton, Mortlach, Talisker, and Johnnie Walker. to just below 200 million cases in 2019. Wine consumption
Pernod has also seen an opportunity to expand its Scotches’ reached its zenith in 2017, at 215 million cases. The major-
presence in the region. According to Gourgues, they have ity of this volume is derived from China’s robust domestic
seen “a strong performance of the whisky portfolio, both wine industry, whose winemakers continue to take cues from
blended whiskies and single malt.” Pernod Ricard opened a French producers. French wines have long dominated the
whisky retail store in Xiamen to showcase its portfolio and import segment, particularly selections from Bordeaux, given
introduce of new collection of its luxury single malts, includ- its perceived cachet and Chinese drinkers’ preference for red
ing Caperdonich, Longmorn, and Glenkeith. Further bol- wines. However, French imports have been in sharp decline,
stering its long-term commitment to whisky in China, with New World wines from Chile and Australia supplant-
Pernod Ricard broke ground on its $150 million Emeishan ing them, due to free trade agreements between both of these
malt whisky distillery in August 2019. Set to open in 2021 countries and China. French wines plummeted 21.5% to
and located in China’s Sichuan province, the 15-hectare site 14.9 million cases in 2019, and fell 36.2% to $644 million
will be the first malt whisky distillery in the country. by value. Bordeaux shipments to China fell 18.1% to 4.67
million cases last year, excluding re-exports from Singapore,
Wine: Chile, Australia Climb Hong Kong and Macau. Champagne shipments to the
Over the last 20 years, China’s wine market has expanded region also fell, decreasing 15.5% to 153 million cases,
by 75 million cases, from 125 nine-liter million cases in 2000 excluding re-exports.

T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M NOVEMBER 1, 2020 15
 CHINA—BOTTLED STILL WINE IMPORTS BY ORIGIN
Volume Value per Case Value
Value (millions of 9-liter cases) Percent (US dollars) Percent (millions of US dollars) Percent
Rank Origin 2018 2019 Change3 2018 2019 Change3 2018 2019 Change3
1 Australia 13.10 13.38 2.1% $54.77 $60.81 11.0% $717.5 $813.7 13.4%
2 France 19.01 14.93 -21.5 53.07 43.13 -18.7 1,008.8 644.0 -36.2
3 Chile 8.28 7.94 -4.1 32.49 33.83 4.1 268.9 268.6 -0.1
4 Italy 3.28 3.29 * 44.52 40.58 -8.8 146.2 133.3 -8.8
5 Spain 6.55 5.68 -13.2 23.85 23.35 -2.1 156.1 132.6 -15.1
6 United States 1.10 0.67 -38.7 63.20 49.02 -22.4 69.5 33.0 -52.4
7 Argentina 0.58 0.49 -14.7 45.09 48.69 8.0 26.1 24.0 -7.9
8 Portugal 0.82 0.78 -4.8 29.42 30.60 4.0 24.0 23.8 -1.0
9 South Africa 1.07 0.72 -32.6 30.34 30.54 0.7 32.5 22.1 -32.1
10 New Zealand 0.28 0.26 -7.2 102.70 80.26 -21.8 28.7 20.8 -27.5
Total Top Ten1 54.06 48.14 -11.0 45.84 43.95 -4.1 2,478.3 2,115.8 -14.6
Other Origins 2.51 2.38 -4.9 38.12 36.52 -4.2 95.5 87.1 -8.9
Total Imports2 56.57 50.52 -10.7% $45.50 $43.60 -4.2% $2,573.8 $2,202.9 -14.4%
* Less than 0.05%.
1
Addition of columns may not agree due to rounding.
2
Excludes sparkling and bulk.
3
Based on unrounded data. Source: Impact Databank

Australia took over as the top imported wine region by CHINA—WINE MARKET 2000-2019
value in China in 2019, and is on track to surpass France by MILLIONS OF 9-LITER CASES
volume this year. Wines from Down Under grew 2.1% to
13.4 million cases, and increased 13.4% to $813.7 million 225
last year. Top Australian producers like Accolade and Trea-
sury Wine Estates have long considered China a key market,
200
given that it is Australia’s largest trading partner, and the top
market for Australian wine exports. However, recent tensions
between the countries have threatened this comity, includ- 175
ing an anti-dumping probe into imports of Australian wine,
which is examining Australian wine imports in containers
of two liters or less to assess damage to the domestic wine 150
industry from 2015-2019. The Chinese Alcoholic Drinks
Association requested the inquiry, which launched in
August, asking regulators to look into 10 Australian wine 125
producers, including Treasury and Accolade.
The investigation “could result in a punitive tariff that
100
would become a challenge to the competitiveness of Austra- ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19
lian wines. The investigations are scheduled to end before Calendar Years
August 2021 and could be extended to February 2022 if Source: Impact Databank
necessary,” says Yoshi Shibuya, CEO of importer ASC Wines,
a subsidiary of Suntory Holdings Ltd. “Because of this the
wine trade in China is stocking up Australian wine to avoid Like Australia, Chile has become a wine powerhouse in
the cost increase in case of an unfavorable ruling.” He notes Asia due to its free-trade agreement. Chilean imports slowed
that there has been a significant decrease in imported wine last year, down 4.1% to 7.94 million cases, but China re-
across the board due to Covid-19, but points to data from mains the South American country’s top wine export
China Customs for January-August 2020 to affirm Austra- market. “Without a doubt, the Covid-19 pandemic has had
lia’s position as the No.1 exporter of wines to China in both a major impact on the wine market in China, with a decrease
value and volume at 72.75 million liters and $457.47 mil- of close to 35% in imported wine,” says Cristián López,
lion. France is at 63.27 million liters and $305.71 million, corporate export director, Viña Concha y Toro, noting how
while Chile is at 56.21 million liters and $139.76 million. critical the on-trade is to Chinese wine consumption. “How-

16 NOVEMBER 1, 2020
ever, we’re seeing a gradual opening and recovery of on-trade CHINA—TOTAL WINE IMPORTS—
business, as well as increasing e-commerce growth, so we’re
2009-2019*
optimistic.” He notes that the hyper-fragmentation of the
MILLIONS OF 9-LITER CASE SHIPMENTS
market makes it a complex region to compete in, but that
the company is dedicated to sales expansion in China, 90
focused on highlighting its Casillero del Diablo label.
While nearly all imported wines fell last year, the pandemic 80
has compounded the challenges faced by U.S. producers.
The ongoing U.S.-China trade tensions, especially when 70
juxtaposed with the FTAs enjoyed by other New World win-
eries in Australia and Chile, have led U.S. wines to fall by 60
more than 50% to below 1 million cases. This steep decline
reflects the trio of tariffs that went into effect over a 14-month 50
period from 2018-2019: a 15% levy in April 2018, a further
10% hike in September 2018, and a 15% increase in June 40
2019. However, in 2020, a tariff relief program for select
U.S. agricultural goods, including wine, went into effect, 30
wherein U.S. wine importers can reduce their tariff rate by
20
up to 25% by applying through China’s Ministry of Finance ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19
for a dispensation. Calendar Years
Despite these challenges, Bill McMorran, vice president *Includes bulk Source: Impact Databank
and general manager, Asia for E.&J. Gallo Winery, remains
confident about the long-term potential for the market, as
the company continues to invest. “During the pandemic, CHINA—SPARKLING WINE
we saw that Chinese consumers only had a slight increase in
IMPORTS BY TYPE—2012-2019*
wine consumption frequency, unlike matured wine markets
THOUSANDS OF 9-LITER CASE SHIPMENTS
in the Western countries,” he notes, pointing to the indus-
try’s reliance on social or business occasions. “Drinking at Prosecco Champagne Cava
home became the key drinking occasion. Unsurprisingly, the 250
online wine channel has seen strong growth. This trend is
going to continue to be prevalent.” Gallo continues to build
on the e-commerce initiatives it established in 2019 through 200
a three-year strategic partnership with Alibaba, which in-
cluded the opening of an E.&J. Gallo Winery flagship store
150
on Alibaba’s Tmall, and feature positions on Tmall’s Super-
market, Hema Supermarket, and RT-Mart. The California
producer also launched its WeChat account “Jia Lu Jiu 100
Zhuang” (Gallo Winery). According to McMorran, the win-
ery has doubled its business in e-commerce this year. Gallo
is also exploring other potential opportunities for virtual 50
brand experiences in China, like the virtual tasting they held
in September together with regional business partners.
2012 2013 2014 2015 2016 2017 2018 2019
China’s Resilience Set to Continue Calendar Years
As other major economies continue to struggle due to the *Excludes re-exports from Hong Kong Source: Impact Databank
pandemic, China appears well on the road to fiscal recovery,
with the wine and spirits industry following suit. Marketers
are bullish about the region’s rebound, and the continued wine, international producers also see great potential for
trends of premiumization and demand for Western labels. imports, even after the challenges posed by the pandemic.
“China’s spirits market has become more sophisticated and “The Chinese market is fast-moving and undergoing signifi-
more open,” says Edwards at Diageo China. “It is exciting cant change, but we’re seeing a scenario of greater openness
to see more diversified Chinese spirit enthusiasts, with a to international brands, and cosmopolitan consumers who
growing following among younger generations as well as like to travel and enjoy wine as part of their quality of life,”
more women. The market potential for spirits is high.” In says Lopez at Viña Concha y Toro. —Mary E. Keefe

T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M NOVEMBER 1, 2020 17
 NEWS Roundup
Management Moves
BACARDI LTD HAS NAMED been with William Grant •KEN EVENSTAD, WHO MADE HIS

Drinks Briefs
company veteran Mauricio since October 2007, ini- fortune in the pharmaceutical busi-
Vergara as president and tially as managing director, ness before building one of Oregon’s
COO of Patrón, as it looks North America. In April most prominent wineries, Domaine
to capitalize on surging 2013 he was named chief Serene, died at his home Oct. 21 af-
growth for the Tequila cat- commercial officer, before ter a long history of chronic pulmo-
egory both in the U.S. and replacing Stella David as nary issues. He was 77. Oregon’s wine
globally. Vergara will re- CEO in 2016. industry was young when Ken and
port directly to Bacardi •Heaven Hill Brands has his wife, Grace, arrived 31 years ago,
CEO Mahesh Madhavan. named Eric Hund senior looking for land to plant a vineyard.
Vergara will drive the com- vice president of U.S. sales. They settled on a 42-acre property
pany’s efforts to “accelerate Mauricio Vergara Hund joined the company on the southernmost peak of the
growth in the well-estab- in 2016 as vice president Dundee Hills. The Evenstads grew
lished U.S. market, while of sales for the Deep Eddy the business over the years and today
leading expansion interna- Vodka division. Prior to own 1,000 acres, with 300 planted
tionally where consumers joining the company, to Pinot Noir and Chardonnay.
are starting to discover and Hund was a vice president
love premium Tequila.” of sales at Republic Na- •BROWN-FORMAN HAS AGREED TO
Vergara was most recently tional Distributing Com- acquire Part Time Rangers Holdings
managing director for pany in Texas. In his new Limited, based in New Zealand, for
Bacardi-Martini Australia role, the 25-year industry an undisclosed sum. Part Time
and New Zealand, a post veteran will lead sales Rangers produces spirit-based RTDs
he held while also manag- activities across the Heaven with all-natural fruit flavoring. The
ing the integration of Hill portfolio. portfolio includes Lime Vodka, Pas-
Patrón into the Bacardi Simon Hunt •New York-based Vintus sionfruit Apple Vodka, Apple Lime
fold following its 2018 has named John Barton as Rum, Strawberry Raspberry Gin,
acquisition in a deal valuing the Tequila director of strategic retail. Barton was Ginger Lime Whiskey, and Apple
giant at $5.1 billion. previously senior national wine buyer Lemon Gin. Brown-Forman called
•Simon Hunt, who has led William at Cost Plus World Market, overseeing the move a targeted investment that
Grant & Sons for nearly five years as 31 states and over $200 million in will complement its Jack Daniel’s
chief executive, has stepped down and business. He then transitioned to the RTD business in New Zealand and
is leaving the company. A successor will distributor side, joining Young’s Market Australia. The transaction is subject
be named in due course. In the mean- in California. As vice president, Fine to customary closing conditions.
time, William Grant & Sons chairman Wine – Strategic Retail, Barton oversaw
Glenn Gordon and CFO Giles Wilson revenue growth of more than 50% •CHOPIN IMPORTS HAS LAUNCHED
will assume Hunt’s duties on an interim until his departure earlier this year. a selection of spirits from Ireland’s
basis. In a statement, the company’s • Domaines Barons de Rothschild Hinch Distillery in the U.S. Chopin
board noted that during Hunt’s tenure (Lafite) has appointed Philippe Rolet has released Hinch Small Batch whis-
“the profitability of the business has as general manager of Chile’s Viña Los key (matured in Bourbon casks and
grown considerably, and Simon has Vascos, in addition to his current post retailing for $30), Hinch 5 Year Old
driven a large part of this. Latterly as as general manager of Argentina’s Double Wood (ex-Bourbon and new
CEO, he has delivered a new strategy Bodegas Caro. In this new role, Rolet American oak, $40), Hinch 10 Year
BACARDI LTD (TOP), AND MICHAEL GROSS

for the business and embarked on a sig- will develop DBR Lafite’s South Ameri- Old Sherry Cask ($55), and Ninth
nificant capital development program can estates, both in the vineyards and Wave gin ($30). These spirits are now
from which the company will continue international markets. Prior to joining available in 11 states with national
to benefit going forward.” Among DBR Lafite in 2018, Rolet spent two distribution (and an expanded lineup
Grant’s investments have been its dis- years at Alejandro Bulgheroni’s wine including Single Malt and Pot Still
tillery projects in Ireland for Tullamore group managing three Argentinean whiskies) to follow in February.
Dew and Milagro in Mexico. Hunt had wineries and vineyards.

18 NOVEMBER 1, 2020 T O S U B S C R I B E , G O T O W W W. I M P A C T N E W S L E T T E R . C O M