Sales Of ‘Status’ Spirits Continue To Climb

Though the full impacts of COVID-19 are still unknown, the IWSR Drinks Market Analysis has unveiled that ‘status’ spirits (brands retailing US$100 or more) are growing faster than the total spirits market. 

The current value of the status spirits market is $8.3-billion (not including the baijiu category).

The category has been increasing at a value compound annual growth rate of 7% (2014-2018), far outpacing the total global spirits market growth at 2% CAGR.

Overall, findings showed that status spirits are outgrowing lower-end options. Cognac and Scotch, two established categories of status-driven spirits, are a strong driving force of this growth. 

But smaller categories in the luxury market are gaining momentum—US whiskey and tequila are seeing fast growth and becoming major categories to watch, while Irish whiskey and rum are slowly building their presence in the high-end sphere.

Importance of Accessible Offerings

The study breaks status spirits into categories: “affordable luxury”, encompassing spirits in the $100 to $1,000 range, and “ultra-prestige”, counting bottles that price upwards of $1,000. The most value sits in the $100-250 bracket, the IWSR reports, though the $250 to $1,000 segment is expected to see quick growth on the horizon.

The study noted that the ‘affordable luxury’ range asks as a gateway category. Those who are picking up the $150 bottles today, will be the ones purchasing the $1,500+ bottles in the future. Brands that cater to a wide range of price points are building brand loyalty, attracting younger drinkers who will move up through brand’s price points and the expressions as they age. (The study particularly recommends higher-end brands offering sample-size bottles of luxury expressions.)

The ultra-prestige category is largely made up of products designed to create a brand halo: ultra-prestige expressions are often released as high-end, collectible releases, many that utilize unique decanters, display cases and authenticity certificates. This category thrives on exclusivity and rarity—releases are limited, covetable, and often hard (and pricey) to get hands on.

“Though the status spirits market is relatively small in size, these are highly coveted and often very rare and allocated products that appeal to affluent and aspirational spirits aficionados and collectors, and yes, sometimes to people only seeking that badge value,” says Mark Meek, CEO at IWSR Drinks Market Analysis. “It’s a unique and nuanced sector which has definitely benefited from the general trend towards premiumization, and also by the younger generation who continue to seek out luxury and find it in high-end spirits.” (Vinexpo Paris found supporting trends, expecting the premium and super-premium categories to grow the fastest at 4.7% CAGR between 2018 and 2024).

Turning back to Scotch and Cognac, leaders in the status spirits market, the Cognac category has found success in individual expressions (the IWSR notes Louis XIII and Hennessy as strong examples in the ultra-prestige sector). Scotch finds success in offering a series of products. In particular, Macallen, Laphroiag and Bruichladdich have generated hundreds of millions through annual and limited releases. 

The sale of individual casks (currently estimated at $40-million) is growing in the Scotch world. This trend is predicted to trickle into other categories, including bourbon, rum and whiskey. 

Will COVID-19 Affect Growth?

“Though we conducted our study prior to the current COVID-19 situation, when we look at similar past events, such as SARS and the 2008 financial crisis, luxury goods and status spirits in particular have always recovered to previous levels,” says Meek.

The luxury market also leans heavily on the Chinese consumer and on global travel retail. According to 2018 IWSR figures, travel retail counts for 1.5% of global spirits volume (excluding baijiu). China consumers about 23% of all alcohol in the world. How these markets rebuild post-pandemic will play into the future of the status spirits category.

The IWSR underlines the resilience of luxury spirits in the aftermath of economic downturns—During the 2008 and 2012 periods, global prestige-plus spirits (accounting for spirits $100+) grew 82% in volume, and almost reaching 230% in value. 

Part of the category’s ability to weather uncertain times is the distribution channel. Status spirits are mainly sold in fine wine and spirits retail stores or via e-commerce, less so in bars and restaurants. “This bodes well for these products in this current climate,” notes Meek. Masters of Malt, an online spirits retailer with broad selection of high-end whiskeys, saw sales soar 200% over the last week of March.