Yes, the whiskey market is good — but it has been better

David A. Mann

Reporter- Business First

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I write a lot about how the bourbon industry (and the North American whiskey market in general) is doing very well in recent years. There are various reasons for this: Pop culture has elevated its popularity, and there's been a big jump in international appeal and flavored whiskeys (more on that later).

 

Industry people talk about their business in a very rosy light. But last week, we got some perspective on this in terms of numbers. Sure, North American whiskey consumption is growing, but it's not at its peak, according to Jane Morreau, executive vice president and CFO of Louisville-based distilling giant Brown-Forman Corp. (NYSE: BF-B). Brown-Forman is the company behind Jack Daniel's, Woodford Reserve, Old Forester and other brands.

Morreau's comments were made while she discussed the impact of flavored whiskey on the American whiskey market.

Consumption of American whiskey peaked in the 1970s, she said. About 100 million cases of American whiskey were sold each year at the time. Sales today are about half that amount. Meanwhile, the U.S. population that is of legal drinking age has grown about 50 percent. That means that per capita consumption of American whiskey has fallen by almost 70 percent since the 1970s, she said.
Interest in the spirit began to reignite in 2010, and Morreau believes there's more to come.
"We think this is the first of many, many years to come of recapturing the lost market share that I just described to you," she said.

Morreau is not alone in that thinking. Plenty of companies — including Diageo PLC in Shelbyville and Maker's Mark Distillery Inc. in Loretto— have announced huge investments in production capacity. They likely wouldn't be doing so if they thought the market would fade in a few years.
Flavored market

Morreau also noted that in 2013, flavored whiskeys accounted for about 45 percent of the American whiskey volume growth in the United States. Demographics have played a major role in the popularity of flavored whiskeys, with increased interest from women and minorities. Additionally, Morreau said, millennials have grown up with many different flavor offerings, whether they're cereals or soda or water or juices.

"So they now expect to have all kinds of choices and tastes and they want great tasting things," she said.
The company has had success with its flavored Jack Daniel's Tennessee Honey brand. It also is expanding a test of a cinnamon-flavored Jack Daniel's, called Tennessee Fire, to five new states.
You can read more of Morreau's comments at SeekingAlpha.com. For more Brown-Forman news, check out this week's The Bourbon Beat.

David A. Mann covers these beats: Health care, health insurance, distribution/logistics (UPS), manufacturing (GE, Ford), environment, travel, minority/women’s affairs and Southern Indiana.