- Shown below is the dollar value growth of Diageo’s spirits portfolio by price tier for the Jul- Dec 2022 period compared to pre-pandemic base levels. Striking to us is the doubling of the super-premium-plus segment, up +£1.3B and more than all of its other price-tiers combined. Brands included in that super-premium-plus segment include Lagavulin, Talisker, Don Julio, Casamigos, Ciroc, Zacapa, among many others.
- Premiumization is a key industry value driver that we highlighted in our BevAlc Retail Industry Overview and Total Wine & More Tenant Overview Report. Premiumization generally means consumers are drinking more higher-end liquids, but also less in volume. On its call with investors, Diageo’s management indicated that there was no attenuation in the premiumization mix-shift in the U.S., or anywhere in the world for that matter, despite high inflation and concerns about the economy.
- As highlighted in the BevAlc Retail report most of the value of the spirits category is by those in the top-40% of household income. As such, premium-plus spirits has experienced little to no downtrading vs. other consumables categories with broad consumer exposure – categories like household products, packaged foods, etc. Also as a reminder, in contrast to high-quality private-brand offerings by Trader Joes, Aldi, Kroger in packaged foods, with the exception of some of Costco’s liquids, there isn’t significant private-brand competition to premium-plus spirits, in fact, that’s kind of an oxymoronic proposition.
- As shared in our Holiday 2022 recap, out-of-home celebration and BevAlc won consumer choice over the holidays, as did beauty, fragrance, large TVs, and gifting. Thus far in 2023 and during “dry January” the consumer has remained engaged and growing for the retail category. For December, industry data for spirits shows that on-premises (out-of-home) revenue growth was about 600 bps ahead of off-premises.
