Tequila, Brandy & Single Malt Scotch Keys to Growth

There’s no way any bar can carry every spirit on the market, not even close. Some that focus on certain spirits (tequila, Scotch, bourbon and gin come to mind first) do make exhaustive efforts to keep up, but they are the outliers. Most bars look to the highest volume brands, throw in a few local favorites or bartender must-haves, and leave it at that.

On-premise spirit sales in the US are outperforming beer and wine, and are being driven by Cognac, Irish whiskey, tequila, and single malt Scotch, according to new data from Nielsen. But the report points out that, based on that booming value and volume, bars and restaurants aren’t shifting their inventory to the brands that offer the most potential right now.

The overall figures reveal that spirit sales in bars and restaurants across the US have undergone steady growth, with volumes up 1.7% and value up 2.9% for the 52-week trend through mid-August. Over the same time period, beer dropped 3.2% in volume and 1.3% in value, while wine sagged 1.6% in volume and 0.6% in value. Cognac led the growth, reporting an impressive 31.1% in volume growth and 36.8% in value. Irish whiskey followed, up about 10% and 11.4% respectively, while single malt Scotch whisky was third, up 4.4% in volume and 12.5% in value.

“The latest numbers confirm the long-term trends at play in the on-premise, especially as usage moves from habit to treat occasions,” said Scott Elliott, SVP, Nielsen CGA. “From the latest data it shows that whiskeys, tequila and Cognac/brandy are still under-spaced in the average bar or restaurant given their value-contribution and trend direction.”

Most bars and restaurants are slow to shed brands and inventory, while always looking for the next big thing. But sometimes the next big thing is a whole lot of small things. While most of the Irish whiskey growth comes from the monolithic Jameson, there’s plenty of money to be made in trading customers up to the growing number of brands of Irish that are now available in the US. Cognacs are finally starting to get some cocktail activity, but again, most bars rely on the power of Hennessy, the leader in this country, rather than looking for brands they can promote and market on their own.

The hardest part is shedding inventory, a chronic issue, especially when action in certain categories falls off and leaves cases gathering dust. Discounting and promoting drinks using those brands are the smartest ways, although operators are always loathe to lower prices, given that they want to get the highest percentage of profit that they can from every drink. But as one very smart operator told me once, “I bank dollars, not percentages.” Words to live by.