Millennials have been blamed for the demise of everything from movies to dinner dates to golf. But now the much-slighted generation is getting credit for something unexpected: saving hard liquor.
Smirnoff vodka and Bulleit whiskey maker Diageo said it has received a boost from American millennials.
While young people in America are said to be drinking less alcohol overall, a shift in their tastes has helped the world’s largest spirits company DGE, +0.00% beat half-year earnings and sales forecasts. In addition to showing a tapering in alcohol consumption among millennials, research has shown that demand for lager has dipped.
U.S. drinkers have been switching to spirits from beer and wine, lifting sales at the drinks giant, which also makes Ketel One vodka and Casamigos, the tequila brand co-founded by actor George Clooney and acquired in 2017 by Diageo.
Data from U.S. trade group the Beer Institute shows drinkers chose beer just 49.7% of the time in 2017, down from 60.8% in the mid-’90s, the Wall Street Journal has reported.
But Diageo’s chief executive, Ivan Menezes, said Diageo, whose beer brands include Guinness and Harp, had fared well during the shift in consumer behavior. “What we are seeing is a positive trend in the U.S., with spirits growing faster than beer and wine,” he said. “We have a much bigger share in the spirits that younger Americans are drinking.
“Generally per capita spending is down, but the shift to spirits and premium brands is strong, which [is] really positive for us.”
North America accounts for 34% of Diageo’s net sales and contributed net sales growth of 6% over the period.
Scotch grew 10%, while vodka sales were flat, an improvement from a year earlier, with the launch of Ketel One Botanical offsetting net sales declines in Smirnoff and Ciroc vodka.
The latter, along with Captain Morgan rum, which saw net sales decline 9%, were the weakest Diageo brands in the U.S.
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SOURCE: MarketWatch, Rupert Steiner