Beer is the dominant category of the alcoholic beverage market. However, beer has been losing its market share in recent years, giving way to distilled spirits and wine. This is impacting beer producers such as Anheuser-Busch InBev (BUD) (ABI.BR).
Distilled spirits, or liquor, include all alcoholic beverages that are first fermented and then distilled. They include whiskey, rum, vodka, and gin.
Rising market share
The Distilled Spirits Council, the national trade association of the US distilled spirits companies, indicates a 4% rise in US spirits supplier revenues to $23.1 billion. The market share of spirits, based on supplier gross revenues of $65.8 billion for the total alcohol beverage market, increased to 35.2% in 2014 compared to 34.7% in 2013. The volume of US spirits also saw a 2.2% rise in 2014, reaching 210 million 9-liter cases.
Beer lost its market share of revenues for the fifth consecutive year. It fell to 47.8% compared to 48.3% in 2013. Wine’s market share remained constant at 17% in 2014.
The market share of spirits has increased by 6.4 points since 2000. Changing tastes, attractive price categories, growing demand for whiskey and tequila, innovative products across liquor categories, and higher exports are some of the reasons for the rise in spirits’ market share.
The Vanguard FTSE All-World ex-US ETF (VEU) invests ~1.23% of its portfolio in Diageo. ETFs such as the iShares Core S&P 500 ETF (IVV) and the Consumer Staples Select Sector SPDR Fund (XLP) invest about 0.07% and 0.9o%, respectively, in Brown-Forman.