2014 was a big year for spirits, with craft beer taking a bit of the backseat in favor of American whiskey. The market exploded in the past twelve months, and global interest is growing, now more than ever before. Other spirits like tequila and gin also benefited from the decline in market share for beer, but the story of the year was focused on whiskey.
Demand for everyone’s favorite spirit was so high, it was reported that the production of bourbon alone has reached a high point not since the 1970s. Analysts saw a number of things that might have influenced this change in taste, but the first and foremost would be nostalgia. In this day and age where technology is moving so quickly for us to ever truly adapt and comprehend, a sentiment for the past – the good old times – is emerging. Culture and sentiment seemed to be skewed towards a renewed love for the classics, perhaps to balance the social realities of the future.
The craft distilling industry also held their own, and perhaps even helped prop up bigger companies as consumers continue to look for something that is vintage, handcrafted, and artisan. Millennials who have since come of legal drinking age preferred to hold a glass of whiskey instead of a bottle of beer, and female consumers are also starting to make up a significant part of the demographic. Per NPR, 37% of whiskey consumers in the US are women.
The American whiskey boom is only predicted to grow stronger in 2015, and it’s not just going to be classic whiskey but flavored whiskey as well. According to the Whisky Advocate, the Distilled Spirits Council of the United States gave this data: “In volume, total spirits cases sold were up 3.9 million cases, and whiskey’s 3.1 million case increase was 80% of that growth. It’s not all American whiskey, either. While total whiskey volume was up 6.2%, Irish was up 17.5%, ‘Blended’…was up 14.3%, single malt scotch up 11.6%, bourbon/Tennessee/rye was up 6.8%, Canadian up 2.9%, and blended Scotch whisky was up 2.0%. Flavored whiskey continued to grow strongly, with 1.4 million additional cases sold, accounting for 45% of the total whiskey category growth.”
With that in mind, here are some whiskey-related stocks worth taking a closer look at:
Brown-Forman Company (BF.B) is one of the leading producers of alcohol in the business. It is mostly known for Jack Daniel's Tennessee Whiskey, but it also recently introduced Tennessee Honey and Tennessee Fire to keep up with competition. Per Bloomberg, Brown-Forman’s global net sales have increased in the past year by 6%, with no signs of decline in the near future. Tennessee Honey, in particular, grew by 36%.
Beam Suntory Inc. (BEAM) makes Jim Bean and Maker’s Mark, the latter announcing a $67 million distillery expansion to meet demand. It is expected that the warehouse capacity would increase by 50%, allowing for more space to age the company’s iconic bourbon.
Newly listed Eastside Distilling (ESDI), on the other hand, has built its reputation on its award-winning spirits lineup, which consists of Burnside Bourbon, Cherry Bomb Whiskey, Marrionberry Whiskey, among others. Located on Distillery Row in Portland, it is an emerging company at the forefront of the craft distilling industry.
Experts are convinced the whiskey market will continue to show growth through 2015. Investors looking for diversity might find whiskey related stocks an interesting way to play what many expect to be the biggest year in whiskey.
