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Whiskey Rebellion

Embracing America's brown spirits (though we still drink a lot of vodka).

5:37 PM, Feb 4, 2014 • By VICTORINO MATUS
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The big news from this morning's annual briefing by the Distilled Spirits Council of the United States (DISCUS) was that for the first time ever, sales of bourbon and Tennessee whiskey exports generated over $1 billion. Admiral Peter Cressy, president of DISCUS, referred to a "whiskey renaissance" owing to a growing middle class, a good product story (American heritage), and the spreading of cocktail culture, among other factors. Indeed, brands like Maker's Mark have experienced growth while keeping its price relatively high—normally volume declines as the price rises. But Maker's and others are now experiencing the best of both worlds.

In 2013, bourbon and Tennessee whiskey distillers cranked out 18 million cases, which meant almost $2.5 billion in supplier revenue (10 percent higher than the year before). Whiskies in general (including Scotch, Irish and Canadian whiskies, and blends) have grown as a category by 6.2 percent, a growth larger than any other sector—vodka only grew by 1.1 percent.

Of course even a 1.1 percent uptick in vodka translates into $122 million—while American whiskies totaled 18 million cases, vodka reached 66 million cases last year. (The fact that I have a book on vodka's dominance coming out this July has nothing to do with my spin. I mean, analysis.) It is nevertheless interesting that America is rediscovering whiskey in all its varieties. To wit, in 1970, over 100 million cases of whiskey were consumed in the United States (almost twice the amount of nonwhiskey products). In 2000, the situation was more than reversed, with whiskey amounting to barely 40 million cases for the year. Last year, that number reached an impressive 52.8 million cases.

The only decline of note is in the value brands for all spirits. Americans seem to be spending less on cheap booze, whether it be Black Velvet, Early Times, Lord Calvert, or Popov. Instead, the revenue growth is coming in the second-highest tier, which DISCUS calls "high end" (Maker's Mark, Johnnie Walker Black, Effen). Frank Coleman, senior vice president and head of communications for Distilled Spirits, views these upper-end brands as attainable luxuries—a middle-class citizen may not be able to afford a Mercedes, but he can afford an 18-year-old bottle of single-malt Scotch.

DISCUS chief economist David Ozgo also mentioned the rise of flavored whiskies, taking a page from the flavored vodka boom, though one can only pray we never see a peanut-butter-and-jelly whiskey.

Will American whiskies one day surpass vodka in sales or volume? I doubt it. Whiskies, Scotches, and blends altogether, maybe one day. But that would mean more people would have to embrace the flavor of the liquor—there are still many who prefer not to taste their booze, hence the decline of gin martinis versus vodka (I even know a guy who was brave enough to order a tiramisu martini).

Meanwhile, the growth of microdistillers continues. Over the years, DISCUS membership in this category has gone from 92 to more than 400 today. But it's still a tricky business involving arduous work and patience. One has to wait years for a whiskey to age properly while seeing money flow out in expenses and nothing coming in—unless of course the distiller decides to make vodka on the side.

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