Glass Packaging Institute 2014 Fall Meeting. Mark Gorman Distilled Spirits Council

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1 Glass Packaging Institute 2014 Fall Meeting Mark Gorman Distilled Spirits Council

2 Spirits Market Share Spirits Market Share Revenue Up 6.0 Points Since 2000, Worth $3.8 Billion 35% 34% 33% 32% 31% 30% 30.0% 29.7% 31.1% 32.1% 33.0% 33.1% 33.3% 33.1% 32.9% 34.1% 34.3% 34.7% 29% 28.7% 28.7% 28% 27% 26% Source: Beverage Information Group Handbooks, Company Financial Reports, DISCUS Estimates October 14, Retailer Meeting 2

Spirits Off Premise Revenue 2000-2013 $40.0 $35.0 $30.0 $25.0 $20.0 $16.3 $17.6 $18.6 $19.7 $21.1 Billions $ $23.9 $22.5 $25.2 $27.6 $30.1 $31.5 $33.2 $35.4 $36.

3 Spirits Off Premise Revenue $40.0 $35.0 $30.0 $25.0 $20.0 $16.3 $17.6 $18.6 $19.7 $21.1 Billions $ $23.9 $22.5 $25.2 $27.6 $30.1 $31.5 $33.2 $35.4 $36.9 $15.0 $10.0 $5.0 $ Source: The Beverage Information Group October 14, Retailer Meeting 3

Spirits On Premise Revenue 2000-2013 Billions $ $40.0 $35.0 $30.0 $25.0 $20.0 $21.0 $21.9 $23.6 $25.8 $28.3 $31.0 $34.2 $36.4 $35.3 $34.0 $34.2 $35.2 $37.3 $38.

4 Spirits On Premise Revenue Billions $ $40.0 $35.0 $30.0 $25.0 $20.0 $21.0 $21.9 $23.6 $25.8 $28.3 $31.0 $34.2 $36.4 $35.3 $34.0 $34.2 $35.2 $37.3 $38.0 $15.0 $10.0 $5.0 $ Source: The Beverage Information Group October 14, Retailer Meeting 4

Volume Growth by Price Segment - 2013 8.0% 7.0% 6.0% 5.0% 7.2% 6.3% 4.0% 3.0% 2.0% 1.0% 1.6% 0.0% -1.

5 Volume Growth by Price Segment % 7.0% 6.0% 5.0% 7.2% 6.3% 4.0% 3.0% 2.0% 1.0% 1.6% 0.0% -1.0% -1.2% -2.0% Value Premium High End Super Premium Source: DISCUS MSDB October 14, Retailer Meeting 5

9-Liter Cases (millions) Whiskey Growth Has Picked Up Since 2005 54 52 3.8% 6.2% 50 1.

6 9-Liter Cases (millions) Whiskey Growth Has Picked Up Since % 6.2% % Source: Beverage Information Group Handbooks, DISCUS MSDB October 14, Retailer Meeting 6

Fighting State Taxes / A Serious Annual Effort 344 of 373 tax threats defeated from 2001 to 2014 2001: 21 of 22 tax victories = $250 million in retail sales saved 2008: 33 of 33 tax threats defeated

7 Fighting State Taxes / A Serious Annual Effort 344 of 373 tax threats defeated from 2001 to : 21 of 22 tax victories = $250 million in retail sales saved 2008: 33 of 33 tax threats defeated = $1 billion in retail sales saved 2002: 27 of 30 tax victories = $984 million in retail sales saved 2009: 32 of 40 tax threats defeated = $1 billion in retail sales saved 2003: 29 of 35 tax victories = $1 billion in retail sales saved 2010: 23 of 23 tax threats defeated = $750 million in retail sales saved 2004: 27 of 30 tax victories = $980 million in retail sales saved 2011: 21 out of 23 tax threats defeated = $750 million in retail sales saved 2005: 32 of 34 tax victories = $990 million in retail sales saved 2012: 15 out of 15 tax threats defeated = $600 million in retail sales saved 2006: 23 of 23 tax victories = $750 million in retail sales saved 2007: 35 of 38 tax victories =$1 billion in retail sales saved 2013: 16 out of 18 tax threats defeated = $600 million in retail sales saved 2014: 9 out of 9 tax threats defeated = $350 million in retail sales saved October 14, Retailer Meeting 7

Moderation in 2015 Dietary Guidelines DISCUS: Encouraged and supported written comments submission Attended all public meetings Submitted positive icon research Successfully recruited additional

8 Moderation in 2015 Dietary Guidelines DISCUS: Encouraged and supported written comments submission Attended all public meetings Submitted positive icon research Successfully recruited additional third parties (Scientists, Association, Federal/State) Yale, Stanford, USC, T. Jefferson U of Louisville, BU Members of Congress Mission Critical Health News AMWA, AAPA Congressional strategy Press strategy October 14, Retailer Meeting 8

9 Marijuana Legalization Campaigns Continue to Demonize Beverage Alcohol How do we deal effectively with this? October 14, Retailer Meeting 9

10 Media Now Focusing on Marijuana Trouble Legalization Advocates Keeping a Lower Profile Fatal Car Crashes Involving Marijuana Have Tripled CBS Denver - February 4, :14 PM Student jumped to his death after consuming marijuana cookie FOX NEWS / April 4, Myths about Marijuana and Your Health Posted March 24, 2014 in The Marijuana Debate by Kevin A. Sabet Denver man consumed edible pot before killing wife April 17, 2014 HASH OIL EXPLOSIONS RISE WITH LEGALIZED MARIJUANA ASSOCIATED PRESS / MAY 6, 2014 Marijuana-trafficking spiking in states near Colorado The Washington Post / May 1, 2014 October 14, Retailer Meeting 10

More Recent Challenges to Marijuana Claims Growing Columbia University pot related traffic fatalities rising 12% of fatalities in 2011, a 300% increase in past 10 years Washington Post opposes

11 More Recent Challenges to Marijuana Claims Growing Columbia University pot related traffic fatalities rising 12% of fatalities in 2011, a 300% increase in past 10 years Washington Post opposes legalization in DC Alcohol may not be more harmful than marijuana The Lancet Psychiatry frequent adolescent use 60% less likely to graduate from high school Project SAM leader, former-rep. Patrick Kennedy Calls for White House to stop ignoring marijuana issue New England Journal of Medicine extensive list of health risks CBS News Colorado pot tax revenue is 2/3 below projections October 14, Retailer Meeting 11

12 DISCUS Policy Initiatives to Date Utilizing third party experts to counter false MJ health claims Promoting health benefits of moderate alcohol using 3 rd parties Lobbied in Colorado for separate distribution and sale of pot Began Hill meetings on requiring better crash data, drug testing October 14, Retailer Meeting 12

13 Changing Public Attitudes toward Marijuana? Factual Reports about Health and Safety Are Making a Difference Question: Making the use of marijuana legal* Total in Favor Total Opposed Trend Down 13.7% Up 13.6% Dramatic shift in opinion since legalization took effect in Colorado and Washington *American Values Survey (4,509 national random sample) October 14, Retailer Meeting 13

14 2014 US House of Representatives Election Results

15 American Whiskey History: George Washington General. Founding Father. Whiskey Distiller. Built largest whiskey distillery in early America at Virginia estate Two-story building measured 75 feet x 30 feet 11,000 gallons of whiskey in 1799 $2 million reconstruction funded by industry Britain s Prince Andrew cut ribbon in 2006

16 16 George Washington s Distillery Fascinates Media

The Development of American Whiskey Natural

limestone-filtered water Plenty of oak forests for

17 The Development of American Whiskey Natural Abundance Leads to Unique Natural Process Five elements contribute to whiskey development: Abundant grain: corn, rye, wheat, and barley Pure limestone-filtered water Plenty of oak forests for barrels Perfect climate for aging Settlers distilling heritage 17

Charred new oak barrel No added color 1964: Congress

Tennessee Whiskey: Follows Bourbon rules Adds Lincoln

up to 10 days Adds smoothness Scotch Whisky: Primary

18 Whiskey Differences: U.S. and Around the Globe Bourbon: At least 51% corn Charred new oak barrel No added color 1964: Congress recognizes Bourbon as Distinctive Product of the U.S. Tennessee Whiskey: Follows Bourbon rules Adds Lincoln County process: charcoal filtering before aging Takes up to 10 days Adds smoothness Scotch Whisky: Primary grain, barley Most aged in used Bourbon barrels Minimum 3-yrs aging More temperate climate 18

19 American Whiskey great looking bottles! George Washington Unaged Rye Bulleit Rye Wild Turkey Rare Breed Jack Daniel s Single Barrel Select Angel s Envy

20 New American Craft Distillers More Than 500 in U.S. and Growing

21 Makers Mark Ole Smoky Moonshine Glenmorangie Original

The Great American Whiskey Experience How to Taste: 1. Observe color (from aging): Golden to rich brown 2. Swirl glass; observe viscosity 3. Add splash of water 4.

22 The Great American Whiskey Experience How to Taste: 1. Observe color (from aging): Golden to rich brown 2. Swirl glass; observe viscosity 3. Add splash of water 4. Smell aroma/breathe thru open mouth 5. Taste lightly around mouth: Characteristics: floral, fruity, caramel, vanilla, woody, etc. Senses: sweet, sour, bitter, salty Location: front palate, back, sides 6. Savor residual flavor (finish)

Distilled Spirits Council

Distilled Spirits Council 2018 ECONOMIC BRIEFING February 12, 2019 New York City @DistilledSpirit #StateOfSpirits19 1 Chris R. Swonger Distilled Spirits Council President & CEO 2 Nine Consecutive Years