How Retailers Can Optimize Their Top-Shelf Spirits Selections
Gift orders and trading up are driving top-shelf spirits sales, particularly for whiskey and tequila
There’s no doubt that entry-level spirits are an integral component of a retailer’s inventory, but Drizly data suggests that the top shelf might be worth a closer look as consumers continue to trade up in spirits. In 2021 to date, 14 percent of liquor share fell into the top-shelf price range ($75 and above), up from 10 percent during the same time period in 2020.
“The continued premiumization in certain categories, like whiskey and tequila, has driven top-shelf spirits share,” says Liz Paquette, Drizly’s head of consumer insights. “Additionally, the increase in gift order share on Drizly has been a driver of this trend, as this price range over-indexes on gift share compared to the overall liquor category.”
Top-shelf selections can yield a higher profit margin per bottle, making it worthwhile to examine the categories, brands, and demographics that will help retailers reel in more higher price point shoppers.
Drizly’s Top-Selling Top-Shelf Spirits, 2021 to Date
- Clase Azul Reposado Tequila
- Don Julio 1942
- Johnnie Walker Blue Label Blended Scotch Whisky
- Hibiki Japanese Harmony Whisky
- Blanton’s Single Barrel Bourbon
- Oban 14 Year Single Malt
- Lagavulin 16 Year
- Yamazaki 12 Year Old Whisky
- The Macallan Sherry Oak 12 Years Old
- The Balvenie 14 Year Old Caribbean Cask Single Malt Scotch Whisky
Whiskey and Tequila Dominate Top-Shelf Sales
Retailers should focus on two subcategories when stocking top-shelf spirits: whiskey and tequila. In 2021, tequila has gained two percentage points in share year-over-year while whiskey has declined by two percentage points. Yet despite that slight drop, whiskey remains the top-selling liquor category for top-shelf spirits, accounting for 59 percent of share.
Within the whiskey sub-category, Scotch leads the way. Accounting for 42 percent of top-shelf whiskey sales, Scotch has lost three percentage points share year-over-year, while bourbon (accounting for 25 percent of top-shelf whiskey sales) is on the rise and has gained two percentage points. But further proving Scotch’s staying power, both Johnnie Walker Blue Label and Oban 14 Year Single Malt moved up the top-selling top-shelf spirits list this year.
Abdo Korin, owner of Adeline Market and Liquor in Oakland, California, confirms that Scotch and bourbon are the best-selling top-shelf subcategories at his store, but says he has also noticed a growing interest in Japanese whiskey (the third-best selling top-shelf whiskey subcategory), especially Hibiki.
Korin works hard to procure items that “are really hard to find or allocated” and that few other stores in the area have, which he determines by searching for the items on Drizly. “We have some customers that come from very far away specifically for special items of whiskey,” he says. Single malt whiskey and rye whiskey are also some of the top five top-shelf whiskey subcategories on Drizly.
Tequila comes in second for top-shelf spirits share at 33 percent. While top-performing subcategory añejo tequila remained flat year-over-year at 44 percent share, reposado gained two percentage points, and silver/blanco tequila dropped two percentage points.
Moreover, Clase Azul Reposado Tequila (ranked as the second-best selling top-shelf spirit in 2020) has dethroned Don Julio 1942 this year thus far as the No. 1 seller. “Once we get [Clase Azul deliveries] we sell out within 10-15 days,” says Korin.
“The tequila category overall has been on the rise over the past couple of years, making it a year-round staple among consumers,” adds Paquette. “Consumers have also begun trading up within the category — moving beyond gold and silver/blanco to higher-end reposado and añejo SKUs. This trend has caused tequila to gain share in the top-shelf category, taking share from whiskey.”
On Drizly, no other spirits subcategory comes close to competing with whiskey or tequila; the next best-selling top-shelf category is brandy, accounting for just four percent of share. Brandy Rand, IWSR’s COO of the Americas notes that premium gin and rum “are also enjoying growth,” though on a smaller base volume.
Who is Buying Top-Shelf Spirits?
The majority of top-shelf spirits purchases are being made by millennials (51 percent share) and Generation X (35 percent). According to Korin, there’s a noticeable age difference between the buyers of top-shelf whiskey and bourbon (older) and tequila (younger) at his store.
Rand suggests that retailers carry a wide selection of top-shelf products in order to continue to appeal to new consumers. “Educate consumers on points of product differentiation,” she adds. “Most consumers are curious and willing to trade up, so they are looking for recommendations to try new brands, particularly within categories they already consume.”
The Perfect Gift
One of the biggest contributors to the demand for top-shelf spirits is gifting — and not just during the holidays. In 2021 to date, 33 percent of sales within this price range were gift orders, up from 19 percent during the same period last year.
“Our customers spend thousands on spirits for gifts,” says Korin, who confirms he has seen a huge increase in gift orders for top-shelf spirits in the last year.
“Gift orders typically see higher average unit price as consumers splurge on higher-end products for friends, family, and colleagues,” says Paquette. “While the holiday season is the greatest driver of gift orders, over the past two years we have seen an uptick in everyday gifting occasions from celebrating birthdays to engagements and promotions.”
Retailers can optimize gift orders by offering personalized notes and gift wrapping. In a recent consumer survey, respondents noted both as key factors of importance for their gift purchases on Drizly.
Will the Top Shelf Trend Continue?
Rand expects top-shelf spirits sales to continue to soar. “Consumers view spirits as a small luxury or indulgence at a relatively lower price of entry compared to other luxury goods,” she says. “There is also an increase in home cocktail-making and overall influence of social media that is driving discovery.”
But as we inch towards the holiday season, Paquette cautions that new pandemic restrictions should be taken into consideration when stocking up on top-shelf products. “This trend will be one to watch through the end of this year and into the next as the impact of the pandemic continues to unfold,” she says. “Particularly as we enter October, November, and December, with holiday celebrations and gift-giving hitting their peak season, pandemic factors will play a key role in how consumers are purchasing and where they are spending.”
During the 2020 lockdowns, there was a significant rise in premiumization with regards to spirits purchases, but Paquette is unsure if that will repeat if new lockdowns are put in place. “This may be the case again,” she says, “however, economic factors could also begin to impact purchasing behavior and lead to more price sensitivity in some consumers than we saw last year.“