WSWA CEO Francis Creighton On The State Of The Middle Tier
The Wine & Spirits Wholesalers of America’s SipSource data tracker recently released figures showing spirits depletions down 5.9% by volume and 5.1% by revenue in the year-to-date through September, with wine slipping 8.5% by volume and 6.9% by value. On rolling 12-month basis, trends are somewhat better with spirits down 4.8% in volume and 4.3% in revenue, and wine decreasing 7.5% and 5.9%.
Francis Creighton, WSWA’s president and CEO, tells SND wholesalers are focusing on bright spots in the market such as Reposado Tequilas and sparkling wines, while laying the groundwork for a broader recovery. “I’ve been referring to it as the catfish market,” he says. “We’re just kind of trolling the bottom now. Hopefully there’s nothing left to go down from, and we feel pretty confident about that. I’m in the cyclical camp. The biggest thing is how people feel about the economy, the consumer sentiment number. When that starts coming back, I think we’ll do better.”
Creighton points to supplier diversification into RTDs as a positive, while noting that with oversupply of wine in California currently there are opportunities for marketers to innovate and create the hot categories of the future. “We need to create more occasions,” he notes. “Whether it’s different packaging, different taste profiles and formats and so on. People are throwing some things out there.”
Among the issues the WSWA is watching closely, Creighton says tariffs are an area of concern. “If the Supreme Court case invalidates the tariffs, that’s like another earthquake, and we’ll be wondering what we’re doing until we get some clarity,” he says. “With tariffs, the question isn’t ‘do you raise prices.’ It’s ‘how do you raise prices,’ because there’s not enough slack in the system to account for a 15% loss.”
The upcoming release of the new U.S. Dietary Guidelines is also on Creighton’s radar. “Our whole thing is the science has to guide it, and there should be good science using a preponderance of evidence, and it shouldn’t be ideological,” he says. “I feel pretty good about the outcome, but we don’t know until we see it.”
Creighton likewise touched on the market for hemp THC products, which have been embraced by many retailers and wholesalers but were recently effectively banned by Congress in the spending agreement to end the government shutdown. The new regulations stipulate that consumable hemp products cannot contain more than 0.4mg of delta 9 THC, a cap that would wipe out the industry when it takes effect in a year. The WSWA has consistently advocated for hemp THC products to be treated like alcohol and move through the three-tier system. “These are intoxicating products,” he explains. “They have to be regulated. Well, if you’re interested in age-gating, public health, public safety, we have a good model.”
Moving forward, Creighton says that despite increased competition for consumers’ scarce disposable income, the wine and spirits market can reverse negative trends by meeting younger drinkers on their own terms, adjusting to their preferred occasions and channels. “We have to find the young legal drinking age person and serve them where they are and not try to pull them into where we are,” he says. “We have to go to them. That’s what successful industries do.”—Daniel Marsteller
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