Any ambitious international brand knows that the US market is key to growth, having increased by 5.1% to $253.8 billion in alcohol sales in 2018. But it’s not an easy market to break into.
Beyond intense competition, from the three-tier system to control states and the bureaucratic TTB, it’s fair to say that the US market is difficult to navigate, for any brand, imported or domestic. So too are consumer preferences, which have been shaped by two centuries of politics, war, temperance, and immigration.
Prohibition and the American Alcohol Regulatory System
Our relic of a regulatory system grew out of Prohibition, a national constitutional ban on the production, importation, transportation, and sale of alcoholic beverages from 1920 to 1933, written into law under the Volstead Act. Although Prohibition did help lower alcoholism in the US, it also led to an increase in organized crime (with names like Al Capone forever imprinted on the American persona) and eventually lost public support. Prohibition was repealed in 1933 by the 21st Amendment to the US Constitution, which handed broad regulatory powers to the states, rather than the federal government. States, in turn, could choose to delegate authority to counties and localities, and thus emerged a complex web of legislation across the country.
For guidance on entering this crazy, but rewarding market, other experts, like SevenFifty Daily, have you covered. But if you would really like to understand the modern-day American consumer, keep reading to dive into a history of consumption trends that illuminates the American palate.
Beverage Consumption Trends in American History: 1776-2019
Colangelo & Partners recently had the privilege to curate a permanent exhibit entitled “History in a Bottle” at Liberty Hall Museum in New Jersey on behalf of the Portuguese Cork Association (APCOR). The consumption patterns outlined below were reflected in the wines and spirits found preserved under natural cork in the cellar of Liberty Hall, an historic house built by William Livingston, the first Governor of New Jersey, and later purchased by the Kean family.
Independence and the Young Republic (1776-1876)
When the members of the Continental Congress signed their names to the Declaration of Independence in July of 1776, laying the foundation for a new nation, a toast was called for. Their celebratory drink of choice? Madeira, a fortified wine from Portugal. While the colonies had no shortage of rum, fruit brandies, and apple cider, Madeira was the treasured beverage of the day. While today Madeira has declined in popularity, it remained in high-demand through the birth of the American republic and well into the 19th century. After George Washington took the presidential oath of office on April 30, 1789, some literature recalls that a toast of Madeira directly followed the ceremony. Historians estimate that approximately 25 percent of all Madeira wine produced was exported to the American colonies and young republic in that period.
Key Takeaway: Affluent Americans have always been inspired by consumption trends across the pond. That hasn’t changed much, so use that to your brand’s advantage!
An All-American Liquor (1877-1919)
While Americans had been making whiskey since the 18th century, brand-name whiskeys became popular in the period before the Civil War. Some of these brands are still found behind the bar today. Known as ‘red liquor’ for the color acquired from aging in wood barrels, whiskey had great value during the Civil War, when it was used both medicinally and to boost morale among soldiers. Despite its value, the whiskey industry suffered during the war, as distilleries were destroyed and master distillers were killed in battle. In 1862, President Abraham Lincoln reintroduced an excise tax on whiskey in order to fund the Union war effort.
Following the Civil War, as commercial distilleries were being rebuilt to meet the growing demand for whiskey, many replaced their pot stills with the more economical Coffey continuous still, named after its inventor, Irishman Aeneas Coffey. This still allowed a greater portion of vapors to re-circulate into the still, thus eliminating the need for multi distillation and producing a spirit with a higher proof and lighter character. Packaging for whiskey also evolved between the Civil War and 1900. Since glass bottles were fragile and expensive to produce, most whiskey was sold in casks or jugs until 1903, when inventor Michael J. Owens developed the first automatic bottle-making machine.
Key Takeaway: Americans have an aged palate for whiskey – it’s not just guzzled in old Western films. If you’re a whiskey producer, pander to the tradition of whiskey in the United States.
The 18th Amendment: Prohibition, the “Noble Experiment” (1920-1930)
By the early 1800s, Americans were drinking an extraordinary amount of alcohol – about 7 gallons of pure alcohol per person per year (compared to about 2.4 gallons per person today). Although drinking was an accepted part of everyday life among all classes, drunkenness was condemned. Inevitably however, the sheer quantity of alcohol consumption resulted in rising rates of alcoholism and all of its related problems, and a backlash developed. Local temperance movements, starting with the American Temperance Society in 1826, had sporadic successes in banning alcohol until the Civil War marginalized the movement. It was revived in 1873 by the Woman’s Christian Temperance Union, which gained political power through a national grassroots base of mostly rural supporters. Finally, after the establishment of the Anti-Saloon League, the temperance movement gained enough support to be able to pass the 18th Amendment to the Constitution in 1920, known as the Volstead Act, and a nationwide ban was enacted on the production, importation, transportation, and sale of all alcoholic beverages.
The ban was known then and today simply as Prohibition, and whatever else Prohibition accomplished, it managed to turn millions of regular, law-abiding citizens overnight into criminals of varying degrees. The illegal manufacture and sale of liquor, known as bootlegging, occurred on a large scale, thousands of speakeasies (secretive illegal establishments selling alcohol) were established and organized crime gained power as it fought to control these illegal activities with violence and bribery of public officials.
Politicians and the public eventually turned against Prohibition, and the 18th Amendment was repealed in 1933 with the passing of the 21st Amendment, turning millions of ‘criminals’ overnight once again into law abiding citizens. People opened up their hidden cellars, and were able to walk in the front door of bars and saloons. Yet the industry was forever changed, as many legitimate wineries and distilleries had gone out of business or relocated operations to Canada.
Key Takeaway: The legacy of Prohibition still creates demand for alcohol. When your freedom to purchase alcohol is limited and then restored, alcohol earns a legacy associated with said freedom, a core American value. Your brand can be a representation of the freedom to choose what you consume.
Rebirth of the California Wine Industry and a Thriving Import Market (1934-2019)
At the turn of the 20th century, the California wine industry was thriving, and exporting quality wines all over the world. Many wines were even winning medals in European competitions. During Prohibition, however, the industry was virtually destroyed. Many vineyards were torn up, and land was left abandoned or replanted with other crops. A few winemakers persevered by securing licenses to make and sell wine for sacramental purposes, or selling grapes and grape products to home winemakers, who could make small quantities of wine in the privacy of their own homes, depending on state legislation.
Following prohibition, vineyards were replanted, distilleries reopened, and production steadily increased in the following decades. On the spirits side, through the 1940s and 1950s, cocktails gained popularity even in the home, and a drink before dinner became a routine part of many people’s daily life. On the wine side, most post-Prohibition domestic production was focused on cheap, bulk wines. At the same time, notable importers started bringing in fine wines from Europe, with a focus on French Burgundy, Bordeaux, and Champagne. By the 1960s, a new breed of artisan importers started bringing over the wines of small European producers, and more people were exposed to fine wines, especially through the burgeoning restaurant scene. But California producers were not standing still, and they increasingly started making higher quality wines that could compete with European imports. Their success was validated by the shocking results of the 1976 Judgment of Paris, a blind tasting in which California wines outscored French wines in several categories.
Key Takeaway: The collective American palate has not had the same amount of time to adjust to fine wine, or adapt wine into its culture like our European brethren. Immigrants brought wine culture to the US, and it is still spreading, which is one reason why the wine market continues to grow, year after year.
When you walk into your next sales meeting, arm yourself with American history. You’ll open your colleague’s eyes to the market reality – or close them.