DES MOINES — Iowans shook things up when it came to their favorite liquor brand this past year – and set yet another record for liquor sales.
For the first time in a decade, Black Velvet Canadian Whisky was unseated by consumers as Iowa’s preferred liquor – by Tito’s Handmade Vodka, according to a new annual report from the Iowa Alcoholic Beverages Division, which serves as the state’s exclusive liquor and wine wholesaler.
Iowa is one of 18 states that directly controls the sale and distribution of alcoholic beverages. The division also regulates and licenses establishments that sell alcoholic beverages in Iowa.
Black Velvet, which had held the No. 1 spot since at least fiscal 2012, when the state began reporting the top brands, slipped to No. 2.
Captain Morgan Original Spiced Rum, Fireball Cinnamon Whisky and Hawkeye Vodka rounded out the top five on the annual list of top sellers, as they did in 2021.
“We’ve turned a corner, haven’t we?” said Karla Zahradnik, owner of Westside Spirits in Cedar Rapids.
“The reason Tito’s sells is their branding is extraordinary,” Zahradnik said. “Either people go for cheap stuff, or they go high-end. But it’s interesting with Tito’s because it fits in everywhere. It can fit in at a fancy restaurant … or you can get it at a college party or college bar and people know it and love it. Or, you can get it at a high-end bar and people are putting Tito’s in their vodka drink. It just kind of spans all generations and all incomes.”
Iowa brands that topped the list include Blue Ox Vodka out of Grimes, which retained its top position, followed by Clive-based Gotcha Vodka, Cedar Ridge Bourbon from Swisher, and Swell Vodka and Prairie Fire Whiskey, both from Cumming.
Iowans set a record for liquor sales for the third consecutive fiscal year. Sales topped $431 million for the fiscal year that spanned July 2021 through June 2022, a 3.75% increase over last year’s record of $415.8 million.
“The Alcoholic Beverages Division (ABD) generated a significant return on investment to the citizens of Iowa in fiscal year 2022,” division Administrator Stephen Larson wrote in the report. “The amount of sales and revenue generated to the State General Fund was an all-time record of $150.1 million, an increase of $284,106 over the previous fiscal year. The sales growth generated record liquor net profits of $120.6 million, which will be used to support essential state programs and services.”
Income from liquor profits, beer and wine taxes and revenue from licensing and regulatory efforts by the state agency translated into a transfer of $118.8 million to the state’s general fund budget, $30.3 million to the public health budget for the administration of substance abuse and prevention education programs, and a new transfer of $1 million to the Iowa Economic Development Authority for promotion of tourism in conjunction with the Wine and Beer Promotion Board, the report says.
Local retailers attributed the increase in sales to an influx of customers venturing out, including returning to bars and restaurants, with the lifting of COVID-19 restrictions and as concerns and hesitancy to be in large groups wane. In-person sales as well have increased, and Iowan’s preferences have shifted – preferring to “trade up” to higher-end brands and “branching out to try new things,” said Michael Ciemnoczolowski, liquor department manager at John’s Grocery in Iowa City.
It’s a trend he attributed to higher wages and federal stimulus checks that fueled increased statewide spending last fiscal year.
Ciemnoczolowski said the store saw a roughly 10% increase in sales from the previous year. Sales of gin and tequila, in particular, have exploded in popularity.
“We’ve expanded our tequila selection by about 30% over the past year or so,” he said. “Tequila is probably the next big thing.”
Zahradnik, of Westside Spirits, has seen similar trends, including an increase in bourbon sales, particularly high-end bourbons. She said it’s the store’s No. 1 seller, followed by vodka and tequila.
“Everybody wants the good stuff,” Zahradnik said. “People were staying home and saving their money, and now they’re getting out and they want to spend their money. And I think a lot of people kind of educated themselves on liquor and alcohol, and it has just become more of a thing to go to your liquor store and buy stuff than to go to a restaurant, because so many people couldn’t go to a restaurant or bar, right?“
As a result, she said people learned to make cocktails at home.
“I have so many people, so many young guys especially, during the pandemic collecting bottles of bourbon and now have like 30 bottles,” Zahradnik said. “I really think the pandemic and forcing people to stay home really kind of elevated the sale of alcohol” once COVID-19 restrictions and concerns eased.
Supply chain issues
Despite record sales, supply chain and staffing issues persist within the alcohol beverages industry, posing challenges that required flexibility from retailers, according to the state division.
“With the ongoing supply chain issues, it was critical for ABD to maintain a more diverse selection of products allowing substitutions to be readily available to the marketplace,” according to the state report.
Ciemnoczolowski, of John’s Grocery, noted imports, particularly Scotch whisky, “can be touch-and-go.
“There’s still a lot of hiccups out there, but not nearly as much as the previous couple of years,” he said. “There’s a lot of stuff that’s been out of stock for months or years on end that usually we didn’t have much of a problem getting a hold of before 2020.”
Zahradnik noted similar problems stocking product, namely certain whiskeys through the Sazerac Company.
“They’re almost impossible to get and it’s very frustrating for sure,” she said. “There’s some vodkas that we’ve had a hard time to get in stock. But as far as the major ones, like Tito’s, we’ve been able to manage.”
Ciemnoczolowski predicts sales will likely dial back a bit next year with the end of stimulus checks and ongoing inflation pinching family budgets.
“People might be going back to their preferred brands from the before times,” he said.
The state’s report can be seen at abd.iowa.gov/annual-reports.
Tom Barton writes for the Courier Des Moines Bureau.