The US is turning its nose up at white liquors, so white liquors are turning brown

Getting darker.
Getting darker.
Image: Reuters/Thomas Peter
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If the taste of vodka brings back memories of being younger—and painfully hung over—you’re not alone.

Vodka has developed an image problem among younger drinkers, and bourbon and whiskey makers are reaping the rewards. A sharp slowdown in vodka sales (paywall), which make up a quarter of US liquor sales by value, have weighed on profits of liquor companies like Diageo (which owns Smirnoff) and Pernod Ricard (which owns Absolut).

As US consumers gravitate toward brown craft liquors like bourbon and whiskey, more liquor companies are producing barrel-aged gins and vodkas, some of which have taken on brown hues. This week, American whiskey maker Constellation Brands, which makes Svedka Vodka, Black Velvet Canadian whiskey, and Casa Noble Tequila, doubled down (paywall) on the brown spirits craze with a $160 million acquisition of Utah-based High West craft whiskey distillery.

In the US, sales growth of whiskey and bourbon have surpassed those of vodka and gin for three years running.

For younger consumers especially, darker liquors have a craft feel that fits a more mature, complex palette. Vodkas, by contrast, have spent the last decade coming out with flavors—like marshmallow and peanut butter and jelly—which ultimately cheapened their brands.

“People are generally trading up,”says Linda Montag, a senior beverage analyst at Moody’s. Beer preferences have moved in a similar direction, she adds. ”Folks want craft beer because it’s new and it’s sexy. Instead of chugging kegs of cheap beer, they’d rather be selective and pay up.”

Even wines are being aged in newfangled ways that appeal to richer, more exotic palettes, and sell for a premium.

Earlier this year, Constellation Brands spent $285 million to acquire the Prisoner Wine Company, which makes California red wine blends. Last year it bought Meiomi, whose $22-a-bottle pinot noir made it onto Wine Spectator’s top 100 list for 2015.