A targeted liquor ETF has enjoyed a spirited year as a growing global market and increased discretionary spending help fuel demand for whiskey, bourbon and other spirits.
The Spirited Funds/ETFMG Whiskey and Spirits ETF (NYSEARCA: WSKY), which is comprised of companies that are whiskey and/or spirit distilleries, breweries, and vintners and related luxury goods companies engaged in the sale of whiskey or the production and sale of mixers for use with premium spirits, has increased 30.9% year-to-date.
Sam Masucci, founder and chief executive officer of ETF Managers Group, which operates the ETF on behalf of Spirited Funds, the creator of the index, argued that the underlying companies in WSKY have strengthened partly due to an improving global economy, reports Gerrard Cowan for the Wall Street Journal.
“People have more discretionary money to spend in the distilled space,” Masucci told the WSJ.
The Spirited Funds/ETFMG Whiskey and Spirits ETF includes big names in the liquor business, including Diageo 17.6%, Pernod Ricard 8.2%, MGP Ingredients 5.8%, United Spirits 5.7% and Radico Khaitan 5.6% among its top holdings.
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The ETF also includes significant international exposure, with 18.7% in the United Kingdom, 28.6% in developed Europe. Furthermore, WSKY holds a 23.5% tilt toward the emerging markets where a growing middle-income class is also seeing a rising in demand for spirits and liquors.
Spirited Funds CEO David Bolton sees many consumers around the world showing a preference for liquors, with whiskey and bourbon experiencing particularly strong growth. Most of the holdings in the fund generate at least half of their revenue from distilled spirits. Bolton argued that spirits are in a 30- to 40-year “supercycle.” Consumers “are spending more on the products, and the industry is investing hundreds of millions of dollars to increase storage and production,” Bolton said.
For more information on the consumer segment, visit our consumer discretionary category.