Bloomberg News

Spirits Sales Advance Shows Americans Still Crave the Hard Stuff

January 31, 2012

Jan. 30 (Bloomberg) -- The U.S. stock market’s worst performance in three years didn’t damp Americans’ taste for cocktails.

Spirits sales by suppliers including Beam Inc. and Brown- Forman Corp. rose 4 percent to $19.9 billion in 2011, the Distilled Spirits Council of the U.S. said today at its annual industry update in New York. Americans weren’t afraid to splurge, either, pushing so-called super premium spirits, such as Ciroc vodka and Woodford Reserve bourbon, up 12 percent.

Spirits took market share from beer brewers last year after a decade of emphasis on high-end drinks, the council said. Distillers also brought in new drinkers by putting a creative spin on classics with introductions such as flavored bourbon. Total liquor sales accelerated beyond the previous year’s 2.1 percent gain.

“People who are doing well are going out and spending on spirits as an affordable luxury,” said John McDonnell, chief operating officer for Patron Spirits Co. and chairman-elect of the Spirits Council. “Also, spirits companies never stopped spending through the downturn.”

The industry’s growth came even as unemployment remained high and the U.S. stock market languished. The Dow Jones Industrial Average gained 5.5 percent last year, about half the pace of the previous year’s gain. The Standard & Poor’s 500 Index was little changed.

Siphoned Share

Spirits’ share rose to 33.6 percent of the market from 33.3 percent the previous year. The category, along with wine, siphoned half a percentage point of market share from beer, which declined to 49.3 percent. American lagers, which dominate the U.S. beer industry, have been on a steady decline as everything from craft beer to spirits carve off customers.

Distillers introduced about 1,800 new products between 2009 and 2011, driving growth, the council said. Those new products accounted for 14.3 million cases in the period. Total industry case sales in those years grew 11.5 percent.

U.S. federal law mandates that manufacturers sell to wholesalers, who in turn sell to retailers. About a third of spirits sales in the U.S. are in bars and restaurants, the council said.

In 2009, liquor sales in the U.S. stagnated at $18.7 billion and volume had its smallest percentage increase since 2001, as consumers turned to less expensive drinks in a slow economy. Value-spirits that year gained 5.1 percent.

--Editors: Robin Ajello, James Callan

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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