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Spirits Growth Soft in '08

Feb 3, 2009 - Warning that the spirits industry is recession resistant, not recession proof, Distilled Spirits Council CEO Peter Cressy released industry data at an annual briefing for media and analysts showing slowing 2008 revenue growth of 2.8% totaling $18.7 billion and volume growth of 1.6% to 184 million cases.

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He noted market share was holding steady but softened in the fourth quarter, although the consumer trend toward premiumization continued.

For 2009, he warned policymakers at all levels that distilled spirits, and indeed all beverage alcohol, are a key component in hospitality industry profitability and- particularly for the hard-hit on-premise segment of restaurants, bars and hotels-new hospitality taxes could have a devastating impact on employment and actual tax receipts.

"Contrary to popular belief, the entire beverage alcohol sector is recession resistant not recession proof," said Cressy.

"Premiumization continues," Cressy said, noting that many consumers appear to be "trading around, not trading down. Consumers are being more discerning about their buying decisions when it comes to alcohol." He cited growth in premium Rums; and high-end premium and super premium American, Canadian and Irish whiskeys. Super premium Tequila also continued its growth, and Vodka, the largest category representing approximately 24% of sales, also showed growth. But, he said, it remains to be seen how the recession will affect the categories going forward.

A bright spot in the briefing included 8% growth in exports of U.S. distilled spirits, primarily American whiskeys, totaling $1.1 billion for 2008. This represented a sixth straight year of record exports. Strong growth occurred in Australia (+24.3%); Canada (21.2%); France (15.9%); and Germany (8.9%). Emerging markets, including China and Brazil where the industry had run market promotions, showed strong growth albeit from a smaller base.

"Bourbon and Tennessee Whiskey are unique and historic products of the United States that are capturing worldwide attention and acclaim. Importantly, export growth helps to protect jobs in the U.S., not only in the spirits sector, but in the farm, forest products, packaging and trucking sectors as well," Cressy concluded.


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