Spirits Up in the U.S.

June 30/Norwalk, Conn./Food Business Week -- According to the Beverage Information Group's recently released 2010 Liquor Handbook, total spirits consumption rose 1.6% in 2009 to 188.6 million 9-liter cases. This gain marks the twelfth consecutive year of advances for the industry, although this rate of expansion has slowed.

Even though growth has pulled back slightly due to the recessionary environment, the distilled spirits business remains healthy. The drivers for slow growth continue to be a shift to off-premise consumption, the economic dip and value-priced offerings.

There has been a sustained shift in consumption patterns away from bars and restaurants and more towards at-home consumption. The on-premise segment of the market has dropped for two consecutive years, with a 3.3% decline in 2009.

Another continued trend cited in the 2010 Liquor Handbook is that domestic spirits are outpacing imports for the second consecutive year. Total imported spirits rose 1.4% in 2009 to 75.3 million cases compared with slightly faster growth for domestics (1.8% to 113.3 million). Although imports have lost share, its contribution to the market has increased since 1999, due in part to the fact that a majority of spirits at higher price points are imported offerings.

"Due to the economic environment, we have seen a 'trading down effect' with more consumption in lower-priced tiers," says Eric Schmidt, manager of information services for the Beverage Information Group, Norwalk, Conn. "As a result, we are seeing heavy price fighting and couponing taking place in order for suppliers to maintain growth and share."

From the July 19, 2010, Prepared Foods E-dition