U.S. News

Recession slows 2009 liquor sales: trade group

NEW YORK (Reuters) - Americans slightly slowed their consumption of hard liquor last year, a trade group said on Tuesday, proving that spirits are relatively resilient in a recession, but not immune.

U.S. revenue for spirits makers in 2009 was flat even though sales volume rose slightly, as many budget-conscious consumers turned to lower-priced drinks, according to the Distilled Spirits Council of the United States (DISCUS).

The trade group expects sales growth to rebound as the economy mends, but stopped short of giving a forecast for 2010.

“In our view, we can begin to see the light at the end of the tunnel here in the recession, but your guess is as good as ours how long is the length of that tunnel,” said DISCUS CEO Peter Cressy.

“We’re cautiously, cautiously hopeful that things will get a little better,” he added. “If the economy continues to move forward and if we begin to see, in this first quarter, some return to job growth, I think things will get better.”

U.S. sales by volume rose 1.4 percent in 2009 to 187 million 9-liter cases, and revenue was flat at $18.7 billion. That represents a slowing from 2008, when volume rose 1.6 percent and revenue rose 2.8 percent.

Volume of cheapest spirits rose 5.5 percent, while those at the highest price points, saw their volume fall 5.1 percent.

“There definitely was some trading down,” Cressy said. But he was encouraged that spirits’ share of the alcoholic drink market by volume rose half a percentage point in 2009, a sign that some consumers might have migrated away from beer or wine, and could trade up to premium spirits once budgets allow.

Exports of U.S. spirits fell about 4 or 5 percent from 2008, but remained above $1 billion for the third straight year, said DISCUS Chief Economist David Ozgo. The largest export markets were Canada, Britain and Australia.

Last week, Fortune Brands Inc, maker of Jim Beam and Maker’s Mark bourbons and Sauza tequila, said sales in its spirits business rose 3.5 percent in the fourth quarter, as the weaker U.S. dollar boosted the value of international sales.

Other large players in the spirits industry include: Diageo PLC, Pernod Ricard SA and privately owned Bacardi Ltd.

By category, the strongest performers in the United States in 2009 were tequila with a 5.2 percent rise in volume, vodka with a 4.9 percent rise and the brandy and cognac category with a 3.3 percent increase.

The hardest-hit category was cordials, where volume fell 4.3 percent, DISCUS said.

Ozgo said the industry’s recent performance was consistent with that of prior recessions.

“The industry has always recovered in past recessions and the high-end share has always continued to grow,” Ozgo said. “I see no reason why the pattern would be broken.”

Reporting by Martinne Geller, editing by Leslie Gevirtz