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News
US prices set to rise as market rebounds
Spirit producers are expected to raise their prices in the US after the market witnessed early signs of recovery last year, with the top-end of the market faring particularly positively.
Sales of spirits rose to 190.7 million nine-litre cases in the US in 2010 – up 2% on recession-hit 2009 – according to the Distilled Spirits Council of the United States (DISCUS).
DISCUS chief economist David Ozgo said any upsurge in consumer demand could embolden spirits makers to raise prices.
"After two years of weak pricing, [spirits makers] are probably looking for that kind of opportunity," Ozgo told an industry briefing this week.
If prices do come up, he said spirits makers could see revenue rise by around 2.5% to 3% percent in 2011. At the same time, any price increases "might damp down volume a little bit," he added, forecasting a volume increase of a maximum 2.5% this year.
In the pre-recession years of 2000 to 2007, the industry in the US achieved average annual growth of 2.9%.
DISCUS added that revenue rose 2.3% to $19.1 billion in 2011.
"In 2010, the industry improved its performance over the previous year, but this recovery remains fragile, and we are not yet out of the woods," council president Peter Cressy said.
"Consumers did begin to trade back up to premium spirits products, but the hospitality industry is still far from its average pre-recession performance."
Super-premium spirits saw both volume and revenue rise nearly 11% over the year, dramatically outperforming the rest of the market.
"While recovery will remain a work in progress until the US employment picture improves, these gradually improving industry trends…give us growing confidence," said Paul Duffy, president of Pernod Ricard USA.
Vodka, which accounts for 31% of total spirits volumes in the US, was up 6.1% at 59m cases.
Whisk(e)y volumes rose 1.4%, as double-digit increases for single-malt Scotch and Irish whiskey offset slight declines for blended Scotch and Canadian whiskey. Volume of rum rose 1.4%, tequila rose 3.6% and gin declined 2.6%.
Spirits accounted for 33.3% of the total US alcohol market in 2010, according to DISCUS, up from 32.9% in 2009.
The picture was not so rosy for beer, however, which lost market share over the course of the year, dropping to 49.8% of the market, down from 50.5% in 2009, marking the first time in 12 years that beer’s market share fell below 50%, according to the DISCUS figures.
Alan Lodge, 26.01.2011