Wine and spirits on the rise in US

Wine and spirits are continuing to make up ground on beer in the US drinks market.

Though beer remains the country’s biggest-selling drink, the annual report from the Distilled Spirits Council of the United States, issued yesterday, suggests that the tide might be turning.

The trade group pointed to a surge in exports, improved marketing support, legalisation of Sunday liquor sales, new flavours and an improving economy, among other factors that helped fuel a 4% increase in spirits sales to US$19.92 billion.

Spirits now account for 33.6% of total US alcohol sales, wine accounts for 17.1% and beer has 49.2% of the US$59.24 billion US drinks industry.

The data represents sales by manufacturers and importers rather than retail sales.

The signs are not particularly encouraging for beer, which aside from a minor gain in 2008 has lost market share to spirits for each of the last 13 years.

Although spirits have added only 0.6% market share over the last five years, beer has lost 1.3% over the same period. Wine has picked up the remaining lost market share.

The Spirits Council sought to cast its 2011 results as “a return to pre-recession” sales growth.

“You’re seeing an economy that’s started growing again, and obviously unemployment is still quite high, but people are getting hired,” the council’s chief economist, David Ozgo, said, noting improved spirits sales.

“When people get hired it gives others the confidence to go out and start spending money.” He pointed to more frequent trips to bars and restaurants, in particular.

Ozgo also highlighted the renewed drive by spirits companies to invest in new product development, saying that around 1,800 new spirits products have been launched in the last three years, adding US$1.5bn to 2011 sales.

Exports were another boon to the US spirits industry, up 16.5%, to US$1.34 billion. Kentucky bourbon and Tennessee whiskey are among the biggest exports.

Michael Binstein, owner of Binny’s Beverage Depot, said sales trends in his 28 stores hint at another trend shift, as craft beer “is capturing and vying for that most coveted customer in the eyes of the distillers,” namely 21- to 40-year-olds.

“Sweet, flavoured vodka is sort of the entry-level beverage of choice for a lot of 21-, 22-, 23-year-olds,” he said. “But more and more of them are migrating to the craft beer category, when five years ago those would have been reliable customers for liquor and for wine.”

Craft beer is seeing double-digit sales growth in his stores, Binstein said, as spirits, which constitute the biggest piece of his business, is posting more modest gains.

Binstein said that although “there’s no question there are more liquor consumers than there were a generation ago,” who are also drinking better and more expensive products, much of that growth is being driven by vodka.

Ozgo and the spirits council see it another way.

“Ten years ago you might have a drinker who had a Budweiser 90% of the time, and today maybe 60% of the time he’s having a Bud and splitting the other 40% between rum and Coke, bourbon and ginger, and maybe a margarita,” he said. “We’re winning the consumer choices more often than we once did.”

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