Industry

U.S. Spirits Volume Jumped 3% in 2012

By John Kell February 6, 2013
WSJ
Strong demand for pricier spirits, as well as notable gains for the key vodka and American whiskey categories, lifted U.S. industry volume 3% in 2012 from the prior year, a trade group reported Wednesday.

The Distilled Spirits Council of the United States, also known as Discus, reported higher priced spirits generated the strongest sales growth in the U.S. last year, a sign of the category's resilience even as consumer spending in other pockets of the economy have softened.

Last year's volume growth also comes amid a backdrop of price increases that have been broadly enacted by the industry's top players, including Diageo DGE.LN -0.32% PLC, Beam Inc. BEAM +0.65% and Brown-Forman Corp. BFB -0.26%.

Discus on Wednesday reported that U.S. spirits volume totaled 201.9 million nine-liter cases last year, and that revenue for the period jumped 4.5%.

Spirits' market share widened 0.2 percentage point to 34.3%, taking a sliver of market share from beer and wine. Spirits have now taken share from beer for three consecutive years.

By pricing segment, volume for super premium spirits, which retail at $30 or more per bottle, had the strongest growth, up 8.9%. That was followed by a 4.8% gain for high-end spirits, which are priced between $18 and $30 a bottle. Lower priced spirits notched less impressive gains.

Volume for vodka, the top selling spirit in the U.S., jumped 4% last year. Bourbon and Tennessee Whiskey volumes, the largest whiskey category, climbed 5.2%. Irish whiskey growth was even stronger, up over 22%.

Volume gains for rum, tequila and gin underperformed the broader spirits category, Discus reported.

Exports of U.S. spirits remained healthy, driven by strong demand for American whiskeys, which now represent 70% of spirits exports, Discus said. The industry's players have performed well in key Western markets like Germany and Australia, while also expanding into emerging markets.

The trade group said policy changes, including free-trade agreements that either significantly reduce or completely eliminate tariffs, can help the industry export more to markets like South Korea and Panama.