State of the spirits industry (Part 1)

NEW YORK -- Anyone who thinks the world market isn't interested in American products as much as usual may want to look over the chart above, listing the 2008 buying habits of the top 10 foreign markets for U.S. spirits.

The figures were released today in a news conference held at the New York Yacht Club by the Distilled Spirits Council of the United States (DISCUS), its annual review of the state of the industry for analysts and media.

Seven of those 10 markets show an increase in purchases of U.S. spirits. That totaled an overall increase of 49% over the prior year, or $392.3 million in just those markets. Overall, the industry experienced record exports for the sixth consecutive year. And, it is projected that once final figures are compiled, spirits exports will top wine exports for the fourth consecutive year.

The biggest market for U.S. spirits exports was Canada, up 21.2% to $171.9 million. Sales in the United Kingdom, while down 15%, ranked No. 2 at $136.5 million.

Those statistics are from the U.S. Department of Commerce, as compiled by the U.S. International Trade Commission.

In the overall distilled spirits industry, said DISCUS CEO Peter Cressy, 2008 showed growth, albeit slower than in 2007, in spirits sales, with revenue growth of 2.8%, or $18.7 billion, and volume growth of 1.6% to 184 million cases. That is well off the average annual industry growth rate of 6% since 2000.

He cited several key factors in the industry's recession resiliency:

• Holding the line on new hospitality taxes.

• Expanding market access.

• The continuing fascination with the cocktail culture and spirits premiumization.

• Continuing to push the idea that spirits are an affordable luxury, even in tough financial times.

In particular, DISCUS, as the major industry organization, takes the stance that because distilled spirits, and all beverage alcohol, is a major component of hospitality industry profitability and -- particularly for the hard-hit on-premise segment of restaurants, bars and hotels -- new hospitality taxes could have a devastating impact on employment and actual tax receipts.

"Our message is simple," Cressy said. "We are not seeking a bailout; just do no harm."

[Tomorrow: I'll take a look in the crystal ball to see what might lie ahead for the industry and its consumers this year.]

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