Liquor's Share Trickles Back Toward Beer

Spirits Sales Slow Down for First Time in Years

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NEW YORK (AdAge.com) -- Doing away with any doubts about whether liquor is recession-proof, distilled spirits in 2008 lost market share to beer for the first time this decade.

Volumes of superpremium brands, like Grey Goose vodka, grew 1.7% this year, compared with an 11.3% gain a year earlier.
Volumes of superpremium brands, like Grey Goose vodka, grew 1.7% this year, compared with an 11.3% gain a year earlier.
The Distilled Spirits Council of the United States released the industry's results this morning, and they showed a significant slowdown in the trading-up phenomenon that has fueled the surge in spirits sales in the past 10 years.

Spirits sales rose 2.8% last year, a sharp decline from the 5.8% gain the category posted the year before. Discus President Peter Cressy attributed the weakening results to a decline in sales in bars and restaurants; off-premise sales rose 2.9% on the year. In the fourth quarter, as the economy worsened, however, sales fell in all channels.

Overall, spirits' share of total alcohol revenue fell to 32.9% from 33.1%, the first such decline since the mid- to late 1990s, according to Discus chief economist David Ozgo. It appeared, he said, that the lost market share was picked up by beer, which gained in the fourth quarter.

'Absolutely not recession-proof'
"The industry is recession-resilient or recession-resistant, but it is absolutely not recession-proof," he said. The results showed a clear slowing -- if not quite a stalling -- of consumers trading up to ever more expensive brands. Volumes of superpremium brands, such as Grey Goose vodka, grew 1.7% this year, compared with an 11.3% gain a year earlier. High-end brands such as Absolut vodka saw volumes fall 0.5% after a 4.5% gain a year ago. The cheaper premium and value categories posted gains.

As to whether those developments would continue in 2009, neither Mr. Cressy nor Mr. Ozgo was willing to make any projections. "Given the volatility of the world, we wouldn't consider that," Mr. Cressy said.

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