SPIRITS SALES GROW MERRIER IN '96 AFTER 15-YEAR SLIDE PREMIUM AND SUPERPREMIUM BRANDS HELP SPUR VOLUME GROWTH IN SHIPMENTS

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The U.S. spirits market wrapped up `96 with its first volume growth in 15 years. Total distilled spirits depletions, measured by shipments of cases from liquor wholesale warehouses, increased 0.3% over 1995, according to yearend estimates by trade newsletter Impact, totaling 135 million cases.

Although the volume growth is slight, it's significant given the bleak streak of stagnant or sliding sales that began in 1981, as liquor distillers, importers and marketers lost share to beer and wine companies.

PREMIUM GROWTH

According to Impact, fueling the '96 growth were premium and superpremium brands such as Skyy Spirits' Skyy vodka and Schieffelin & Somerset Co.'s Hennessy cognac.

Liquor industry experts cite several turnaround factors, including a healthy economy, relatively stable liquor prices and targeted marketing to young adults. The resurgence of classic cocktails also helped.

Liquor marketers have good reason to try to lock in young adults' loyalty now: According to a recent study by Mediamark Research Inc. and American Demographics, the percentage of 25-to-34-year-old men who drink is projected to decrease by 16.2% in the next decade, while consumption among 45-to-54-year-old men is expected to rise by 21.9%.

In some cases, the hottest growth brands are still relatively small players. Skyy vodka, for example, grew 66.7% last year, but its total volume, an estimated 625,000 cases, pales beside Seagram Americas' Absolut, which grew 5.2% and depleted 3.3 million cases. The premium/superpremium segment itself grew 4.9% to 28.8 million cases, Impact said.

VO, J&B TAKE A DIP

Not all brands rode the growth wave. Of the top 25 premium/superpremium brands listed by Impact, four posted volume decreases: Seagram's VO Canadian whiskey fell 2.8%; Paddington Corp.'s J&B Scotch whisky dropped 3.6%; and Hiram Walker & Sons' Beefeater gin and Courvoisier cognac fell 3.1% and 2.4%, respectively.

Although there is some concern among liquor marketers that the growth of upper-end beverages will cannibalize midtier and popular-price brands, experts believe enough new drinkers will enter the market to compensate.

A potential wild card in `97 sales is the possibility of expanded TV and radio advertising by spirits marketers. Although Seagram, Paddington and Sidney Frank Importing Co. have had isolated success placing some local cable and broadcast buys, rumblings of possible government intervention have made broadcast outlets nervous about accepting any new ads.

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