Recovery of Distilled Spirits Industry Still Fragile, Says DISCUS.

This morning in New York, the Distilled Spirits Council (DISCUS) presented its annual report on the state of the industry.

The report is based on sales data and other research about the year just ended. DISCUS President Peter Cressy led with an appeal to lawmakers not to stifle the recovery by piling on new tax burdens.

In 2010, supplier volumes rose 2% to 190 million cases and revenue rose 2.3% to $19.1 billion, but Cressy pointed out that growth rates remain below the robust pre-recession growth rates, and the important on-premise (restaurants and bars) sector is still experiencing a fragile recovery.

Cressy also noted that in 2010 consumers began to return to their preference for high-end and super premium spirits products, with revenue in the super premium category growing 10.9% from a very soft 2009. Revenue-based market share for spirits versus beer and wine gained four-tenths of a point, rising to 33.3% of the beverage alcohol market. Beer lost seven-tenths of a point of market share falling below 50%, as consumers continued their decade-long migration from beer to cocktails.

Reinforcing the cocktails theme, vodka, which accounts for 31% of industry volume, was up 6.1% to 59 million 9-liter cases (the standard measure of industry volume). Among super premium vodkas, volume was up nearly 18% and revenue was up approximately 14%.

Whiskey showed strong revenue growth, particularly in the super premium segment, which increased by 8.1% overall to over $1.1 billion. Within the super premium segment, bourbon and Tennessee whiskey revenue increased by over 17% to $161 million; single malt scotch grew nearly 18% to $140 million; and Irish grew 30% to $23 million. Super premium Brandy and Cognac were also up almost 10% to $315 million.

2010 preliminary U.S. distilled spirits export data showed a fourth consecutive year exceeding $1 billion, and a rebound from the slight downturn in 2009. The Council predicted final results could break the $1.1 billion record set in 2008. American whiskey represents 71% of all U.S. spirits exports.

DISCUS also reported that progress is being made in the prevention of underage drinking and drunk driving. The latest government data shows underage drinking by 8th, 10th and 12th graders, as well as the total number of drunk driving fatalities in the United States, are at historic low levels.