USA: Land of Opportunity

27th September, 2012 by Chris Mercer

The American dream is very much alive, and it’s supping super-premium spirits even as a Greek tragedy threatens to engulf much of Europe.

USA New York

The old saying runs true, still. America really is the land of opportunity

US bars are littered with big beer sales execs gazing wistfully at throngs of young adults keen to slug all manner of distilled liquids, be they flavoured, Irish, white or brown.

Diageo CEO Paul Walsh has even ventured to label the US an “emerging market” for spirits. It’s a deliberately provocative point, but perhaps it has legs when you consider that 3.5m Americans reach legal drinking age annually.

Without being too crude, this represents a huge pipeline, with one-fifth of the US population aged under 14 – compared to 17% in China.

“The most exciting aspect of the US spirits market right now is that we are able to recruit new 21-year-old consumers into the category,” said Sazerac Co’s spokesperson, Amy Preske. It’s a widely held sentiment. “The demographics are extremely favourable to spirits,” John McDonnell, chairman of the US Distilled Spirits Council (DISCUS) and COO of Patrón Spirits, told The Spirits Business.

Beer still accounts for 49.3% of US alcoholic drinks sales by value. Spirits’ share is 33.6%, but distillers clearly hold the momentum, having sucked up an extra five percentage points of share in the past decade.

In 2011, DISCUS figures show spirits sales in the US rose 2.7% by volume and 4% by value, to US$19.9bn, making a promising case for premiumisation following a sticky recessionary period that slowed sales momentum to a near standstill.

American hospitality fights back

Particularly pleasing to McDonnell is a rebounding on-trade sector, seen as a key platform for propelling consumers into higher priced spirits. “The number of employees in the hospitality industry is back to where it was before recession,” he says.

As for which spirits are winning, many of the trends from 2011 have continued into this year. Anything super-premium and above seems to be having a decent time of it. McDonnell says that Patrón Tequila depletions – sales from distributors to retailers – are up 10.5% for the first five months of 2012.

In Cognac, Bacardi feels confident enough to debut D’Ussé, a US$45-a-bottle VSOP that will be promoted by hip-hop star Jay-Z.

And beyond that? “Bourbon is exploding,” McDonnell says. There are also signs that bourbon is catching fire abroad, with exports up 10% in 2011 and on track to rise even faster in 2012.

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