Although on-premise growth returned to positive territory in 2010, recovery is slower than anticipated. With continued high unemployment and rising fuel costs, consumers' disposable income is being squeezed, leading people to dine out less. The "trading up" trend that drove consumption prior to the failing economy also has been tempered by these economic factors. Consumers are now more frugal -- instead of the ultra-premiums that once dominated the market, quality products at lower price points are driving consumption.

The economy's slight recovery helped imported products return to outperform domestics in 2010. Total imported spirits offerings climbed 3.0% last year, compared with 1.1% for domestics. Imported products now account for 40.4% of all spirit consumed in the U.S., an increase from the 36.4% it held 10 years ago.

Distilled spirits consumption successfully made it through the recession's impact of the past few years and is expected to continue on a positive path over the next five years. Total spirits is expected to end the year up 1.8% to reach 195.6 million cases. 

"Consumer willingness to experiment, quality products in every price tier, continuous marketing efforts and the ever-increasing popularity of cocktails are all factors that will lead to spirits' continued success," says Eric Schmidt, manager of information services for the Beverage Information Group, Norwalk, Conn.

From the July 25, 2011, Prepared Foods' Daily News.