February 6/Milan/Teatro Naturale-- The distilled spirits industry experienced growth in 2011 while taking more market share again from beer, reported Distilled Spirits Council president and CEO Peter Cressy at the industry's annual briefing. However, he warned, uncertainty about the economic recovery and the impact of new taxes could derail future growth.

Cressy said industry suppliers saw year-to-year volume growth of 2.7% to 195.8 million nine-liter cases, and sales growth of approximately 4% to $19.9 billion, reflecting a consumer return to premium products. On a revenue basis, this resulted in another three-tenths of a point in market share gains against beer, reaching 33.6% of the total beverage alcohol market. This represents approximately five points of market share since 2000, worth approximately $2.9bn annually.

Cressy attributed the market share growth to industry innovation and the consumer return to premiumization. He said that other significant factors contributing to the positive outcome were ongoing national market modernization trends and a willingness by policymakers to hold the line on taxes. "It is a credit to the companies' commitment to innovation, and successful modernization trends, that we have experienced nearly five points of revenue market share growth over the past decade," Cressy said.

A key legislative win for the industry in 2011 was the passage of Sunday sales in "Deep South" Georgia -- with Atlanta voting 82-18% in favor. Georgia became the 15th state to repeal its Sunday Sales Blue Law ban since 2002, bringing the total to 37 nationwide.

Vodka, which accounts for 32% of industry volume, was up 5.9% to 63m nine-liter cases, but in the super premium category, volume rose 12.7% and revenue rose 15.9%, $160 million, now totaling $1.16 billion.

In the largest whiskey category, Bourbon and Tennessee Whiskey, overall volume was up 3.9% to 16 million nine-liter cases, and revenue was up 3.9% to $2 billion. Again, the largest growth occurred in the super premium category where revenue was up 11.4% for a total of $180 million.

"These results show that the hospitality industry is helping drive the national recovery and job creation, but it remains critical that legislators don't derail future economic growth through higher taxes," said Cressy.

Distilled spirits exports exceeded one billion dollars for the fifth consecutive year, reaching a projected record $1.34 billion in 2011 (based on 11-month totals). Total spirits exports grew 16.5% over the preceding year, while American whiskey -- 69% of total exports -- grew 13.6%.

An ongoing trend towards open markets and sensible transparent regulations, as well as a focus on communicating the heritage of the products in new markets, contributed to the trade growth. Among significant trade victories in 2011 were the passage of the US- Korea Free Trade Agreement, which will eliminate the 20% tariff on Bourbon/Tennessee Whiskey upon implementation of the agreement, and the World Trade Organization's final ruling that the Philippines' excise tax on distilled spirits is discriminatory and in violation of WTO rules.

"As countries around the world lower tariffs and other barriers, American spirits products are finding new audiences fascinated by the rich heritage and unique character of these great brands," Cressy said.

 From the February 6, 2012, Prepared Foods' Daily News.