Blog: Olly WehringCan a winner be brewed in this recession?

Olly Wehring | 27 February 2009

Today’s story on just-drinks reflecting on the latest US GDP figures will not make happy reading for those at the premium end of the drinks spectrum.

The US is the world’s most profitable drinks market and spirits companies in particular are tied into its health. As the piece goes on to show, the declining economy has not left the spirits business unscathed. Spirits shipments in the 19 US Control States rose by only 1.1% in January, according to the National Alcohol Beverage Control Association (NABCA).

Analyst group Berstein, though, estimated in a note this week that spirits volume growth for the US is running at 1% below the NABCA shipment figures, because Control States are more geared towards off-trade sales, which have been less affected than on-trade sales.

If correct, that would make total US spirits shipments by volume flat for January.

Another analyst group, this time Frost & Sullivan, added further woe this week with suggestions that North American food and drink consumers will slow their spending on premium food and drinks.

But it’s not all been bad news. Indeed the Brewers Association released figures showing small independent craft brewers are gaining alcohol market share due to a shift toward full flavour beer and increased support for local breweries.

But I also wonder how the economy will affect this trend.

The Brewers Association in its statement also pointed to data from Gallup showing a move back towards beer from wine and spirits. We didn’t include this in our story as the survey was from July last year. Nonetheless, the Brewers Association’s confidence was telling. And, I would be none surprised if the trend was extended as the recession bites.

“Beer's popularity as America's favourite fermented beverage continued in 2008 with Gallup stating ‘beer is back to a double-digit lead over wine,’” the Association said. “Taking into account the challenges in today's economy, BevincoNielsen released a survey showing beer was faring better than spirits, with wine lagging. The Brewers Association emphasised trading across from wine and spirits to beer continues, with some of today's wine drinkers discovering the affordable enjoyment and rewards of craft beer.”

After a number of years living and shrinking in the shadow of wine and spirits, there could be winners in this recession after all.


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