This is marketing research on the Distilled Spirits industry and can include information on the background, market structure, definitions, competitors, trends and developments of distilled spirits and is related to alcohol, liquor, beer and wine.

Table of Contents

[edit] Background

The alcoholic beverage industry has three major sectors: beer, wine, and distilled spirits. Except in a handful of situations, producers do not venture out of their respective sectors. Per capita consumption in many major developed countries has leveled off. As a result, most producers have had to find niche markets for their products overseas to continue to grow. Malt beverage and distilled spirit companies have had to establish licensing agreements and joint ventures in addition to exporting to continue to satisfy their owners’ desire to increase profits.

The international distilled spirits industry has faced hard times because of changing economic cycles in the fastest growing markets for their products. As a result, according to Impact, a major alcoholic beverage trade publication, major multinationals have moved inexorably toward the creation of powerful core premium brand groups that are responsible for growth in the global marketplace, while their other brands are tapped on a more narrow strategic basis, usually according to regional or local strengths. Globally, white spirits account for about 42 percent of the branded distilled spirits markets, followed by local spirits with 28 percent and whiskey with 18 percent.

[edit] Market Structure

In the late 1990s, total U.S. production of alcoholic beverages declined 2 percent to 6.7 million gallons. There continued to be modest growth between going in to the year 2000. Per capita consumption has remained relatively stable in recent years as consumers have shifted to higher-priced alcoholic beverages. In a number of instances, imports have competed successfully for the consumer’s dollar. Total constant dollar shipments of alcoholic beverages rose 1.4 percent in 1999. While industry shipments remained flat for distilled spirits, wine and brandy shipments rose 2 percent and malt beverages rose about 1.5 percent.

Consolidation has continued in the distilled spirits industry as larger players have extended their reach to additional geographies. The number of establishments has decreased by approximately 8% up to 2002.

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Productivity may be boosted by having fewer players in the business, but the distilled spirits workforce continues to expand. Employment in the industry us up and should now number about 170,000 workers.

[edit] Market Metrics

Growth in industry revenues has outpaced inflation up to 2002. The industry had risen almost 30% in 5 years and should now be close to US $100 billion in annual revenue.

[edit] Recent Trends and Developments

Even though domestic consumption of alcoholic beverages will remain relatively stable, constant dollar industry shipments increased approximately 1.4 percent in the year 2000 and grew 1.3 to 1.8 percent over the next 5 years as U.S. consumers continue to consume higher priced alcoholic beverages.

As the Asian economies rebound and other markets continue to open, U.S. exports of alcoholic beverages were expected to increase 3 to 7 percent from 2002 onwards. In 1998, almost 71 percent of U.S. distilled spirit exports consisted of branded items such as whiskey (59 percent), rum (7 percent), liqueurs and cordials (3 percent), vodka (1.3 percent), and gin (0.4 percent). Japan was the largest export market for U.S. whiskey, accounting for 23 percent of the total, followed by Germany (16.5 percent), Australia (14 percent), the United Kingdom (9 percent), and France (5 percent). Japan, Germany, and Australia were the top three export markets for all distilled spirits.

At the beginning of the decade, the estimated 9.5 percent decline in total U.S. distilled spirit exports could be attributed to a decline in grain spirit exports or in those of other distilled spirits products used in the production of vodka and possibly gin. As the demand for grained spirits as inputs for vodka has declined, U.S. exports of branded distilled spirits have garnered a greater share of total U.S. exports of distilled spirits. In 1999, branded spirits accounted for 80 percent of total distilled spirits exports, up from 71 percent in 1998. Between 1998 and 1999, U.S. exports of branded spirits grew about 10 percent while exports of non-branded spirits fell almost 50 percent. In the year 2000, U.S. exports of distilled spirits were expected to increase over 4 percent, with branded spirits accounting for most of the increase. Over the next five years, exports of U.S. branded spirits should increase as countries that were in violation of WTO policy, which prohibits countries from discriminating against imports, adhere to WTO rulings.

[edit] Sources

• Most current US government sources