Finding Opportunities in the Face of Growing Challenges
Delivering this year’s State of the Industry address, President and CEO of the Distilled Spirits Council of the United States (DISCUS) Dr. Peter Cressy declared that we are now back to above-recession levels in regards to growth in spirits. The number of cases sold in the United States increased 1.9% in 2013, up 3.9 million cases for a total of 206 million cases sold. In addition, US spirits supplier revenues rose 4.5% in 2013. This represents a growth of $960 million for a total of $22.2 billion.
Growth continues in the high end and super premium spirits segments with whiskey revenues up 14.3 percent. In fact, whiskey drove 2013, counting for 25.6% of industry volume with 52.7 million 9-liter cases. Blended whiskey in particular rose in volume by 14.3 percent. Vodka slowed in terms of growth but has not stagnated or experienced a decline. In 2013, tequila experienced a spectacular year as case volume rose 6.6%, translating to 13.1 million cases. This is likely due, according to Dr. Cressy, to sales of shooters. Rum didn’t experience growth in volume in 2013. However, the libation did experience growth in revenue. In terms of new products, there are more than 800 new products and new expressions of existing brands flooding the market. Flavors are dominating these new products, with 2.3 million flavored cases being produced as opposed to 1 million cases of traditional spirits.
Switching gears, Dr. Cressy spoke about demographics. While we are back to above-recession levels, the 21- to 34-year-old demographic is going to experience a drop to zero growth. This is due to the fact that this key demographic is experiencing approximately 30% unemployment. Guiding the audience to a demographic that is often overlooked, Dr. Cressy pointed out that he was possibly the oldest person in the room at the age of 72, that he still drinks and that people are making a big mistake when they don’t market products to him. Capturing new demographics and being creative is the key for success.
The President and CEO of DISCUS then spoke about the very real threats to the industry. With the federal deficit still at unsustainable levels and the economy in a very vulnerable position regarding recovery, the Federal Excise Tax (FET) remains a threat. However, DISCUS boasts a success rate of 92% in defeating major tax threats with a record of 336 out of 365 crushed. In fact, DISCUS has defeated major tax threats that appeared in 18 out of 19 states. Dr. Cressy made certain to point out that local taxes are proving to be a growing threat to the industry. The keys to beating these threats are rapid response and refuting bad science with the real facts.
The good news is that spirits are experiencing growth and that DISCUS is here to respond quickly – and effectively – to municipal, state and federal threats. Cultural acceptance of spirits is continuing to grow, strengthening the industry as a whole. With your commitment to engage local officials, meet and write your legislators, identify tax threats early and communicate with other supportive organizations, 2014 can be an even stronger year for the industry. Consider this your call to action!