NEW YORK (Reuters) - Americans slowed their consumption of hard liquor last year, a trade group said on Friday, proving that spirits are not immune to a recession.
Sales slowed throughout the year, but likely declined in the fourth quarter, which is often the industry’s most important, said officials from the Distilled Spirits Council of the United States (DISCUS).
The industry group abandoned its practice of giving industry forecasts for 2009, citing marketplace volatility.
The trade group joins a growing list of companies, including Fortune Brands Inc, Microsoft Corp, eBay Inc and Coach Inc, that say it is too hard to forecast results in the recession.
“(Last year) wasn’t a great year and yet we did ease up a little bit, despite the fact that the fourth quarter was not strong,” said DISCUS CEO Peter Cressy. “We’re hopeful we’ll continue some modest increase, but I don’t think I can tell you any more than that.”
Cressy said that, if economic conditions and excise tax levels remain as they are, performance in 2009 should not be any worse than last year.
“If the economy slides into an even deeper recession, the downside risk could be greater,” he added.
Revenue for spirits companies rose 2.8 percent to $18.7 billion in 2008 and sales by volume rose 1.6 percent to 184 million 9-liter cases.
That represents a slowing from 2007, when revenue rose 5.6 percent and volume 2.4 percent, and from a prior forecast by DISCUS that called for revenue growth of 4 percent to 5 percent and volume growth of about 1.9 percent.
“Contrary to popular belief, the entire beverage alcohol sector is recession-resistant, not recession-proof,” Cressy said.
Exports of U.S. spirits, primarily American whiskeys, rose 8 percent to $1.1 billion in 2008, the group said, citing double-digit growth in Australia, Canada and France, which helped offset weaker exports to Britain and Spain.
The DISCUS data came a day after Fortune Brands, maker of Jim Beam bourbon and Sauza tequila, posted weaker-than-expected profit and said fourth-quarter global spirits revenue was flat, excluding the impacts of inventory destocking by distributors, currency fluctuations and higher Australian taxes. Including those factors, sales fell 16 percent.
Earlier this month, France-based Pernod Ricard SA, the world’s second-biggest alcoholic drinks group after Britain’s Diageo Plc, said performance in the United States, its biggest market, had suffered from sellers whittling down their inventories.
Reporting by Martinne Geller, editing by Leslie Gevirtz and Andre Grenon