Stock Market in High Spirits

The stock market’s poor performance and high unemployment may have curbed consumers’ spending in some areas, but one where it did not was in cocktails. In 2011, the spirits industry saw an increase in spending.

According to the Distilled Spirits Council of the U.S., in 2011, spirits sales, including those by Beam Inc. (NYSE:BEAM) and Brown-Forman Corp. (BF.B), increased 4 percent to $19.9 billion. Americans opened their wallets and increased spending 12 percent on “super premium spirits.” This included Ciroc (DGE) vodka and Woodford Reserve (BF.B) bourbon.

With the rise in spending for premium liquors, the beer industry’s market share declined. Premium spirits and wine took a half a percentage point of market share from beer, which dropped to 49.3 percent, according to Bloomberg.

Spirits’ market share increased to 33.6 percent in 2011, up from 2010’s 33.3 percent.

While American lagers lead the U.S. beer industry, it has been declining across the board as spirits take these customers away. Distillers entice them by offering new products such as flavored bourbons. Between 2009 and 2011, they introduced approximately 1,800 new products, according to the council. Total liquor sales in 2011 moved past 2010’s 2.1 percent gain.

John McDonnell, chief operating officer for Patron Spirits Co. and chairman-elect of the Spirits Council, offered some explanations,“People who are doing well are going out and spending on spirits as an affordable luxury. Also, spirits companies never stopped spending through the downturn.” The council added that about a third of U.S. spirits sales took place at bars and restaurants.