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Alcohol Issues in 2012

Alcohol Issues in 2012. Food Industry Association Executives San Antonio, TX November 9, 2011. Spirits Volume Increased 2% in 2010. 2.0%. 1.4%. 1.7%. 2.2%. 4.1%. 2.7%. 4.1%. 3.8%. 2.0%. 1.0%. 3.0%. Source: DISCUS MSDB. Spirits Revenues Rose 2.3% in 2010. $19.1. $18.7. $18.7.

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Alcohol Issues in 2012

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  1. Alcohol Issues in 2012 Food Industry Association Executives San Antonio, TX November 9, 2011

  2. Spirits Volume Increased 2% in 2010 2.0% 1.4% 1.7% 2.2% 4.1% 2.7% 4.1% 3.8% 2.0% 1.0% 3.0% Source: DISCUS MSDB

  3. Spirits Revenues Rose 2.3% in 2010 $19.1 $18.7 $18.7 $18.2 $17.2 $16.0 $15.1 $13.9 $13.2 $12.2 $11.7 Source: DISCUS MSDB

  4. Spirits Continuing to Gain Market Share • 33.3% of the alcohol market (revenues) in 2010 • A five point gain since 2000 • 10.9% increase in spirits retail licensees since 2000 • …versus a 0.6% decline in beer licensees • …but beer outlets still outnumber spirits 3 to 1 • There’s room to grow!

  5. Volume Growth by Price Category 2002-2007Consistent Rapid Growth By Premium+ Products 14.7% 5.8% 5.3% -0.2% Value Premium High End Super Premium

  6. Whiskey (All Types) • Accounts for 29% of industry volume • 47 million cases • Industry revenues $5.6 billion • Volume was up 1.4% in 2010 • Value brands down (-2.0%), premium flat • Strong performance among high end (5%) & super (8.1%) • Categories: • Irish whiskey up 21.5% • Single Malt Scotch up 11.7% • Bourbon & Tennessee up 2.5% (Super premium up 16.2%) • Blended Scotch down 1.4%

  7. Vodka • Accounts for 31% of industry volume • 59 million 9-Liter cases, up 6.1% • 25% of industry revenues ($4.8 billion) • Revenues up $230 million in 2010 • Performance by price segments • Value: volume up 3.8%, revenue up 2.5% (+$26M) • Premium: volume up 8.9%, revenue up 6.7% (+$80M ) • High End: volume up 3.2%, revenue up 0.2% ($3M) • Super Premium: volume up 17.7%, revenue up 13.8% (+122M)

  8. Other Major Spirits Categories • Rum growing slowly • Case volume up 1.4% to 24.9 million cases • Revenues down 0.9% to $2.2 billion • Low volume growth due to weak pricing • Tequila popularity continues • Volume up 3.6% to 11.6 million cases • Revenues up 4% to $1.7 billion • High end brands lead this category, up 17%

  9. 2010 U.S. Spirits Market = $19.2 billion

  10. Summary • During recession volumes grew but revenues were flat • Both volume and revenues now accelerating • Recession trading down kept consumers in spirits • Easier to trade up in recovery • Spirits continue to gain market share • Moderate growth expected • Craft distiller phenomenon creating new consumer interest

  11. Grocery Retailers Want in on the Action • Distilled spirits and wine are high margin products • Market shares are growing • New products on the shelves bring new customers

  12. Beverage Alcohol Grocery Store Sales Spirits, Beer, Wine Beer and wine Beer only

  13. States Expected to Consider Grocery Sales of Alcohol in 2012 • Colorado (strong beer, wine and spirits) • Connecticut (wine) • Kansas (wine and spirits) • Kentucky (wine) • Massachusetts (wine and spirits) • New York (wine) • Oklahoma (full-strength beer) • Tennessee (wine)

  14. Distiller Concerns About Allowing Wine Only in Grocery Stores • Diverts wine customers away from package stores • Opportunities to purchase spirits would decrease • Consumers would substitute wine “occasions” for spirits • Some package stores will go out of business • Availability of spirits would further decrease • Promised new tax revenues would not materialize • Wine tax rates are about 1/3 of spirits rates • Decline in spirits tax revenues could lead to tax hikes

  15. A Complicated Situation for Distillers • We have to oppose wine only in grocery stores • It could seriously damage our spirits business • Our studies show it would cut store traffic 20-40% • We do support legislation that modernizes ABC laws • Spirits growth depends on expanding market access • Grocery chains are already among our biggest retailers • But, we also support our independent package stores

  16. A Possible Way Forwardin Massachusetts • Grocers and package stores have compromise deal • Current 3 license limit will grow to 9 over time • Allows expansion by independents and chains alike • New Jersey stores are looking at a similar solution • Package store lobby can be surprisingly strong • Politicians don’t want to hurt small business • Best advice: Look for win-win solutions

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