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Slight slowdown seen in liquor sales growth

January 26, 2008|From Reuters

The distilled spirits industry expects its U.S. revenue to increase 4.6% in 2008, down from last year's growth rate, a trade group said Friday, as the weaker economy forces people to tighten their budgets for going out.

The Distilled Spirits Council of the U.S. expects spirits makers to post $19 billion in revenue in 2008. Revenue rose 5.6% to $18.2 billion in 2007.

Sales by volume are expected to go up 1.9% in 2008, the trade group said, reaching 185 million cases. Volume sales advanced 2.4% in 2007.

David Ozgo, the organization's chief economist, said that he expected the economic slowdown to take a toll as people cut back on going out to restaurants and bars, but that the industry would outperform other areas of the economy.

"Nobody is recession-proof," Ozgo said. "However, there are a number of mitigating factors for us. We'll react to a recession, but it's not like we're the real estate industry or the auto industry . . . where you would expect sales to go into the tank."

Ozgo said that even if people don't go out to drink, liquor is considered by many to be an "affordable luxury" they can have at home.

In 2007 tequila was the smallest but fastest-growing segment of the liquor industry, which is dominated by Diageo, Pernod Ricard and Fortune Brands Inc.

Tequila sales, which made up 15% of the industry total, jumped 10.5% to $1.6 billion in 2007. Whiskey, the largest segment with 29% of total sales, saw the slowest growth last year, rising 3.8% to $5.2 billion.

Fortune Brands, the holding company for Jim Beam bourbon, said spirits sales grew 3.7% to $2.61 billion in 2007.

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