Recession 'proof'?
Liquor industry grows but feels pinch too
By EMILY FREDRIX, The Associated Press
Monday, February 09, 2009
MILWAUKEE — Drinking away your troubles? Possibly. But chances are you’re doing less of it, and you’re imbibing at home.
The alcohol industry is often thought of as “recession proof,” but the spirits industry says that its business softened last year, with revenue growth slowing and spending shifting away from bars and restaurants.
Revenue reported by liquor suppliers rose 2.8 percent from the previous year to $18.7 billion in 2008, according to the Distilled Spirits Council of the United States. That’s slower than the 6 percent average annual growth rate since 2000. Volume grew 1.6 percent, also below the 2.7 percent average growth of recent years.
That there is even still growth shows the spirits business is “recession resilient,” said council president Peter Cressy, but not immune to the pressures of the economy.
“It is absolutely not recession proof,” Cressy said. “There’s no question the fourth-quarter softened substantially.”
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What’s Good for Beer Is Good for the Country
By EDUARDO PORTER The New York Times, Published: January 24, 2009
Legally, at least, getting drunk was not an option at the onset of the Great Depression. Prohibition, in effect from 1920 through 1933, stopped hordes of unemployed Americans from lawfully getting sloshed. The forces of temperance needn’t have bothered. As the world skids deeper into recession today, workers are resisting the temptation to drown their sorrows in booze.
SABMiller, the second-biggest brewer in the world, reported a surprise 1 percent drop in volume shipments in the last three months of 2008, compared with a year earlier. Its lager volumes in Europe fell 1 percent, led by a 22 percent drop in Russia. In the United States, volume sales of its MillerCoors joint venture with Canada’s Molson dropped 2.3 percent.
The Danish brewer Carlsberg announced it was cutting about 275 jobs in Europe. Diageo, which makes everything from Cuervo tequila to Guinness, put on hold an $840 million expansion of beer production in Ireland. The British Beer and Pub Association reported that pubs were struggling across the country as beer sales fell to their lowest in 70 years.
Makers of other forms of tipple are getting worried too. Rob Sands, president and chief executive of Constellation Brands, the world’s biggest wine company, warned this month that he was “recalibrating our sales expectations” to account for the weak macroeconomic environment.
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