Alcohol brand growth potential amid economic gloom

By Sarah Hills

- Last updated on GMT

Related tags Alcoholic beverages Alcoholic beverage

In the current economic climate consumers are turning to local alcoholic beverages rather than imports, providing opportunities for brand growth, according to a report from The Nielsen Company.

Despite a “fragile”​ economy, US consumers are reluctant to cut back significantly on beer, wine and spirits, especially for consumption at home.

And Nielsen said that with exchange rates unfavorable to the dollar, imports have been forced to raise prices, making it more difficult for these products to compete with domestic alcoholic beverages.

Richard Hurst, senior vice president, Beverage Alcohol, at Nielsen said: “In tough economic times, consumers are often biased toward national or local products, further enhancing the prospects for domestic brand growth, whose prices have remained relatively stable through the year.”

Nielsen said that while both domestic and imported wines were growing at the same double-digit rates last year, domestic growth is now ahead of imports.

Imported beers have also suffered, showing steady declines in the last six months.

Meanwhile craft beers and US wines from outside California have been gaining share, which it said is consistent with the “localization”​ trend.

Home consumption

Hurst added: “Historical as well as more recent consumer trends indicate that alcoholic beverages are much more recession-resistant than many other product categories.

“While there is evidence of consumers reducing on-premise consumption, as well as trading down to less expensive beverages, they are reluctant to cut back significantly on beer, wine and spirits, especially for at home consumption and entertaining.”

Hurst said that with the prospect of limited economic recovery in 2009, consumers are likely to consider alcoholic beverages as an affordable indulgence during the holiday season.

The outlook report was based on a Nielsen survey of about 3,500 consumers who had purchased alcoholic beverages from a store during three months up to May 2008.

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