The alcohol market in the U.S. has expanded significantly over the past few years on the back of strong demand. Moreover, improvement in the U.S. economy, especially solid growth witnessed in the labor market, played a vital role in boosting the outlook for the alcohol industry for the upcoming months.
The industry is also poised to benefit from the upcoming holiday season. In this encouraging backdrop, selecting potential stocks from the domain may prove to be a profitable investment option.
Alcohol Industry in Good Spirits
Though data from Euromonitor showed that global alcohol consumption declined last year, it increased in the U.S., which is the second biggest consumer of alcohol. The report cited that alcohol consumption in North America grew at a pace of 2.5% in 2015. It indicates the growing popularity of three major segments within the domain – beer, spirits and wine.
Though beer has the largest market share among the three, spirits continued to see gradual increases in market share. Spirits’ market share increased to 35.4% in 2015 from 35.2% in 2014.
While volume at the spirits segment grew 2.3% year on year, revenues increased 4.1% year over year. Within the spirit segment, whiskey has seen robust growth over the past few years. This is especially true as high-end premium and super-premium bourbon and Tennessee whiskey brands saw revenues surge 50% and 155%, respectively, between 2010 and 2015 in the U.S. alone, as per the Distilled Spirits Council of the United States. The Irish Whiskey and Single Malt Scotch industries are also growing at a rapid pace. These segments registered year-over-year growth rates of 19.9% and 13.5%, respectively.
Factors Boosting the Alcohol Sector
Among others, the spirits and wine market is significantly benefiting from favorable demographic trends. The baby-boomer generation remains at peak spirits and wine consuming ages both in Europe and the US. Younger generations are also consuming more spirits. Separately, the surging popularity of high-end and super-premium spirits is also helping the sector to register healthy growth over the past few years. It is speculated that favorable consumer confidence levels and encouraging labor market conditions have aided the sector over the past few months.
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