Spirits Overcome Tariffs to Post Ninth Year of U.S. Sales Growth

(Bloomberg) -- Sales of whiskey, tequila and vodka just can’t be shot down.

Spirits posted another year of record U.S. sales and volumes in 2018 -- extending the industry’s growth streak to nine years. While whiskey exports took a hit from tariffs, the category’s domestic momentum remains strong, according to a report by the Distilled Spirits Council, a trade association.

U.S. supplier sales of spirits rose 5.1 percent to $27.5 billion in 2018, according to the report. Spirits such as whiskey, tequila, cognac and vodka are gaining market share at a time when American beer consumption is falling.

“The spirits sector is benefiting from millennials, who demand diverse and authentic experiences and desire innovative and higher-end products,” Chris Swonger, chief executive officer of the Distilled Spirits Council, said in a statement.

Spirits Overcome Tariffs to Post Ninth Year of U.S. Sales Growth

The strongest growth was seen in higher priced spirits that sell for more than $20 per bottle. Ongoing demand for super premium American whiskey, which sells for upwards of $35 a bottle, is “creating a halo effect for the entire whiskey category,” said David Ozgo, the council’s chief economist.

The results could’ve been better, the council said, if it weren’t for the negative impact of retaliatory tariffs on U.S. whiskey exports, which increased prices 25 percent in the European Union in the second half of 2018. Other countries, including Mexico, China and Canada, also leveled tariffs on American whiskey.

American whiskey exports to the EU, which had been growing at a 33 percent clip, took a nosedive after tariffs were imposed, and declined 8.7 percent during the July-to-November period. The export trend to other parts of the world followed a similar trajectory.

In the U.S., the industry was helped by law changes on the state level: Indiana and Tennessee, for example, lifted Sunday sales bans.

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