Rebounding demand and novel products are supporting strong revenue growth
Los Angeles, CA (PRWEB) August 20, 2012
The Vodka Distilleries industry is growing, despite the drop in consumer confidence and spending during the recession. Driven by rising demand from downstream industries and the growth in niche products, industry revenue has climbed at an average annual rate of 3.7% over the five years to 2012, says IBISWorld industry analyst Nikoleta Panteva. Still, the recession did not leave vodka distillers completely unaffected. As per capita disposable income fell in 2009 and consumers were forced to tighten their budgets, their drinking habits changed too. Instead of frequenting nightclubs and bars, patrons turned to at-home cocktails bought at grocery and liquor stores. Moreover, consumers traded down from premium and ultra-premium spirits to value vodka. As a result, industry revenue dropped 0.2% in 2009, while profit (i.e. earnings before interest and tax) declined. Fortunately for its operators, the industry has performed strongly since 2010. Demand from wholesalers and nightlife establishments has rebound strongly as consumers have begun to loosen their purse strings. Moreover, distilleries have increasingly offered novel products – including flavored, low-calorie and craft vodka – to their consumers, helping to support industry revenue growth. In fact, IBISWorld expects a strong 7.3% revenue gain in 2012 alone, to total $2.1 billion.
The Vodka Distilleries industry has a low level of concentration in the United States. The top firm in 2012 is Campari America, which produces Skyy vodka. Although major players typically operate on a global level and have a wide range of products, only certain brands of vodka are distilled in the United States, says Panteva. For example, global powerhouse Diageo features vodka brands such as Smirnoff, Ciroc, Ketel One, Popov and Gordon's Vodka in its product mix. Out of these, Smirnoff, Ciroc and Ketel One are the top-selling brands throughout the United States; however, only Smirnoff, Popov and Gordon's Vodka (bottom-shelf brands) are distilled in the United States. In addition, most distilleries operate in smaller regional or niche markets where nonemployer firms are common.
The next five years promise to be even better for vodka distilleries. With per capita disposable income steadily growing, consumers will again turn to premium and ultra-premium alcohol. Additionally, nightclubs and bars will again become a significant source of demand. As a result, industry revenue is forecast to grow over the five years to 2017. Profit is also anticipated to grow through 2017. These trends will continue to open the door to new entrants. Over the next five years, the number of distilleries (many of which will be small, offering craft vodkas) is expected to grow, which is likely to bump up internal industry competition. For more information, visit IBISWorld’s Vodka Distilleries in the US industry report page.
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IBISWorld industry Report Key Topics
This industry primarily manufactures vodka and includes traditional (i.e. not flavored), flavored, craft and low-calorie varieties.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.