The Business of Spirits

Spirits Industry Drinking Up Profits

Americans are thirsty for hard alcohol – whether it’s single malt Scotch, designer vodka or fancy, new cocktails. The popularity of spirits has soared during the past decade and shows no signs of abating. From 1997 to 2005, retail sales increased nearly 60%, forcing many distilleries to increase production dramatically and even expand their facilities to meet demand. Most notable is the emergence of exclusive brands, such as Glenlivet Scotch, Grey Goose vodka and Corzo tequila. The Distilled Spirits Council of the United States (DISCUS) reports that “overall case sales of premium spirits grew by nearly 19% between 2002 and 2005.”

Explosive growth has been particularly noticeable in the Scotch whisky segment. Although consumption has risen considerably in Asia, India and South America, French people drink more Scotch than anyone, followed by Americans. With the advent of single malts, upper-end Scotch prices skyrocketed. Bottles of vintage whiskies have sold for thousands of dollars.

In general, spirits are enjoying a much higher profile because of increased advertising opportunities. Hundreds of cable TV channels carry liquor...