Spending on alcohol continues to rise at almost $230 billion yearly

Consumption is not up substantially, but buyers are trading up for more expensive brands.|

Total U.S. alcohol spending for the past ?12 months has increased 3.8 percent, according to a new report, as consumers continue to trade up for more expensive brands.

That choice is benefiting North Coast wineries and breweries, which specialize in more expensive products, whether it’s a ?$60 pinot noir from the Russian River Valley or an $18 12-pack of craft beer from Lagunitas Brewing Co. in Petaluma.

Total U.S. consumer spending on alcoholic beverages was at $229.8 billion for the past 12 months ending Aug. 31, according to the consulting firm bw166, analyzing state and federal data.

“Consumers continue to spend more,” said Jon Moramarco, managing partner of bw166, which also conducts analyses and issues reports for the alcoholic beverage industry. “In beer, craft is taking business away from your traditional Budweiser, Miller and Coors.”

Spending may be up, but consumption has stayed substantially the same.

Beer, wine and spirits have all increased their production volumes over the past year as overall consumption has increased by 1.28 percent, according to Moramarco’s analysis.

Beer has fallen in volume slightly to a share of overall alcoholic beverage servings just below 50 percent for the past 12 months at 49.97 percent. Wine was at 17 percent and spirits were at 32 percent.

The beer share has fallen about 10 percent since the end of 2003, as consumers veer away from the top three domestic producers. Those shares have been evenly split between spirits and wine, Moramarco said.

Even with the shift, the beer sector is seeing growth beyond craft. For example, Mexican beer imported to the United States is up 13 percent for the past 12 months as of the end of July.

Hard cider production has cooled off considerably as its volume over the last ?12 months is down 5.3 percent, a rapid change for an industry that had annual sales increases as much as 75 percent a few years ago. Sonoma County is the home to more smaller craft cider production but also has California Cider Co. of Sebastopol, which has nationwide distribution.

Overall, the cider market is still relatively small at 2 million barrels annually compared to beer at 208 million barrels, Moramarco said.

The overall alcoholic beverage sector seems immune to fluctuations in the economy compared to other sectors, such as housing and autos, Moramarco said, which are more closely linked to consumer income and spending habits.

“It doesn’t move as the economy goes up and down,” he said.

His report comes as the Census Bureau announced this week that U.S. median income increased 5.2 percent last year to $56,156, the largest annual gain since the data have been released for almost 50 years.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

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