Consumer Nation

Spirits Makers Expect a Bubbly Holiday Season

Uncorking Holiday Liquor Sales
Uncorking Holiday Liquor Sales

Diageo and Pernod Ricard are predicting fizzy sales this December as Americans make merry at holiday parties.

"Early indications are this is going to be a great holiday season," Bryan Fry, CEO of Pernod Ricard U.S., told CNBC this week.

Going into the holidays, retail sales of its spirits are up 6 percent, while consumption of its Absolut Vodka, Jameson Whiskey and other alcohols is up 7 percent in bars and restaurants, he noted.

Fry told "Squawk on the Street" that the last three months of the year account for a third of its overall spirits sales while the last two weeks of the year are when it sells nearly a fifth of its champagne and other bubbly.

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Rival Diageo also said that the holidays have looked strong so far. On a conference call last week, Larry Schwartz, president for Diageo North America, said that spirits maker sees consumers continuing to trade up to top-shelf as opposed to the generic stuff.

Schwartz noted that the overall U.S. industry is relatively recession resistant and that the total North American alcoholic beverage market, including spirits, wine and beer, is growing ahead of the economy.

On Thursday, JPMorgan upgraded Diageo to "neutral" from "underweight" noting that the U.S. pricing environment is improving.

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Beyond the strong near-term holiday sales, Pernod said that Americans are knocking back whiskey again.

"Whiskey – American whiskey, Irish whiskey and Scotch whiskey – all categories are growing strongly led by Irish and single malt," he said. "American whiskey is back in trend."

Fry said that Americans are trading up to premium whiskeys, noting the company is seeing great growth in single malt scotches like Glenlivet 18. In the last quarter, Pernod Ricard reported a 17 percent increase in organic net sales growth of its Jameson brand and a 24 percent increase for the Glenlivet brand.

Younger consumers are also drinking more spirits, attracted by new labels and flavors.

In China, sales of spirits, particularly cognac and whiskey, have been strong leading up to the Chinese New Year, Fry said.

The drinks company is also seeing some bright spots in Europe, Fry noted, as it grows in Eastern Europe and European consumers continue to drink top-shelf liquor.