US beverage ethanol outperforms industrial counterpart

04 November 2010 16:13  [Source: ICIS news]

GENEVA (ICIS)--US beverage ethanol has weathered economic challenges better than its industrial counterpart this year, supported by the growing trend for spirits over beers and domestically produced spirits over imports, an industry executive said on Thursday.

Rick Miller, vice president of alcohol products at Iowa-based Grain Processing Corporation, was presenting a paper at the 13th annual World Ethanol Conference in Geneva, Switzerland.

The US beverage ethanol market, the annual volume of which is around 70m gallons per year, or 134.4m proof gallons, has seen increased imports of ultra-premium spirits into the country in recent years, particularly from Europe and Russia, which posted 10% annual growth prior to the economic downturn.

However, since the economic crisis, consumers have increasingly been opting for domestically produced “value” alternatives.

In addition, younger consumers are now increasingly choosing flavoured spirits over beers, which has supported the growing US beverage demand.

“[These trends] have hit US beverage ethanol producers right in the sweet spot,” said Miller.

He added that during difficult economic times consumers tend to drink more alcohol and although fewer spirits are consumed on-premises in places such as restaurants, off-premises sales from the likes of off-licences and supermarkets are more than making up the difference.

The larger US industrial ethanol market, the volume of which is around 275m gallons to 300m gallons per year, or in proof measurements around 536m to 585m gallons, has mirrored the current fall in GDP, Miller said, while the beverage market has performed slightly better than GDP.

Industrial uses such as non-basic personal care products, coatings, print inks and adhesives are more economically sensitive and have been more adversely affected by the downturn, he said.

“It is these ebbs and flows that dictate the total industrial demand each year,” said Miller.

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By: Heidi Finch
+44 20 8652 3214



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