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The state of the states.

As privatization initiatives continue to challenge several control state jurisdictions, one thing has remained constant throughout the control states: agencies continue to deliver dollar and volume growthy even in a slow economy, and states coffers continue to benefit from the revenue increases contributed to the control states from their beverage alcohol operations. And even as state legislatures are tightening financial expenditures and reducing budgets in a wide range of areas, control state operations continue to prosper overall, with productivity and efficiency gains allowing agencies to stretch their resources.

As we point out in our annual State Ways Fiscal Year in Review (page 20), control state operations continue to deliver positive results, as they have for more than two decades continuously now. Total gross sales throughout the control states grew to $9.02 billion (from $8.72 billion in FY 2010), representing a 3.5% gain over the previous year. Overall revenue contribution to state coffers by control jurisdictions increased by 4.5% to $3.16 billion (from $3.03 billion in FY 2010). Distilled spirits case volume rose 3.6% in FY 2011 to 4.6 million cases. All these percentage increases outpaced last year's percentage gains, an impressive overall performance.

At this time last year, the U.S. economy seemed on the way to a moderate recovery, although the unemployment situation remained troubling. Overall sales of wine and spirits confirmed that consumers were feeling better about spending a little extra money on beverage alcohol products. Unfortunately, U.S. economic growth this year, while still up, has been less than robust through October of 2011 and consumers and businesses may again befalling into a defensive crouch. Still, there is no solid evidence yet that beverage alcohol sales have been affected. In fact, early reports from several producers suggest that there have been fairly healthy sales gains so far this year.

According to many economists and news commentators, the still-sputtering U.S. recovery may depend less on what actions U.S. corporations and governments (local, state and federal) may take to help strengthen the economy and more on what actions the European Union takes in the next month or two. If European leaders successfully deal with their dual financial/banking and sovereign debt crises, then the world economy will benefit. If they fail to act decisively, then we could well be in for another rough economic period; the advanced economies of the world are inextricably connected these days, for better or worse. In short, what happens to the Greek economy can have a very real effect on U.S. economic circumstances.

So, we find ourselves in a commonplace situation: there are certain things beyond our immediate control, but other things still within our reach. As we all know, the November-December holiday selling period is the most significant of the year, normally accounting for at least 20% of total volume, if not more. At this point, while total consumer confidence is rather low, the latest results concerning all U.S. retail sales show modest increases, a key point for control state agencies to keep in mind in preparation for the holiday selling season.


Richard Brandes, Editor-in-Chief
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Title Annotation:EDITOR'S NOTE
Author:Brandes, Richard
Date:Nov 1, 2011
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