Hard times scotch pricier alcohol sales

The economic downturn has been changing how much consumers want to spend on alcoholic beverages. But not all spirits are down in the industry.

Take Paul McCann. More than two years after introducing a brand of vodka, he isn't about to let an economic recession halt his plans to put Virginia-made vodka on the map.

"I'm not slowing down at all," said McCann, whose Parched Group LLC distills and bottles Cirrus vodka at a plant in South Richmond. "If I can get national distribution, I would do my best to be able to raise the capital to support that."

He introduced Cirrus vodka to Alcoholic Beverage Control stores in Virginia in the summer of 2006. Parched Group has expanded sales into Tennessee and the District of Columbia, and fills special orders for six states.

"We are getting ready to expand into Maryland and South Carolina, and we are working on three states in the Northeast," he said. "By the end of 2009, I expect we will have sales in the majority of East Coast states, and I also would expect to be in an additional six to 10 states across the U.S."

Alcoholic beverage sales in Virginia bear out the impact of the downturn as consumers have turned more toward bottle sales from mixed drinks. Virginia ABC reported in November that year-to-date gross sales were up 6.5 percent over the same period in 2007.

Last month, sales to bars and restaurants were down 11 percent, as establishments that sell mixed drinks were not buying as much as usual because of what ABC called "bad economic times."

But McCann said he sees an opportunity to draw new customers as some consumers switch from premium brands that can sell for $40 or more per bottle to cheaper brands. Cirrus occupies the lower end of the premium market, with a 750 ml bottle costing between $22 and $26 at retail. Some vodkas at the lower end of the market sell for less than $12.

Cirrus vodka, which buys up to 4 tons of Virginia-grown potatoes a month, is planning to add equipment to the distillery next year as it expands its sales territory.

McCann also is working on a redesign of the Cirrus bottle.

But he has more plans. "I don't see any reason why we can't become a million-case-a-year operation."
Contact John Reid Blackwell at (804) 775-8123 or .