Wikinvest Wire

Americans drink more, pay less

Tuesday, February 02, 2010

Yet one more sign of the recessionary times comes via this report on how Americans have increased their consumption of alcohol while spending less money.

While the value of all spirits sold was essentially flat at $18.7 billion in 2009, volume increased about 1.4% as consumers drank "value" brands of bourbon, vodka and tequila - largely at the expense of so-called high-end and super-premium marques, according to the Distilled Spirits Council of the United States (DISCUS). That move also helped the category gain market share against beverage alcohol rivals like wine and beer. Spirits market share by volume tipped to 30.2% last year, up from 29.7% in 2008 and 27.4% about 10 years ago.
While growth was down from the past few years, Peter Cressy, chief executive of DISCUS said that was due largely to "trading down" by consumers and the figures show that the industry remains fairly resilient in times of economic duress.

All of the growth came from the "off-premise" sector, i.e. beverages that are consumed at home or at private parties, which makes up 75% of the industry total. But much of that was offset by lower sales in restaurants, bars, hotels and nightclubs, which saw an aggregate 3% volume decline.
Beer distributors and package stores have been virtually recession-proof for as long as I can remember and that goes back to the days of being a teenager in the 1970s, hearing about car dealers and home builders who were dying while the beer distributor was hiring. Moreover, the shift in brands and drinking at home instead of at restaurants and bars all makes good sense for a nation with less disposable income.

For some time, one restaurant chain has been offering half-price bottles of wine on Wednesdays which, when you think about it, is a pretty good deal. You can buy a bottle for less than what it would cost you in a grocery store and it makes you wonder how California wineries are possibly going to survive in the years ahead if the labor market doesn't pick up.

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Dan said...

A friend of mine is a VP for a liquor distributor and told me that started over a year ago. He told me that, by district, Beverly Hills bars started "trading down" first. Just anecdotal.

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