When our current recession began way back in 2008, people began scaling back on all non-essential items, from big-ticket items such as cars, real estate and vacations, to smaller expenses like eating and drinking out. One of the industries that seemed to be recession proof was, and continues to be, the alcohol industry.
Even while the unemployment rate soared, alcohol sales have consistently risen each year since 2008. However, the key to reading the economy based on sales of alcohol is not how much people are purchasing, but rather what brands they are purchasing and where they are consuming their alcohol.
In the summer of 2008, PennLive.com, a comprehensive news and information website for Central Pennsylvania released an article, “Alcohol sales thrive in bad economy – July 12, 2008″. In it, vice president in client service and beverage alcohol for Nielsen’s polling service Danny Brager stated that, “Alcoholic beverages are withstanding the economic slowdown very well, compared to other categories that might be considered indulgent or non-necessities. To many consumers, alcoholic beverages are an affordable luxury.”
A year later, the Maneater, the official student newspaper of the University of Missouri, reported in their article, “As economy flops, alcohol sales soar – March 10, 2009″, that the sales of alcohol continued to rise. According to the article, in 2008 both Pennsylvania and Connecticut reported a rise of 4.7% in alcohol sales. The Division of Liquor Control for the Ohio Department of Commerce also reported that alcohol sales rose 4.75% from 2007 to 2008.
By 2009, it was also apparent that the alcohol shopping habits of consumers had changed, as shown by this quote from Victor George, the owner of Stadium Market, “If we’ve seen anything, it’s not less sales, but we’ve just been selling less expensive liquor.” George went on to say that the lower-end vodkas had been selling better than the high-end ones.
Jump ahead two years to 2011 and the story hadn’t changed much. Alcohol sales were up by nearly 10%, and consumers were purchasing, and consuming, more fiscally minded. In the article released by CNN Money, entitled, “Alcohol sales thrive in hard times – June 9, 2011″, Esther Kwon, the alcohol industry analyst for Standard & Poor’s, had this to say, “People will buy less and they will move to different venues, meaning moving to home instead of a bar. But people will continue to drink, regardless.”
By the end 2012, it began to look like there may be a chance for economic recovery, as reported in the Royal Gazette’s article, “Surging liquor sales defy recession – November 22, 2012″. They reported that, “according to the Distilled Spirits Council of the US, sales of “high-end” alcohol increased in by 5.3 percent in 2011. In 2009, high-end alcohol sales decreased by 3.5 percent.”
As of January 2013, there were more signs of economic recovery. Not only were sales of high-end alcohol on the rise, up 15.9% for super premium vodkas, as reported by Time Magazine (” Cheers! Increase in Liquor Sales Bodes Well for Economic Recovery – Jan. 31, 2012″), but wholesale liquors were also on the rise. According to Matt Mullins, a spokesperson for the Department of Liquor Control, “The wholesale of liquor to restaurants and bars is a good indicator of the strength of the economy,” Mullins said. “We have seen the wholesale of liquor to restaurants and bars increase the past two years.” (From: “Alcohol sales may indicate improving economy – January 28, 2013″).
To further the positive outlook of the economic rebound based on alcohol sales, the Time article also mentioned David Ozgo, chief economist for DISCUS, stating that consumers are once again purchasing high-end spirits, which indicates, “a classic pattern we see during a recovery. During a recession, we see consumers go to value brands”.
This shift from consumers buying low-end value brands to purchasing high-end brands, both in the liquor stores and in restaurants and bars, can be seen as a very positive sign for economic recovery, both for bars, liquor stores, spirits manufacturers, and even the economy as a whole.
Author: Corey Rozon