Almost every day, as the nation’s media scrutinizes the fallout of the economic downturn, we read somewhere that while sales across most industries are down, alcohol sales are up—at least sales of lower priced wines, beers and spirits are up.
Almost every piece I read on this subject explains this seeming anomaly the same way they do in the Daily Collegian:
“[Our sales] have been increasing since the economic situation started,” said Tim Kramer, manager of Beer Depot, in
. “What do you think people run to? It’s easier to drink than go out.”
Either driven by economic fears or due to dwindling disposable income, folks are spending their leisure time staying at home drinking rather than going out and spending money on more expensive leisurely pursuits. That’s the usual explanation.
I have another theory.
Whether in good or bad times, drinking is a leisure time pursuit. You don’t do it while you are at work. Well, most people don’t. As it turns out, there are far fewer people at work these days. Put another way, the total amount of leisure time Americans collectively have on their hands has increased…and they have to spend it doing something. Drinking appears to be the way to spend that time for some.
The official U.S. Unemployment Rate for February 2009 is 8.1%, a full 65% higher than its 4.9% rate in January 2008. It’s the highest rate of unemployment the U.S. has witnessed in more than 25 years and I won’t be surprised if unemployment rises to the 10% level.
There is no doubt that people are spending more time closer to home in this economy. There is no doubt that rather than dropping cash at a restaurant, friends are being invited over for a home cooked meal and a game of Jenga. But I’m also thinking that a lot more people are finding it convenient to have a drink at 1:30pm where before, it quite so convenient.
I just hope they are not drinking the same old same old, but going out there and trying something interesting, with all that time on their hands, this is perfect opportunity to learn.
it’s a little after 11 a.m. central time where i am, and i’m thinking of opening a bottle right now!
Many joke that it’s a case of people drowning their sorrows, or taking the edge off of reality–but I disagree. I actually think you hit it on the head. People are buying to drink at home, rather than purchase their drinks out on the town. No one has turned more toward the bottle than they have before, they’re just buying and consuming in a different manor.
Could anxiety and depression also help to explain this increase in the lower priced alcohol consumption?
I think the lower prices folks are paying to drink these days can be accounted for by a general pull back in spending, as opposed to anxiety or depression. The fact that there is more drinking probably has a lot to do with a lot more folks having a lot more time on their hands.
Lots of rumour and innuendo around of course, but a few noted pundits have suggested that the real rate of unemployment is much higher than the official 8%. Anyway, it’s not good. Interestingly the Aust rate still below 5% but with a bullet, lots of big cuts starting to be announced every day down here.
We keep reading that wine sales are up… but I haven’t found a retailer that isn’t down- Way down.
I have something even better than a theory: I have data.
Alcohol sales are not up. They are down. Way down. If you don’t believe me, read this:
According to the data, the drop in alcohol sales for off-premise consumption from the 3rd quarter of 2008 to the 4th quarter was the largest drop (9.3%) ever seen since 1959, which is as far back as the DOC-BEA data goes. That drop is more than 2.5 times greater than the next largest drop between quarters (3.7% from 3rd-4th quarters in 1991).
Surprisingly, beer has been the hardest hit, by far. Wine and liquor sales have only slightly decreased, but they certainly aren’t increasing.
As someone who has been in the retail beverage industry for about 10 years, let me boil it down real simply for everyone: the number of daily transactions is slightly increasing, but the average money spent per transaction has drastically decreased. This is obviously not a good thing, as stores are essentially doing more work for less money.
Anyone who claims that the alcoholic beverage industry as a whole is somehow benefiting from the current economic climate is either ignorant, misinformed, or lying.
Just discovered your blog…I love it. Great March 7th post on the Ego-Organic crowd.
Another retailer here, we are indeed working twice as hard for much smaller sales. No increase here and I am always baffled when I read these reports, where are those people getting their information, or moreover who are the lucky bastards getting the “bump” in business?
I wonder how a marketing person approaches a demographic such as the one in Ann Arbor, which, I understand, predominantly is weighted by academia. Maybe young adult students, as is typical, have recognized some future trend before the less progressive segments of our society see it. Further, with respect to MI, I believe unemployment there exceeds the national average significantly, though I wonder what formula the state employment statistical bureau in MI might be applying to quantify unemployment among students; certainly in places like Detroit and other auto mfg centers, unemployment creep is problematic currently.
The way I remember, writing a term paper while sampling a rare Medoc, might enhance the typing speed but reading those term papers after grading made apparent that some of the lyric turns of phrase were a smidgeon too euphonious. Professors have to read that stuff.
Here in NYC I hear wildly varying stories from retailers (off premise) and restaurateurs (on premise). Some are way down, some are more than holding their own. One of my most expensive wines is selling pretty well. I can’t give some of the sharply reduced ones away.
“It’s a crazy muddled up shook up world /
Except for Lola…”
There are three kinds of lies: lies, damned lies and statistics.
Many years ago I worked as a question taker for a drug rehab stat compiling organization. I know what statistics mean, and it varies– often based on who wants what from the results.
I assume that comment is directed towards me, but perhaps I am wrong.
If you have problems with my data, Thomas, please state them. If you have more trustworthy numbers, please share them. If you’re just going to throw out quotes and vague generalities about questioning statistics, I fail to see what you’re adding to the discussion.
(BTW – Benjamin Disraeli coined the phrase “Lies, damned lies, and statistics.” Twain simply repeated it.)
I’ve linked to your post and commented on your ideas here: Drinking, Selling Wine in a Recession
Hmmmm – my link didn’t post:
Hi there, just wanted to say, I enjoyed this post. It was helpful. Keep on posting!