Most Americans find their cost of living is rising faster than the income they’re bringing home. In times of economic uncertainty, thrifty consumers find cheaper substitutes for expensive brands. That is now happening with alcohol this holiday season as sales of higher-priced liquor and wine are slowing.
“Sales growth of costlier spirits and wine is slowing, and even reversing, as shoppers seek out more value,” WSJ reported.
According to the latest findings of Nielsen data by the Bump Williams Consulting Co., a beverage-industry consulting firm, US retail store sales for top-shelf spirits, including whiskey priced at $24 to $39.99 for 750 milliliters, dropped 3.7% in the 48 weeks that ended on Dec. 3, after increasing 4% in 2021. Sales growth for top-shelf spirits, which include tequila priced above $50 and American whiskey at more than $40, slowed to 2% from 24% in 2021.
Liz Paquette, head of insights for online alcohol retailer Drizly, found belt-tightening consumers are more inclined to choose prosecco over French Champagne this holiday season. She said prosecco sales are booming, and on Drizly’s website, the average bottle sells for around $16 versus the average bottle of Champagne for $57.
An analysis by WineDirect and Enolytics, which provide winemakers with e-commerce platform solutions, noted a similar trend of high-end wine sales plateauing in 2022 while cheaper wines are more in demand.
Bump Williams Consulting said wine priced between $50 to $99.99 per bottle saw retail store sales increase by more than 18% in 2021. Now those sales are down 4.5%, and bottles priced between $25 to $50 also see less demand. But bottles priced under $20 are booming.
The shift is another sign consumers, especially the bottom 90% of Americans, are in financial trouble after 19 months of consecutive negative real wage growth.
Meanwhile, consumers max out their credit cards while the personal savings rate plunges to a 17-year low. This is a toxic combination.
And in November, overall retail sales plunged the most in 11 months. Price-sensitive shoppers are gravitating to more affordable goods as the Federal Reserve is hellbent on tightening financial conditions into a downturn — a policy error that could spark even more turmoil.