The Economy’s Down, But Alcohol Sales Are Up

According to a short item today in CNN Money, “[a]lcohol sales climbed with little interruption throughout the recent recession, and have continued to expand in recent months.”

Over the last, for the period ending May 31st, “[a]lcoholic beverage sales grew by nearly 10%,” according to the financial information company Sageworks. During that same period of time, “the average unemployment rate during that time exceeded 9.3%.”

Sales expanded more than 9% in 2008, the first full year of the recession, when the average unemployment rate was 5.8%. Sales slumped dramatically the following year, but were still 1% higher, as the unemployment rate shot up to about 9.3%.

In 2010, sales jumped more than 9% as unemployment grew to 9.6%.

The only other industry showing similar growth is apparently health care. Sageworks analyst Sam Zippin quipped that apart from “going to the doctor, [alcohol] is another need to have.” By which I assume he means there are only two certainties during a recession, that people will either get sick or drink. And the article concedes that the old saw about beer being recession-proof “appears to be true.”

Except that Esther Kwon, who’s identified as “an alcohol industry analyst for Standard & Poor’s, says just the opposite, stating “I wouldn’t say it’s recession proof. 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.” Um, maybe she’s been misquoted, but isn’t that contradictory? I’m not trying to pick a fight with Kwon, but I just don’t quite understand her point. I agree with her statement that “people will continue to drink, regardless,” and that to save money, many will choose to drink it at home. But concluding from that information that alcohol isn’t recession-proof doesn’t seem to logically follow or make any sense to me.

Where they buy their alcohol, or where they drink it, has no bearing on how much people buy, apart from the price they pay. And if it’s cheaper to drink at home, that would mean they could actually buy more, doesn’t it? And if the sales growth of all alcohol companies is up nearly 10% that would likewise suggest that people are not just continuing to drink, but are drinking more. It’s a simple ipso facto, isn’t it? There’s a recession. People are drinking (or at least buying) more. Ipso facto. What am I missing that would cause a so-called “beverage analyst” to conclude otherwise?

That confusion aside, this is more good news for the craft beer industry, as within the beer industry, that’s the segment that’s showing the most growth by a very wide margin. In fact, it’s practically the only segment showing strong growth.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>