{"id":2693,"date":"2023-10-18T11:58:48","date_gmt":"2023-10-18T11:58:48","guid":{"rendered":"https:\/\/infundpros.com\/business\/us-cheapskates-dampen-high-end-liquors-party-spirit\/"},"modified":"2023-10-18T11:58:48","modified_gmt":"2023-10-18T11:58:48","slug":"us-cheapskates-dampen-high-end-liquors-party-spirit","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=2693","title":{"rendered":"US cheapskates dampen high-end liquor\u2019s party spirit"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=0f787487-d3fc-40cb-944c-d2c382dfbc38\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The hangover from America\u2019s pandemic fling with high-priced booze is starting to set in.<\/p>\n<p>As with much of life, Covid lockdowns scrambled consumers\u2019 relationship with alcohol, driving down drinking at bars and restaurants while boosting retail sales for quaffing at home. Overall global consumption fell and remains below where it would have been without the pandemic, analysts at Jefferies calculate.<\/p>\n<p>The story is different in the US, where consumers historically bought just 20 per cent of their alcohol in restaurants and bars, compared with half in Europe. They loaded up on pricey spirits to get themselves through the crisis. The volume change was not that great: an extra monthly shot between 2019 and 2022 for a new US average of 13.1 drinks per month.<\/p>\n<p>But boy did they trade up. Diageo\u2019s Johnny Walker Blue, a high-end scotch whisky which retails for around $200, became one of the fastest growing brands, and Americans spent nearly a third more on spirits in 2022 than they did pre-pandemic. At first, it was because consumers had very few other things to spend their mad money on. Later, liquor benefited from the economic reopening, as restaurant-goers and travellers treated themselves to the fun they had been missing.<\/p>\n<p>As drinks makers partied hard, they forgot the simple rule that all things \u2014 even boozy nights out \u2014 come to an end. With rising inflation and the resumption of student loan payments, Americans burnt through much of their extra savings and they now have other needs. <\/p>\n<p>The French luxury group LVMH said last week that revenue from wine and spirits had fallen 10 per cent so far this year, amid a big drop in US cognac sales. Liquor wholesalers are reporting shrinking spirits shipments for the first time since at least 2018. And Pernod Ricard, which owns Absolut vodka and reports later this week, has seen its shares slide since it warned in late August that its quarter had gotten off to a \u201csoft start\u201d in the US.<\/p>\n<p>My social circle bears this out. At the height of the pandemic, we whipped up mint juleps, whisky sours and palomas. But I can\u2019t remember the last time I mixed a cocktail at home, and martinis at a bar are running at $25 apiece. That\u2019s fine for the super-rich, but what about the rest of us?<\/p>\n<p>Some of the falling sales are a pandemic overhang. As retail sales shot up, supermarkets and liquor stores loaded up on top-shelf brands to keep their customers happy and wholesalers followed suit. Many of them ended up with too much on hand and have cut purchases as they wait for the inventory to clear. <\/p>\n<p>Drinks groups fell into the same trap as online retailers, food delivery apps and at-home exercise equipment makers before them. They mistook a one-time step up for a fundamental change. <\/p>\n<p>In some ways, it is understandable. Americans had been slowly trading from beer to liquor and up to more expensive brands for more than a decade when the pandemic hit. Liquor groups are counting on this \u201cpremiumisation\u201d to boost profits without exposing them to more complaints from governments and charities concerned about binge and problem drinking. <\/p>\n<p>Seeing high-end sales shoot up during the lockdowns and continue even as bars and restaurants started to reopen must have felt like the reward for years of preparation. <\/p>\n<p>But now this trend appears to be slowing or even going in reverse in the face of higher prices. The cost of drinking alcohol outside the home has risen 10 per cent since early 2022, even as gasoline, mortgages and other necessities also shot up.<\/p>\n<p>Jefferies has spotted worrying signals from supermarket sales that Americans are starting to trade down from $40 to $50 tequila to bottles that cost $20 to $30, though so far they\u2019re still eschewing the real rotgut. That\u2019s particularly bad news because the agave-based spirit recently overtook whisky and is on track to displace vodka as the US\u2019s favourite hooch. <\/p>\n<p>More broadly, sales of all spirits costing more than $100 were down 14 per cent year on year in the 12 months to August, compared with a drop of just 1.8 per cent for those priced $17.99 to $50, according to SipSource, which tracks wholesaler trends. Today\u2019s strapped US consumers \u201cdon\u2019t drink less, they drink lesser,\u201d says Michael Bilello, its director.<\/p>\n<p>Bad as that is for profits, it could get worse. The share of Americans aged 18 to 34 who told pollsters they had an alcoholic drink in the past week has dropped sharply in the past 20 years, from 49 to 38 per cent. Some of them cite health concerns, but today\u2019s young people are also using a lot more marijuana than their parents did. <\/p>\n<p>Better to have cheapskate customers than none at all. <\/p>\n<p><em>brooke.masters@ft.com<\/em><\/p>\n<p><em>Follow Brooke Masters with\u00a0<\/em><em>myFT\u00a0<\/em><em>and on\u00a0<\/em><a rel=\"nofollow\" href=\"https:\/\/twitter.com\/brookeamasters\" data-trackable=\"link\"><em>social media<\/em><\/a><\/p>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>Read the full article <a href=\"https:\/\/www.ft.com\/content\/0f787487-d3fc-40cb-944c-d2c382dfbc38\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The hangover&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-2693","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>US cheapskates dampen high-end liquor\u2019s party spirit | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The hangover from America\u2019s\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=2693\" \/>\n<meta property=\"og:locale\" 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