August 2008
Bottoms up! Alcohol Sales Outdo Economy

Andrew Wagner got ready for a slump in business a few weeks ago.

Wagner, a warehouse manager at Glenn Miller beer distributor in Lemoyne, said he typically sees a summer slowdown when schools let out and families depart for the beach and other vacation points.

Not this time.

"In June, some years, I've seen business die," he said. This year has been different, he added, "We seem a lot busier."

Ditto for hard liquor.

"For our year-to-date sales through the end of May, sales were up 4.8 percent from a year ago," said Nick Hays, spokesman for the Pennsylvania Liquor Control Board, which oversees liquor sales.

In the down economy, many people apparently are spending their limited dollars on home-based entertainment. Increased liquor and grocery store sales and television and electronic game purchases point to consumers looking to save money by staying in.

A few obvious signs of the change in buying patterns: Starbucks is closing hundreds of stores as consumers switch to less pricey java; sales of trucks, sport utility vehicles and roomy sedans have slowed; and retailers are slashing prices to lure shoppers in.

"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," said Danny Brager, a vice president in client service and beverage alcohol for Nielsen's polling service.

More than 80 percent of consumers polled by Nielsen in the spring said they are spending the same amount or more on beer, wine and spirits compared with a year ago.

But liquor might not be totally immune to economic forces, at least by one other indicator. Pennsylvania collected $273.4 million in liquor, beer and cigarette taxes in June -- $2.9 million less than expected, according to the state's Revenue Department.

The Nielsen poll also found a large number of consumers are going out less often to restaurants, bars and nightclubs and are buying alcohol for consumption at home.

Wagner figures that's why he's moving more cases of beer.

Instead of loading up the gang for an impromptu beach weekend or night on the town -- and paying by the drink -- many Glenn Miller customers appear to be picking up cases and kegs and hosting bashes at home, Wagner said.

Grocery stores are enjoying a boost in sales because of a tendency to cook more at home, according to Tim Hammonds, the president and CEO of the Food Marketing Institute, a trade group based in Arlington, Va.

Giant Food Stores have seen an increase in customers going to their deli and bakery departments for "restaurant-quality, prepared foods to serve at those gatherings," Giant spokeswoman Tracy Pawelski said.

But even in a product as essential as food, buyers are looking for savings, she said.

"We see an increased interest in our [house] brands," Pawelski said. As a result, Giant has decided to nearly triple its Guaranteed Value offerings. The generic product line includes cleaners, paper, pet, health and beauty care products. In September, it will include dairy, meat and produce, Pawelski said.

One survey conducted by a financial advising firm showed that consumers now say that price dictates where they will shop and what they will buy. This means they are leaving specialty stores for department stores, are more accepting of store brands, and generally are trading down, according to the AlixPartners Consumer Sentiment Index.

And when folks decide to vacation away from home, some surveys have found that even the affluent are saying they are less likely to go overseas and are planning shorter trips.

Rewritten from: Patriot News (Harrisburg, Pennsylvania), July 13, 2008
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