It appears that despite layoffs, foreclosures, and all the other depressing things our economy is throwing up, people are still willing to spend what little hard-earned cash they still have on alcohol – the cause and solution to all of life’s problems.
Could it also be one of the only true recession-proof industries? (Even the porn industry is suffering)
A recent report by the AP boils it down to a few simple rules:
- 1.) When people are under financial stress, they’re more likely to frequent bars.
- 2.) When economic times are tough, people drink more alcohol.
- 3.) In a downturn, folks will cut back first on other purchases before they give up booze.
- 4.) Maybe we’re more complicated creatures than conventional wisdom suggests.
When faced with big financial burdens, most people will cut back to single-ply toilet paper and generic cereal brands (Lieutenant Crunch, is just as good, right?), but they’ll hang on tight to their booze.
Then again, the report also explains that there is data suggesting that rather than buying their usual mid-priced bottle of wine during tough times, many people might switch over to a similarly priced bottle of hard-liquor to get the job done. Essentially paying the same amount, but getting wayyy more hammered to cope. Is that a sign of alcoholism, or just a means of coping for some people? I’ll leave that debate up to the health professionals.
But the alcohol business, as a whole, appears to do relatively well (or at least hold on to their profits) in times of a near national downturn in consumer spending. One of the reasons for this is because unlike cigarettes, junk food, and other luxuries, the alcohol business offers a wide variety of increasingly cheaper alternatives to get your fix. Case in point – if you’re a vodka man, you may step down to imported beer, and then to domestic beer, then to light beers, and eventually you’ll be getting just as drunk while plowing through 40s of OE on the street corner. But is it a flawless system?
One professor of economics who has studied the alcohol trend has stated that in times of financial distress it is the poorer consumer – the one often categorized as having a drinking problem – that will give up the sauce completely. The wealthy are the only ones who can afford to keep drinking, and it is their excess in times of despair that picks up the slack in the industry’s profits.
All of this recession and drinking problem talk is getting to me. It’s not like we’re in the Great Depression 2, or something, people.
I’m gonna go have a beer. Let us know your whole take on the alcohol business sales situation in the comments section. Would you cut back on your drinking if your finances could use a boost? Cheers.
AP: Consumers Cutting Back, But Not On Liquor, September 2, 2008