Alternative Indicators: What Pinched Consumers Are Buying at the Liquor Store

Key takeaways

Consumers are increasingly buying smaller liquor bottles as a response to economic pressures, while larger bottle sales are declining.
Despite a general downturn in liquor sales, there is a noted preference for premium brands, with consumers opting to buy less rather than downgrade in quality.
Economic factors and health consciousness are shaping alcohol consumption patterns, indicating a shift in how consumers approach spending on discretionary items.
The podcast ties liquor sales trends to broader economic indicators, highlighting the disparities in consumer behavior across different income levels.

Summary

Trends in Liquor Sales

The podcast dives into the rising trend of consumers purchasing smaller liquor bottles amid declining sales of larger options, touching on how economic pressures are reshaping spending habits. This trend is reflected in major liquor brands like Diagio and Brown Forman, which have reported increased sales of smaller formats, signifying a shift in consumer buying behavior as they seek to maintain quality while managing costs.

Economic Pressures and Consumer Behavior

Nadine Sarwatt, an equity research analyst, discusses how consumers, feeling the pinch from inflation and rising costs, are choosing to buy premium brands but in smaller quantities. The conversation touches on how societal norms and economic constraints are influencing drinking habits, shedding light on the complexities of discretionary spending in uncertain times.

Understanding Alcohol Consumption Trends

Sarwatt explains the paradox of declining liquor sales overall while smaller formats thrive. Health consciousness and economic pressures are identified as key factors in changing alcohol consumption patterns, with consumers opting for quality over quantity without completely abandoning their preferred brands.

Broader Economic Indicators

The podcast concludes with a look at how the discussed trends tie into larger economic indicators. Spencer Jacob highlights a K-shaped recovery, where wealthier consumers thrive while others face significant challenges. This economic disparity plays a critical role in shaping consumer behavior and spending patterns.

Show notes

We all want a little treat—even if we’re on a budget. That desire may be part of what’s shaping U.S. liquor sales; big spirits companies are seeing growth in the sales of their smaller bottles of liquor, while sales of the pricier larger sizes decline. What does that tell us about how consumers are feeling about their wallets? Host Alex Ossola discusses with Nadine Sarwat, director and equity research analyst at brokerage firm Bernstein. And finally, in this last episode of our alternative economic indicator series, WSJ investing columnist Spencer Jakab joins Alex to take stock of all four indicators in this series—Nevada employment, copper, heavy trucks and liquor—and the picture they paint about the broader U.S. economy.

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Further Listening

Alternative Indicators: Can Nevada Employment Predict Where the Economy is Headed?

Alternative Indicators: What’s Dr. Copper’s Prognosis for the U.S. Economy?

Alternative Indicators: What Big-Rig Truck Sales Reveal About the U.S. Economy

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