Last week in this space, my good friend the Beverage Goddess cast a gaze into her crystal ball and foretold crazy times approaching, citing such diverse contributing factors as fuel costs, the coming hops and barley malt shortage, and upward pressures on the minimum wage. She’s a savvy soul, the Goddess, and none of what she speaks should be discounted or ignored.
But it ain’t all bad, folks.
Over the weekend, I cracked the spine of a new book by Noah Rothbaum entitled The Business of Spirits, and while reading the Introduction, I was struck by how much of what Rothbaum was noting in the spirits market could be broadened to also cover the wine and beer businesses. Especially when he wrote of the ever-increasing interest in high-end brands.
Between 2002 and 2005, Rothbaum reports, DISCUS recorded growth in the sales of premium spirits of nearly 19%, while the growth during that same period for value brands was a mere 2%! Further, turning his attention to specific segments, he notes that the value of Scottish whisky imported to the United States increased by 10% from 2004 to 2005, while the actual number of bottles imported grew by only 2%.
It doesn’t take much thought to translate these same trends to beer and wine. Just pick up any wine or beer magazine like Wine Enthusiast or All About Beer and you can see the interest in the high end growing, while little or nothing is said about the mainstream and economy brands. In bars and restaurants, where people tend to splurge more than they do at home, this trend is even more obvious.
To summarize, people may be drinking less, but they’re also drinking better. This could change if that recession many economists keep talking about rears its ugly head, but for the time being, the course to continued profitability is clearly marked with a large red arrow that reads: “PREMIUM.”