WINE AND SPIRITS UNCERTAIN THIS HOLIDAY SEASON
An article in Reuters suggests tough financial times might actually be a good thing for the wine and spirits industry. Trading up activity from consumers with higher discretionary income coupled with people who are suffering from the credit crunch could ironically help give wine and spirits a final sales boost the last week before Christmas. Of course, the industry won’t know until the holidays are over, but it’s always fun to try and predict the future.
“‘If (the consumer) continues to spend, then we'll have our typical big holiday season. If they don't, obviously sales might ease up a bit,’” said David Ozgo, chief economist for DISCUS to Reuters.
As you know, alcohol beverage companies can make up to a quarter of their U.S. annual sales between Thanksgiving and New Year’s Eve, so it’s a big time of year.
“I've seen a disappearance of the higher-end corporate customer,” said Steven Kaiden, who owns Winfield-Flynn Ltd Wines & Spirits, to Reuters. “The $100 per person (gift-giver) has sometimes traded down to $50.”
Super-premium brands have grown at double-digit rates in recent years, while value brands are down. The rate of decline has slowed a bit, though, which Ozgo said is probably due to some people who would normally drink premium brands shifting to value brands.
Brown-Forman, for one, said it was feeling the crunch during its second quarter results. Chief Paul Varga stated, “When times are challenging as we’re seeing today it’s more difficult for some of our consumers to pay the premium price for Jack Daniel’s with the regularity they normally do.”
As you’ll recall, Varga blamed the shift from Jack Daniels on several factors, but the most interesting theory centers around off-premise. Paul suggested that tough economic times keep consumers at home, where they are more likely to pop open a bottle of wine or a beer.
“When people move their consumption from on-premise to off-premise spirits suffers a little bit because they’re not as easy to prepare. Beer and wine is actually easier for consumers to prepare in their homes then making a Cosmo or a mixed drink at home,” said Paul during the conference call.
Executives from Bacardi, Diageo and Pernod all acknowledged consumers’ troubles, according to Reuters, but were much more optimistic then Brown-Forman.
Tim Ramey, an analyst with D.A. Davidson & Co., told Reuters that while there’s no doubt that consumers are weak, “I think wine and spirits probably is disproportionately positive in an environment like this.”
To view the Reuters story, written by Martinne Geller, click here.
To view WSD’s coverage of the Brown-Forman conference call, click here.
“‘If (the consumer) continues to spend, then we'll have our typical big holiday season. If they don't, obviously sales might ease up a bit,’” said David Ozgo, chief economist for DISCUS to Reuters.
As you know, alcohol beverage companies can make up to a quarter of their U.S. annual sales between Thanksgiving and New Year’s Eve, so it’s a big time of year.
“I've seen a disappearance of the higher-end corporate customer,” said Steven Kaiden, who owns Winfield-Flynn Ltd Wines & Spirits, to Reuters. “The $100 per person (gift-giver) has sometimes traded down to $50.”
Super-premium brands have grown at double-digit rates in recent years, while value brands are down. The rate of decline has slowed a bit, though, which Ozgo said is probably due to some people who would normally drink premium brands shifting to value brands.
Brown-Forman, for one, said it was feeling the crunch during its second quarter results. Chief Paul Varga stated, “When times are challenging as we’re seeing today it’s more difficult for some of our consumers to pay the premium price for Jack Daniel’s with the regularity they normally do.”
As you’ll recall, Varga blamed the shift from Jack Daniels on several factors, but the most interesting theory centers around off-premise. Paul suggested that tough economic times keep consumers at home, where they are more likely to pop open a bottle of wine or a beer.
“When people move their consumption from on-premise to off-premise spirits suffers a little bit because they’re not as easy to prepare. Beer and wine is actually easier for consumers to prepare in their homes then making a Cosmo or a mixed drink at home,” said Paul during the conference call.
Executives from Bacardi, Diageo and Pernod all acknowledged consumers’ troubles, according to Reuters, but were much more optimistic then Brown-Forman.
Tim Ramey, an analyst with D.A. Davidson & Co., told Reuters that while there’s no doubt that consumers are weak, “I think wine and spirits probably is disproportionately positive in an environment like this.”
To view the Reuters story, written by Martinne Geller, click here.
To view WSD’s coverage of the Brown-Forman conference call, click here.
posted at 12:18 PM
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