Alcohol “Somewhat Recession Proof”
The downturn in the economy, so far, is not a big deterrent for consumers when purchasing alcohol on-premise. New research from Nielsen indicates that the declining economy has only a “mild impact” on consumers buying wine, beer and liquor at grocery and liquor stores, convenience stores, warehouse clubs and other stores.
Nearly half of consumers surveyed said the economy has had no influence in the amount they are spending for beer, wine or spirits in stores. Less than 20% indicate a significant impact. In fact, more than 80% of consumers say they are spending the same amount or more on alcohol compared to a year ago.
When it comes to wine, 49% said the economy has had “no effect” on the amount they spend, while 37% said “just a little” and 13% said “significantly.” With spirits, 48% reported “no effect,” while 34% said “just a little” and 17% claimed a significant difference in spending. Beer, meanwhile, had 47% of consumers reporting that their spending hadn’t changed, while 40% said “just a little” and 13% said “significantly,” according to Nielsen.
“Although consumers have less money to spend due to rising gas prices and other economic pressures...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, vp, Client Service, Beverage Alcohol, Nielsen.
ON-PREMISE. So while consumers are still buying alcohol off-premise, the on-premise is not doing as well. A large number of consumers reported that they are going out less often to restaurants, bars and especially nightclubs. This is particularly not good for distillers since on-premise is where they generally build their brands and generate the majority of sales.
“Purchases at out-of-home or on-premise locations may be more susceptible to a negative economy as consumers eat out less and entertain at home more often,” said Brager. “Off-premise sales in grocery, mass merchandise, convenience, liquor and other stores will likely see benefits of this activity.”
WHERE CONSUMERS ARE SHOPPING. Out of the consumers that said the economy has significantly impacted their alcoholic purchases in stores, more than 60% report that they are now shopping at places where they can get a better price and nearly half report that they are shopping at stores that are closer to save money on gas. More than a third of consumers are shopping for alcoholic beverages at stores where they combine other shopping purchases while a majority report that they simply buy less often.
Depending on state laws, the traditional grocery store is most often shopped for beer and wine. Consumers shop for spirits most frequently at liquor stores, followed by grocery stores. Warehouse clubs and mass merchandise stores (Wal-Mart, Costco) are also shopped frequently for wine, beer and spirits. Wine purchases ranked the highest at traditional grocery and warehouse clubs.
When asked about the primary reasons consumers shop for alcoholic beverages at certain types of stores, convenient location and better prices or promotions top the list for beer, wine and spirits purchases. However, wine and beer buyers say “a fun, interesting place to shop” is their main reason for shopping at less traditional stores, while the liquor store is good for its knowledgeable staff. When hosting a party at home, some consumers say they are more likely to shop warehouse clubs, larger liquor store chains or specialty grocery stores.
CASUAL CHAINS FEEL THE ECONOMIC BURN
Speaking of on-premise dining, causal chains are continuing to struggle amid the economic downturn, which has also taken a toll on wine, beer and spirits on-premise.
According to an article in the WSJ, Metromedia Restaurant Group, owner of Bennigan's, Ponderosa and Steak and Ale, is in talks with its major lender GE Capital Solutions in an effort to stave off a possible bankruptcy filing. Other chains, including Outback Steakhouse and Ruby Tuesday’s, are also struggling as consumers opt to eat at home or pick up fast food to save money. As it turns out, casual chains tend to cater most to people who are the hardest hit by rising gas prices.
If Metromedia files bankruptcy, it would be one of the largest restaurant-chain filings in several years. Even Starbucks, which was once thought immune to economic downturns, is feeling some pain. The coffee house reported its first quarterly drop in domestic traffic in November.
However, some analysts say casual chains don’t have it as bad as we think. They point out that sure, consumers are cutting back in spending, but it’s not any worse in casual chains than it is elsewhere.
WINEBOW BUYS CLICK WINE GROUP
Winebow, a New Jersey wine importer that specializes in Italian wines, bought Click Wine Group for an undisclosed price. Click is based in Seattle and also imports wine from around the world. Some of Click’s wines include Fat Bastard from France, Root:1 from Chile, and Clean Slate from Germany.
"This acquisition will result in a 1.5MM-case import portfolio from virtually all of the best wine regions in the world, advancing our aim to be the leading super-premium import wine supplier in the USA," said Winebow’s ceo, Leonardo LoCascio.
Click Wine Group will continue to be based in Seattle under the same name, operating as a division of Winebow. Founder Peter Click will remain as president of Click Wine Group and will also become executive vice president of Winebow.
"The combined enterprise will improve the growth trends of both companies' brands, and provide a strong foundation as we continue to develop and launch successful brands in the future," said Peter Click in a statement.
JUDGE AND DOLPH APPOINTS THREE INDUSTRY VETS
Wirtz Beverage Group has appointed three veterans to lead the Spectrum Wine Division of Judge and Dolph. David Lockie, a 24-year veteran of the wine, spirits and beverage industries, will transition to Vice President and General Manager of Spectrum Wine Division from his most recent role as President of Union Beverage of Illinois. In his new position, Lockie will lead the strategic objectives of Judge and Dolph to expand and enhance the company’s premium wine brands.
Also joining Judge and Dolph are Dan Keller, Director of Spectrum Fine Wine Division, and Derek Holmes, Director of Spectrum Corporate Accounts Division.
BROWN-FORMAN BECOMES INCREASINGLY INTERNATIONAL
Analysts predict that most of Brown Forman’s growth in the fourth quarter and full year (reported tomorrow) will come from international markets. As a result, Brown-Forman should benefit from the weak dollar, although such gains are likely to be offset by higher fuel and grain costs.
“Most investors seem fixated on the North American outlook, which appears to have weakened by at least one percentage point of growth - perhaps decelerating to 2%-3% growth versus 3%-4% before the current consumer malaise. We think the real story is the terrific growth outside the U.S. and the view that this insulates Brown-Forman from significant weakness,” said Tim Ramey of D.A. Davidson.
Although the U.S. accounts for 53% of B-F’s net sales, international expansion is beginning to carry more weight. Markets outside of the U.S. contributed more than 75% of the growth in net sales in 2007.
RICH CARTIERE DIES
We regret to inform you that Rich Cartiere, editor and publisher of Wine Market Report, died yesterday (June 3). Rich was a great friend and advocate of the industry, not to mention an excellent reporter and writer. Before starting Wine Market Report, Rich worked at the Press Democrat and co-founded Wine Business Monthly. We are truly saddened by this news and know he will be greatly missed.
WSD BRIEF:
RESVERATROL, FOUND IN RED WINE, MAY HELP protect the heart against the effects of old age, researchers said this week.
Until tomorrow, Megan
“Reality is nothing but a collective hunch.”
Jane Wagner
--------- Sell Day Calendar ----------
Today's Sell Day: 3
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
Nearly half of consumers surveyed said the economy has had no influence in the amount they are spending for beer, wine or spirits in stores. Less than 20% indicate a significant impact. In fact, more than 80% of consumers say they are spending the same amount or more on alcohol compared to a year ago.
When it comes to wine, 49% said the economy has had “no effect” on the amount they spend, while 37% said “just a little” and 13% said “significantly.” With spirits, 48% reported “no effect,” while 34% said “just a little” and 17% claimed a significant difference in spending. Beer, meanwhile, had 47% of consumers reporting that their spending hadn’t changed, while 40% said “just a little” and 13% said “significantly,” according to Nielsen.
“Although consumers have less money to spend due to rising gas prices and other economic pressures...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, vp, Client Service, Beverage Alcohol, Nielsen.
ON-PREMISE. So while consumers are still buying alcohol off-premise, the on-premise is not doing as well. A large number of consumers reported that they are going out less often to restaurants, bars and especially nightclubs. This is particularly not good for distillers since on-premise is where they generally build their brands and generate the majority of sales.
“Purchases at out-of-home or on-premise locations may be more susceptible to a negative economy as consumers eat out less and entertain at home more often,” said Brager. “Off-premise sales in grocery, mass merchandise, convenience, liquor and other stores will likely see benefits of this activity.”
WHERE CONSUMERS ARE SHOPPING. Out of the consumers that said the economy has significantly impacted their alcoholic purchases in stores, more than 60% report that they are now shopping at places where they can get a better price and nearly half report that they are shopping at stores that are closer to save money on gas. More than a third of consumers are shopping for alcoholic beverages at stores where they combine other shopping purchases while a majority report that they simply buy less often.
Depending on state laws, the traditional grocery store is most often shopped for beer and wine. Consumers shop for spirits most frequently at liquor stores, followed by grocery stores. Warehouse clubs and mass merchandise stores (Wal-Mart, Costco) are also shopped frequently for wine, beer and spirits. Wine purchases ranked the highest at traditional grocery and warehouse clubs.
When asked about the primary reasons consumers shop for alcoholic beverages at certain types of stores, convenient location and better prices or promotions top the list for beer, wine and spirits purchases. However, wine and beer buyers say “a fun, interesting place to shop” is their main reason for shopping at less traditional stores, while the liquor store is good for its knowledgeable staff. When hosting a party at home, some consumers say they are more likely to shop warehouse clubs, larger liquor store chains or specialty grocery stores.
CASUAL CHAINS FEEL THE ECONOMIC BURN
Speaking of on-premise dining, causal chains are continuing to struggle amid the economic downturn, which has also taken a toll on wine, beer and spirits on-premise.
According to an article in the WSJ, Metromedia Restaurant Group, owner of Bennigan's, Ponderosa and Steak and Ale, is in talks with its major lender GE Capital Solutions in an effort to stave off a possible bankruptcy filing. Other chains, including Outback Steakhouse and Ruby Tuesday’s, are also struggling as consumers opt to eat at home or pick up fast food to save money. As it turns out, casual chains tend to cater most to people who are the hardest hit by rising gas prices.
If Metromedia files bankruptcy, it would be one of the largest restaurant-chain filings in several years. Even Starbucks, which was once thought immune to economic downturns, is feeling some pain. The coffee house reported its first quarterly drop in domestic traffic in November.
However, some analysts say casual chains don’t have it as bad as we think. They point out that sure, consumers are cutting back in spending, but it’s not any worse in casual chains than it is elsewhere.
WINEBOW BUYS CLICK WINE GROUP
Winebow, a New Jersey wine importer that specializes in Italian wines, bought Click Wine Group for an undisclosed price. Click is based in Seattle and also imports wine from around the world. Some of Click’s wines include Fat Bastard from France, Root:1 from Chile, and Clean Slate from Germany.
"This acquisition will result in a 1.5MM-case import portfolio from virtually all of the best wine regions in the world, advancing our aim to be the leading super-premium import wine supplier in the USA," said Winebow’s ceo, Leonardo LoCascio.
Click Wine Group will continue to be based in Seattle under the same name, operating as a division of Winebow. Founder Peter Click will remain as president of Click Wine Group and will also become executive vice president of Winebow.
"The combined enterprise will improve the growth trends of both companies' brands, and provide a strong foundation as we continue to develop and launch successful brands in the future," said Peter Click in a statement.
JUDGE AND DOLPH APPOINTS THREE INDUSTRY VETS
Wirtz Beverage Group has appointed three veterans to lead the Spectrum Wine Division of Judge and Dolph. David Lockie, a 24-year veteran of the wine, spirits and beverage industries, will transition to Vice President and General Manager of Spectrum Wine Division from his most recent role as President of Union Beverage of Illinois. In his new position, Lockie will lead the strategic objectives of Judge and Dolph to expand and enhance the company’s premium wine brands.
Also joining Judge and Dolph are Dan Keller, Director of Spectrum Fine Wine Division, and Derek Holmes, Director of Spectrum Corporate Accounts Division.
BROWN-FORMAN BECOMES INCREASINGLY INTERNATIONAL
Analysts predict that most of Brown Forman’s growth in the fourth quarter and full year (reported tomorrow) will come from international markets. As a result, Brown-Forman should benefit from the weak dollar, although such gains are likely to be offset by higher fuel and grain costs.
“Most investors seem fixated on the North American outlook, which appears to have weakened by at least one percentage point of growth - perhaps decelerating to 2%-3% growth versus 3%-4% before the current consumer malaise. We think the real story is the terrific growth outside the U.S. and the view that this insulates Brown-Forman from significant weakness,” said Tim Ramey of D.A. Davidson.
Although the U.S. accounts for 53% of B-F’s net sales, international expansion is beginning to carry more weight. Markets outside of the U.S. contributed more than 75% of the growth in net sales in 2007.
RICH CARTIERE DIES
We regret to inform you that Rich Cartiere, editor and publisher of Wine Market Report, died yesterday (June 3). Rich was a great friend and advocate of the industry, not to mention an excellent reporter and writer. Before starting Wine Market Report, Rich worked at the Press Democrat and co-founded Wine Business Monthly. We are truly saddened by this news and know he will be greatly missed.
WSD BRIEF:
RESVERATROL, FOUND IN RED WINE, MAY HELP protect the heart against the effects of old age, researchers said this week.
Until tomorrow, Megan
“Reality is nothing but a collective hunch.”
Jane Wagner
--------- Sell Day Calendar ----------
Today's Sell Day: 3
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 12:21 PM
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