Americans Are Drinking Less But Spending More on Fancy Booze

May 11, 2015

(Bloomberg) - The cost of going out is going up. The culprit this time isn’t bars and restaurants that hike up drink prices. It’s the growing number of Americans who intentionally choose more expensive beers, wine, and cocktails. As drinkers get pickier, their bar tabs get more bloated.

This is just one of recent changes in the way American drink booze. People go out less often. On a given night, they order fewer drinks. Still, they can’t seem to get enough craft beer and fancy cocktails. 

“When consumers do go out, they’re trading up to more expensive drinks,” says Peter Reidhead of the research firm GuestMetrics, which monitors drink sales at 6,000 bars and restaurants. Wines costing more than $10 a glass now make up 48 percent of the volume of wine sold, GuestMetrics data show. Craft beers make up 31 percent of all beer sales at bars and restaurants. Both categories saw their market share grow about 6.5 percent in the past year. Bartenders generally charge $6 for a craft beer, Reidhead says, versus about $4.25 for a domestic mainstream beer.

At grocery stores and liquor stores, drinkers are also choosing to pay more for specialty or high-quality options. Buyers are generally paying 5 percent to 7 percent more than they did two years ago, according to Nielsen, which tracks in-store alcohol sales. That’s not primarily because stores are hiking prices. “It’s more a reflection of consumers trading up,” says Danelle Kosmal, vice president of Nielsen’s Beverage Alcohol Practice.

Because of consumer tastes, the number of small craft breweries is booming. Many are brewing at or near their capacity, says Bart Watson, staff economist at the Brewers Association. Even Congress has noticed. Two competing bills—one preferred by craft brewers and one by larger beer companies and distributors—would lower excise taxes on beer to encourage small breweries to get bigger. 


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