The alcohol industry is on pace for a down year in 2024, and inflation is largely to blame.
Transcript:
Conway Gittens: Inflation is finally taking its toll on a part of the economy that’s normally inflation proof. The alcoholic beverage industry is headed for a down year in 2024. Sales volumes dropped 3 percent in the first seven months of the year, according to analysis by IWSR, and the numbers are not expected to get better.
One reason: pricing. Some of the biggest players in the game- Johnnie Walker owner Diageo; Absolut vodka company Pernod Ricard; Proximo Spirits- which is behind the Jose Cuervo tequila brand; Brown-Foreman, maker of iconic Jack Daniels whiskey; and the giant of them all – Anheuser-Busch InBev, have each indicated consumers are trading down to cheaper bottles.
Private labels have sensed an opening. Discount supermarket chain Aldi, for example, is capitalizing with lower-priced malt-based cocktails, wine, and beer. Meanwhile, Costco’s Kirkland Signature label has a wide array of alcohol on offer at a discount price.
But that’s not the only thing hurting the drinks business. Industry sales are coming off an extraordinary boost provided by the COVID years, when consumers went on a drinking binge. Now that sales are normalizing, a lot more bottles are being left on shelves, further pressuring sales volumes.
There is one category, however, that’s being left out of the slump: ready-to-drink mixes in the can or RTDs. This segment of the hard-drinks business is up two percent through the first-half of the year.
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