from staff and wire
The Meridian Star
MERIDIAN — Even when times get tough, people keep on drinking, but in Mississippi, many of those people are reaching a little lower on the shelves.
Despite a downtrodden economy and jobless rates in double-digits, Mississippians continued to reach for the wine and spirits in 2009.
While they drank more liquor last year, people turned to cheaper brands, according to a recently released report by the Distilled Spirits Council of the United States, a national trade association for the alcoholic beverage industry. The study also revealed that consumers drank more at home and less in bars and restaurants in an effort to ease the strain on the family budget.
Diane Griffin of Meridian has been working at Edna's Super Mart Package Store, Inc. for 20 years, though her mother, Edna Moore, has been in business for 37 years here.
"The economy has been tough on us," Griffin said, as a customer walked out the door with two $1.99 bottles of Aristocrat. Griffin revealed that same customer used to buy Smirnoff brand.
"Customers are replacing those higher end brands with cheaper brands," Griffin said. Consumption of distilled spirits in Mississippi was up by almost 4 percent in 2009. Nationally, 2009 sales volume growth stood at only 1.4 percent, but revenues held steady at $18.7 billion, the DSC report cited.
Ferdie and Mary Ellen Moore are in their 28th year of operation at Ferdie's Discount Wine & Liquors. Ferdie said that while business is still good, there is still a trend forming in what customers are purchasing at he and his wife's store.
"There's kind of a top and bottom right now," Ferdie said. "The middle items are not selling as well as they used to.
"A lot more people are going to the lower end of the scale than the upper end."
The state’s Alcoholic Beverage Control (ABC), an arm of the Mississippi State Tax Commission that regulates the sale and consumption of alcohol, garnered a net profit of a little over $50 million — with alcohol and sales taxes added, the total ABC collections for FY 2009 was $91.6 million.
"Buyers who are accustomed to buying brand-name [liquors], are still buying those expensive brands," said Ed Broome, who owns The Corkscrew Wine & Spirits on 29th Avenue along with Garry Lawyer. "But customers who used to buy those $30 bottles of wine, they're taking it down a notch."
The Corkscrew has been open for three years and specializes in wine, though it also has a large selection of high-end liquors. Regardless of the shifting trend in purchases, Broome said, "Our business is still growing."
But what about the sales of not-so-hard alcoholic beverages, namely beer?
Surprisingly, beer sales were down in Mississippi last year. In 2009, there were 72 million gallons of beer purchased, compared to nearly 73 million the previous year. The actual difference was 955,587 gallons bought, according to data compiled by the ABC.
‘‘What we have seen is a steady progression of selling more product [wine and spirits], but the selling price is lower,’’ said Kathy Waterbury, spokesperson for the Tax Commission, which oversees ABC. ‘‘For instance, the total number of cases sold for wine increased in 2009 by 1.9 percent ... but the sales value of those cases increased by only 0.1 percent.’’
Waterbury added that spirits cases sold were up 1.2 percent but sales value went down by a half percentage point.
Marianne Hill, a senior economist with the State Board of Institutions of Higher Learning, said she’s not surprised that consumers are spending less on a luxury item such as alcohol.
‘‘When the economy is in a downturn, people will still buy items like a bottle of wine or a fifth of liquor,’’ she said. ‘‘But what they will do is simply substitute their usual brand for one that’s less expensive.’’
Some may not be aware that their buying habits affect state revenues, she said.
‘‘We normally think in terms of big-ticket items like refrigerators or televisions,’’ Hill said. ‘‘However, choosing a lower-priced wine as opposed to a top-shelf brand week-to-week does have an adverse affect on annual tax revenues, when you consider the number of people who purchase wine and spirits.’’
Distilled Spirits Council CEO Peter Cressy attributed the slower growth compared to 2008 to the trading down trend. However, he said a long-term analysis of prior recessions showed a strong leaning toward consumers purchasing high-end brands as the economy improves.
‘‘Our data shows that there is light at the end of the tunnel,’’ Cressy said. ‘‘The question remains, how long is the tunnel? We don’t know, but consumers will again gravitate to affordable luxuries’’ such as top-shelf alcohol brands.
Mike Cashion, executive director for the Mississippi Hospitality & Restaurant Association, said Cressy’s assessment is accurate.
‘‘I’m certainly not an economist, but I don’t think we’ll see a reversal in the economy in Mississippi until the middle to the end of the year,’’ he said. ‘‘The state was a little slower to see the recession and we’ll be slower to come out of it. (Liquor sales) are a jobs driven industry and when consumer confidence returns, spending will eventually return.’’
