Americans’ taste for the top shelf (liquor) is slowly being outweighed by concerns about their wallets.
Diageo, the company behind several spirit brands (including several high-end varietals), says sales growth of bottles that cost $50 or more slowed in the past fiscal year, resulting in a smaller market share.
That’s a turnaround from the exuberant spending (a binge, some might say) on exclusive alcohol that took place during the pandemic and in the immediate years following it. As people were stuck at home, they would hold virtual cocktail parties and often lean into higher-end cocktails, since their disposable income was unused. That quest for high-end drinks continued in the early excitement of getting out of the house.
In the past year, though, economic headwinds have been blowing and fears of a looming recession have forced many consumers to reexamine their spending, and an easy area to cut back is that top of the shelf.
To be clear, Diageo says sales of its higher-end offerings are still increasing, rising 7% last year. They’re just nowhere close to the rates of a year ago, when the $50-and-up category saw sales increases of 31%.
Diageo’s brands include Johnnie Walker, Dom Perignon, Casamigos tequila, Ciroc (which saw sales drop 32% last year amid a feud with Sean “Diddy” Combs), and Don Julio.
Spirits isn’t the only field that’s seeing demand wane. Overall U.S. Beer volume sales were down 3% in 2022, according to the Brewers Association. Craft beer, which saw explosive growth starting in 2015, continues to see slight increases in sales (up 5% last year), but like Diageo, nothing close to the spikes of years ago.
Investors aren’t showing much worry yet. Diageo’s sales were up 6.5% overall last year, beating analyst expectations. The company’s stock was up slightly in early trading Tuesday.