The truth is, nobody — including us — knows what impact the 7.5% in consumer prices in January will have on sales of beer, wine and spirits. But we think you should expect a repeat of the historical pattern in which when personal budgets get pinched, people trade down on what that drink, but don’t significantly reduce the amount of beer, wine or spirits that they consume.
Will that pattern hold in 2022? We don’t know. Many consumers still have ample savings, other media tell us, although Attom, which tracks foreclosures, reported Thursday (2/10) the number of foreclosure filings — default notices, scheduled auctions or bank repossessions -in January was 29% higher than in December and 139% higher than a year earlier. Foreclosures are the highest since the Covid pandemic began, but “far below normal levels – less than half as many as in January of 2020 before the pandemic was declared, and about 60% lower than the number of foreclosure completions in 2019,” says Rick Sharga, executive vice president of RealtyTrac, an ATTOM company.
Another sign of trouble: After surveying more than 6,500 people, Aflac, the insurance people, found that 46% of respondents do not have enough savings set aside to pay for potential unexpected medical expenses, even when they have insurance. For those living in economically distressed communities, that percentage is even higher. Some 24% of respondents report having no money in their savings accounts and 48% say they have $1,000 or less. Further exacerbating the situation is that 33% of insured Americans cannot go more than one week without a paycheck, while 71% cannot endure a month without pay.
Those figures suggest to us that what you may see is a bifurcated market: High-end spirits do well even while popular priced beverages gain share from premium beverages.