PHOENIX -- Alcoholic beverage purchases may be somewhat recession-proof, with the declining economy having only a mild impact on consumers' alcoholic beverage purchases at off-premise locations, such as grocery, liquor, convenience stores, warehouse clubs and other stores, according to a study released by The Nielsen Co. at its Consumer 360 conference for the consumer packaged goods (CPG) industry.
Nearly half of consumers surveyed reported that the downturn in the economy has had no influence in the amount they are spending for beer, wine or spirits at off-premise locations; less than 20% [image-nocss] indicated a significant impact. More than 80% of consumers said they are spending the same amount or more on beer, wine and spirits compared to a year ago.
"Although consumers have less money to spend due to rising gas prices and other economic pressures, our research shows the economic slowdown is having only a modest impact on alcoholic beverage purchases," said Danny Brager, vice president of client service for beverage alcohol at Nielsen. "Alcoholic beverages are withstanding the economic slowdown very well, compared to other categories that might be considered indulgent or non-necessities. To many consumers, alcoholic beverages are an affordable luxury."
According to Nielsen's research, a large number of consumers report that they are going out less often to "out-of-home" venues, such as restaurants, bars and nightclubs. "Purchases at out-of-home or on-premise locations may be more susceptible to a negative economy as consumers eat out less and entertain at home more often," said Brager. "Off-premise sales in grocery, mass merchandise, convenience, liquor and other stores will likely see benefits of this activity."
Of those consumers that responded the economy has significantly impacted their alcoholic beverage purchases in stores, more than 60% report that they are now shopping at places where they can get a better price and nearly half report that they are shopping at stores that are closer so they can save on fuel. More than a third of consumers are shopping for alcoholic beverages at stores where they combine other shopping purchases while a majority report that they simply buy less often.
While alcoholic beverage consumers shop a diversity of store types—where state laws determining what beverages can be sold where allow it—the traditional grocery store is most often shopped for beer and wine. Consumers shop the liquor store, followed by the traditional grocery store, most often for spirits, partly due to these state laws. Warehouse clubs and mass merchandise stores, perhaps as a reflection of the importance of value pricing to consumers, are also shopped frequently for alcoholic beverages. C-stores rank high for beer purchases.
When asked about the primary reasons consumers shop for alcoholic beverages at certain types of stores, convenient location and better prices or promotions top the list for beer, wine and spirits purchases. In certain store types, other factors are important. For example, beer and wine buyers cite, "a fun, interesting place to shop" as the main reason for shopping at less-traditional stores, while consumers cite the liquor store as a preferred store for its helpful and knowledgeable staff. Wine buyers also prefer specialty grocery stores for this reason.
Depending on the occasion, consumers may change their shopping location for alcoholic beverages. For example, when hosting a party at home, some consumers respond that they are more likely to shop warehouse clubs, larger liquor store chains or specialty grocery stores.
"While value and convenience clearly matter to consumers when deciding where to buy, our research also indicates that consumers choose where to buy based on a variety of factors, ranging from the occasion to what type of product they are looking for to the store's services and ambience," said Brager. "And while we don't see a radical shift in consumer behavior depending on the occasion, there are opportunities for specific types of retailers. Cross-merchandising with party supplies and offering party food pairing ideas may resonate with these consumers."
As the economic downturn causes consumers to reprioritize their spending habits and forces CPG manufacturers and retailers to reevaluate their consumer marketing strategies, New York City-based Nielsen also revealed other CPG categories among those most immune and most vulnerable to a recession. According to the firm's analysis of macroeconomic variables, historical trends and consumer behavior, products such as seafood, dry pasta and candy are most immune to a recession. Pasta sauces also show some level of immunity to recessionary times. Those products among the most vulnerable or recession-prone include carbonated beverages, eggs, cups/plates, food prep/storage items and tobacco.
“Consumers are feeling the squeeze as they are caught between rising costs and lower spending power,” said Eugene Roytburg, managing director at Nielsen. “As a result, many consumers are reprioritizing or altogether changing their spending habits. For CPG manufacturers and retailers, this requires a change in the way you market to consumers, and knowing which of your products are most affected by a recession will help you maintain focus on the right categories and brands in order to succeed.”Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.