It’s been a tough year for many, but apparently, not tough enough to drive people to drinking.
Tariff boycotts in countries like Canada and the United Kingdom took American liquors off the shelf, dramatically reducing sales. One poll showed consumers have been trending away from drinking alcohol.
And of course, in the U.S., consumers say they feel that the price of basic necessities have kept rising. These days, after paying for basics like groceries, they’re bending over to eye the cheaper bottom-shelf spirits rather than stretching for the high-end stuff.
In a December earnings call, Brown-Forman President Lawson Whiting said their data shows that consumers who might normally buy $100 bottles of liquor are now “trading down” to cheaper alternatives within the same brand.
“I mean, look, we know the consumer is going to be looking for sort of value and remaining very brand loyal, I think,” Whiting said in a December earnings call. “I think our expectations for this holiday season are — we're trying to be optimistic, but at the same time, we are looking and seeing some of the macro trends that are tough.”
Brown-Forman’s net sales are down 4% overall in the first half of their current fiscal year.
But the same earnings report showed there may be one small, but bright spot: emerging markets. That means countries like Brazil, Mexico, and Turkey.
“Brazil continues to be a very strong market for us as we are geographically expanding,” said Leanne Cunningham, Brown-Forman’s chief financial officer.
Burkay Adalig is a whiskey writer and promoter in Turkey. He said it’s an interesting market because, although it’s predominantly Muslim (a religion which forbids alcohol consumption), it’s culturally rather secular.
“We are traditional and we are religious when it comes to some aspects, but I wouldn't say that affects drinking,” Adalig said.
He says young people are increasingly gravitating to American brands like Jack Daniels because it’s an affordable alternative to the country's national anise-flavored drink, raki.
“It’s because raki, you open one bottle, and you share it with your friends and in every dinner we finish the bottle,” he said. “So nowadays, especially young people, don't see the value in giving 40, $50 to a bottle, which will be finished in one hour.”
In September, Turkey removed a long-standing 70% retaliatory tax on American whiskey making it even more affordable to buy.
But what about the polls showing younger people are drinking less? Adalig says he’s skeptical about any claims that it’s because they’re healthier.
“It’s not because they are responsible, or recycling, or taking care of their body and well being – blah blah blah,” he said. “They are simply broke.”
