Alcohol—both in T&T and the United States of America—continues to be one of the biggest sellers during a recession.
However, while many alcohol lovers may not be able to buy premium drinks because of the economic downswing, they are now gravitating towards cheaper alcoholic beverages to satisfy their drinking habits.
This change in the consumers’ buying pattern is beginning to affect many businesses, since it has been cutting into their profit margins as they try to survive in the midst of an economic downturn.
On February 1, the price of alcoholic beverages will be slashed from 15 to 12.5 per cent.
When T&T faced its last recession in 2008, many businesses that rely on the alcohol industry saw little interruption in sales at bars, restaurants, hotels, liquor stores and pubs.
Similarly, CNN Money also reported five years ago that America’s alcohol sales thrived during its 2011 recession and stagnant job market because people drank even when they were broke.
The report showed that alcoholic beverage sales for that period grew by nearly ten per cent even though the average unemployment rate during that time exceeded 9.3 per cent.
The report explained that alcohol sales rise during recessions and other economic downturns, especially when there is rising unemployment, stagnant wages, and higher cost of living.
Also, people generally drink when they are depressed, upset or suffering a personal problem.
In the US, alcohol sales amount to $90 billion per year.
While T&T has no reported figure of alcohol sales, last July the Pan American/World Health Organisation reported that our country had the highest rates of alcohol consumption in the Americas.
Having worked in a local rum manufacturing company, a source who requested anonymity said during a recession some consumers refuse to compromise on their alcohol consumption.
“What they will do is consume less but stay with the brands that they prefer. In other words, a consumer who drinks Stag will not go to a lower priced beer because he does not want to be associated with a cheaper brand. Depending on the consumer’s disposable income he would stay with the brand that he likes, but he will drink less. Similarly, a person who drinks Carib and Stag, would gravitate to a brand called Polar, which has a good taste but a lower price.”
He recalled that in 2008 there was an influx of cheap scotch whisky on the market.
Among the cheap brands that sold was Mac Arthur’s scotch whisky distributed by T&T Import and Export.
Consumers also gravitated to buying inexpensive jug-wine exceeding 1.5 litres.
In the case of rum, an individual who drank Single Barrel rum switched to Black Label.
While the person who consumed Black Label purchased a less costly Guyanese rum.
Charles: Premium brands
might suffer a bit
Jason Charles, group product manager of one of the country’s largest suppliers of premium beverages, AS Brydens and Sons, said during the country’s last recession consumers maintained their drinking habits.
“The overall consumption does not change. During a recession people tend to gravitate towards lower-end brands so they would possibly drink more rum and beers. So premium brands might suffer a bit.”
He said in good times, people tend to drink high-priced drinks. However, when there is a decrease in economic activity alcohol lovers consume less costly drinks.
Some of the premium drinks AS Brydens sells are Johnnie Walker, Baileys, Moet Hennessy, Smirnoff, and Moet and Chandon.
Singh: Less profit selling beers
Owner of Singh’s Liquor Mart in St James, Goutam Singh, said since before Christmas his customers have been buying cheaper drinks, in particular beers, which had seen a spike in sales.
“To buy they will buy. But they are not going for the exclusive drinks and this has been happening since before Christmas.”
In 2008, Singh said, business sales were normal, “I don’t think we faced a recession. Sales of alcohol were not adversely affected.”
Singh said if beers continued to be the top seller in 2016, this would cut into his profit margin.
“When you sell the expensive drinks this is where you make the bulk of your money. This is where liquor shops will take a beating in this hard time.”
Jhallo: Consumers watching their spending
Soul Jhallo, of Jhallo’s Liquor Mart in San Juan, said following the announcement of the recession last month, sales of exclusive drinks took a nose dive.
She said only a few customers were selecting expensive drinks, while those who bought the cheaper end drinks were watching their spending.
Singh also observed that people’s drinking habits were changing.
“Everybody looking at their dollar. Customers not buying the top of the line drinks as before. They are leaning towards drinks that are lower-priced like beer and rum.”
Singh: Consumers buying
patterns are changing
Employee of Pasea Liquor Mart, Tunapuna, Elizabeth Singh, admitted that in the last two months people’s buying patterns had changed.
She said customers were moving away from purchasing high-end brands such as Johnnie Walker, Jack Daniel and Hennessy.
“Their choice of drinks now is beers, rum and puncheon. People are going for cheaper drinks as they watch their spending in this recession.”
In a bid to grab sales, Singh said they slashed the price of Angostura’s White Oak rum from $85 to $80 which customers have been lapping up.
Singh painted a picture of doom and gloom in 2016 for liquor shops, bars, pubs, hotels and restaurants which rely heavily on alcohol sales to generate income.
She said another setback was the heavy taxes business owners would have to pay through the Business Levy and Green Fund Levy.
“This will take away from our profits.”
Chang: Trinis will not go off their rum during a recession
Andrew Chang, manager of Chang Brother Liquor Store in Marabella, said when people were depressed they turned to alcohol to drown their worries and stress.
“Drink-wise, Trinidadians accustom drinking. They are not going to let go of their rum...recession or no recession,” Chang said.
He, however, observed that from last month the sale of alcoholic beverages has been dipping, in particular that of expensive drinks.
“The basic thing in liquor. You must drink White Oak, puncheon rum, Carib and Stag. This is what have been selling in the last few weeks.”
Another popular drink that young men have been purchasing is Magnum—a tonic wine that contains 16.5 per cent alcohol, which sells at $15 retail.
“The young men are buying this because it giving them a faster head,” Chang said.
Chang said those who could not afford beers and rum prices, would buy an occasional bottle of Bay rum at $5.
In the next week, VAT on alcoholic drinks would be reduced from 15 to 12.5 per cent.
“It’s ridiculous that food prices going up and alcohol going down. It’s not logical. The situation is bad. It’s time to close down. If I could get this place rent out, why not?” said Chang who has been in the liquor business 40 years.
Faria confident about Carib
Managing Director at Carib Brewery Ltd, Gabriel Faria, said he felt confident that based on the brands that the company carries, consumers would select from within their portfolio.
“We have a portfolio of brands and we are confident that consumers will choose from one of our portfolios, be it our imported premium, local premium or standard brands because they want to stay with a quality product,” Faria said.
La Ronde-West: Consumers are more discerning about their purchases in a recession
Senior manager—Public Affairs and Communications at Angostura Ltd, Giselle La Ronde-West, said in any recession there was less disposable income and consumers were more discerning about their purchase.
“Angostura continues to offer excellent quality products at competitive prices and as such consumers have confidence in purchasing our products.”
In the last five years, La Ronde-West said, the company had not changed its prices, despite increases in operational costs.
Asked if Angostura was likely to reduce its prices, La Ronde-West said they would publish a suggested retail price listing.
“We cannot stipulate what our retailers will sell our products at.”