Keeping spirits up

Slow market has no effect on alcohol sales

Amid the increasingly grim economic climate, consumers have been cutting back on a number of things in their household budgets — with one notable exception: alcohol.
And even as prices rise for alcohol products, especially beer, the industry seems to be unfazed by dire economic news.

"Some people say it's the only recession-proof business," said Deborah Robitaille, front-end manager for Liquors Inc. in Pittsfield, "and those people are right."

For the first half of 2008, national beer sales rose by 1.4 percent, translating to 97 billion more barrels sold, according to the Beer Association, a Boulder, Colo.-based industry group. Constellation Brands, one of the world's largest wine and spirits makers, saw its net sales rise 7 percent in the last quarter alone.

Those figures are sharp contrast to the overall drop in retail spending, which has dropped for three consecutive months, according to the U.S. Commerce Department.

"Alcohol falls into a category of inelastic demand," said Ben Kahn, professor of business and economics at Massachusetts College of Liberal Arts.

Kahn said that while most industries' sales are directly related the economy, alcohol sales remain largely unchanged no matter what the fluctuations might occur in prices or individuals' income. According to a Nielson Consumer Survey from earlier this year, nearly half of those asked said the economy will have no influence on the amount they spend on beer, wine and spirits, and more than 80 percent said they plan to spend the same as the previous year.

But while shoppers don't plan on cutting out alcohol, they have been looking to save.

"People are being more careful, trying to buy things that are on sale," said Paul Hashim, president of Liquors Inc. and Hashim's Package Store in Pittsfield.

Hashim said he has had to increase prices in recent years because of increased costs of ingredients and shipping, but that hasn't deterred customers. He said he has even seen increases among customers going out of their way to save money by shopping at discount liquor stores.

Other store owners have noticed a shift as well.

"People are no longer willing to spend if it's not a wine they really want," said Jim Nejaime, owner of Nejaime's Wine Cellars, which has stores in Lenox and Stockbridge.

He said although the volume of sales has been largely unchanged lately, many consumers have shifted from more expensive wines to modest alternatives.

While alcohol sales remain steady, the shift in consumer spending is affecting smaller stores and restaurants.

"Business is down, definitely," said Victor Lampiasi, owner of Val's Pipe and Package in Adams. "It's at a point where people just can't afford it."

Lampiasi said that while alcohol sales have not fallen as sharply as other items in his store, he has seen a significant decrease in sales, especially among older customers looking for cheaper products.

Kirk Grippo, owner of Old Forge Restaurant in Lanesborough, said that with the tourist season just coming to an end, it is too soon to say what effect the economy has had, but he has noticed a change.

He said people who used to have three beers might now only have two and that high-end beer sales have dropped significantly.

"We're working a lot harder to make the same amount of money," Grippo said.

Christine Bump, co-owner of Brew Works in Pittsfield, also sees an impact.

"Definitely people are feeling the economy and so are we, but we still have steady business," she said.

But Despite difficult times, Bump doesn't see her restaurant struggling too much for one main reason: "Everybody likes beer."