Liquor sales up in down economy

Sheila Schmidt of Greensburg said her friends are buying more alcohol from state Wine and Spirit Shoppes these days so they can entertain at home and skip costlier nights out at bars or restaurants.

"The economy is a factor," Schmidt said. "Basically, it's cheaper to drink at home."

Schmidt and her friends reflect a trend that's supported by state Liquor Control Board statistics: While the recession hasn't slowed the flow of alcohol sales, more people are cutting costs by drinking at home.

State store sales to individuals were up 7.1 percent while sales to licensed establishments were down 2 percent for mid-October to mid-November, the most recent numbers available from the LCB.

"We're seeing that our sales are being driven by retail customers who are buying for themselves, gifts, et cetera," spokesman Nick Hays said. "And we're seeing declines in our sales to licensees -- and that may reflect larger economic trends."

For fiscal year 2007-08, the liquor agency recorded total sales of $1.77 billion, up 4.7 percent from the previous year. Of those sales, purchases by individuals rose 5.2 percent, compared with a 2.4 percent increase for licensees.

Bill Diegelman said he witnesses the drink-at-home trend nearly every day at Max's Allegheny Tavern on the North Side. The business he's owned for 13 years is getting more customers than a year ago, he said, but they're buying less alcohol.

"Some of the customers aren't drinking at all in the restaurant," Diegelman said, blaming both the recession and Allegheny County's year-old 10 percent drink tax, which will fall to 7 percent with the New Year. "They're partying at home -- and many of them say that."

He said businesses are cutting back on how much they spend for holiday parties or aren't having a party this year. That leaves it to colleagues to find ways to celebrate together, sometimes at a co-worker's home.

Alcohol may be recession-proof, according to a study released this year by the Nielsen Company, which tracks numerous consumer trends as well as television ratings. About 80 percent of those interviewed said they were spending the same amount or more on beer, wine or spirits compared with a year ago.

"Alcoholic beverages are withstanding the economic slowdown very well, compared to other categories that might be considered indulgent or non-necessities," said Danny Brager, a Nielsen vice president. "To many customers, alcohol beverages are an affordable luxury."

But the survey also found that more people are staying home to drink and fewer are going to restaurants, bars and nightclubs.

John Pugliano, owner of the Penn-Monroe in Monroeville, agreed that the economy and the drink tax are a double whammy for business owners in Allegheny County.

"What we find is they're probably drinking less," he said.

Pugliano said the number of customers is up slightly from a year ago, but they're buying fewer or cheaper drinks.

"People are being more conservative," he said.

Sharon Smith, an economist and president of the University of Pittsburgh at Greensburg, said the state's alcohol statistics appear to reflect a change in how people are spending.

"They seem to be changing their buying habits for a budget adjustment," she said.

Beer sales in the state are up, despite price increases that breweries blame on higher costs for hops, barley and other ingredients.

"We haven't seen a big decline as some industries have," said Jay Wiederhold, president of the Pennsylvania Beer Wholesalers Association. "As far as state sales, they're still good."

Association figures showed that beer purchases in September, the most recent figures available, were up 1.1 percent from September 2007. Sales were up nearly 1.5 percent from January through September compared with same period for 2007.

Dan Apone, manager of Beer, Bets and Butts in North Huntington, said he has heard customers talking about staying home and entertaining rather than going out for the holidays.

"I think there are some people doing that," he said.

He described beer sales at his business as about the same as a year ago.

Lou Conte, a Greensburg licensed private counselor and certified addiction counselor with almost 30 years of counseling experience, said many people tend to drink more if they are dealing with a financial problem, such as a job loss.

"They're going to reach out and find that comfort zone, something that makes them feel better. And often that's alcohol," he said.

Selling alcohol is one the best jobs to have in hard times, according to HR World, an online employment resource center. In a Dec. 17 article, the group lists alcohol industry employment as the 14th best of 25 jobs to have during a recession. Health care jobs won the top rating.

"Alcohol is another outlet for troubled times, so distributors and manufacturers in the industry will continue to thrive," according to the article.