Surging liquor sales defy recession

  • Drinking it up: The Labour Day holiday weekend and preparations for Hurricane Leslie helped spike liquor sales by 25.5 percent. Photo by Mark Tatem

    Drinking it up: The Labour Day holiday weekend and preparations for Hurricane Leslie helped spike liquor sales by 25.5 percent. Photo by Mark Tatem

  • Drinking it up: The Labour Day holiday weekend and preparations for Hurricane Leslie helped spike liquor sales by 25.5 percent.

    Drinking it up: The Labour Day holiday weekend and preparations for Hurricane Leslie helped spike liquor sales by 25.5 percent.

Beer, wine and liquor seem to be selling better than ever in Bermuda despite the Island’s sluggish economy.

According to the Government’s monthly Retail Sales Index, sales of liquor, along with food sales, drove retail sales 0.8 percent higher in September.

However, after adjusting for the annual retail sales rate of inflation, measured at 2.5 percent in September 2012, the volume of retail sales fell by 1.1 percent.

Sales of alcohol jumped 25.5 percent in September — the largest increase this year. The figures follow a record increase in August when sales were up 19.6 percent.

Liquor sales have been on the rise since December of last year — increasing every month apart from April. The decrease during that month was attributed to one less discount-shopping day compared to April 2011.

The figures may seem surprising, but the alcohol industry has long been thought of as “recession-resistant”. When tough times hit, many people look for comfort in a bottle. And in an economic recession, purveyors of booze may be in a unique position to thrive.

However, when we spoke to Gosling’s about the figures, they were surprised saying they haven’t experienced such an increase.

“As a wholesaler and retailer of wines and spirits, I can confirm that our sales did not increase by anywhere near that amount,” said Nancy Gosling, president and CEO of Gosling’s Ltd. “Sadly, every year since 2007, our sales have been below the prior year and this one is no exception.”

Ms Gosling speculated that perhaps the uptick in sales year-on-year Island-wide came from a particular retailer who may have experienced a sudden increase due to location or brand they were carrying.

According to the Department of Statistics, the increase in September sales can be attributed to the Labor Day holiday weekend and preparations for Hurricane Leslie — two events that typically motivate people to stock up on both food and booze. So, grocers may have seen more alcohol sales than liquor stores as customers picked up some beer or wine with their groceries. August’s increase was attributed to the Cup Match holiday weekend.

By most accounts, during recessions, alcohol sales don’t suffer much anywhere in the world. After all, tough times unfortunately bring with them an excuse for some to turn to the bottle. Or it’s seen as a cheap form of entertainment or escapism.

But an economic downturn is usually accompanied by a shift in what kinds of booze people drink. In the US for instance, while $20 and $30 bottles of wine were popular in the carefree pre-recession times when homes seemed to increase in value 20 percent annually, once the housing market collapsed and unemployment soared over 10 percent, the $9 to $12 bottle became the fastest-growing segment in the US wine market.

Looking for signs of an economic rebound? We may be able to look to alcohol sales for that too. According to the Distilled Spirits Council of the US, sales of “high-end” alcohol increased in by 5.3 percent in 2011. In 2009, high-end alcohol sales decreased by 3.5 percent. Pre-recession sales for these brands were on average up 5.8 percent, the council said.

Bermuda residents also seem to be eating more, or perhaps going out less and eating in more. Grocers reported a 10.9 percent increase in September following a 9.4 percent rise in August. Food store receipts, which exclude the sale of alcohol, have increased every month this year except April and May.

Other local businesses however, have not fared as well. Retailers of building materials experienced the largest decline in September, registering a 27.3 percent drop in sales. The decrease was due to the completion of major construction projects and fewer new projects coming online as the weather begins to get colder.

Sales of cars and bikes also continued to fall in September — down 2.8 percent year-over-year. And sales for apparel stores were down 8.3 percent — the largest single month decline in more than two years.

Tourist-related stores also suffered a massive hit with sales falling 25.6 percent. Boat and marine retailers, meanwhile, recorded a 28 percent rise in sales — the strongest increase in retail sales activity. The increase could be attributed to the end of boating season and more demand for annual maintenance.

The ‘catch-all’ sector experienced a 4.4 percent drop in sales receipts during the month of September — following a 4.8 percent drop in August. However, sales of big-ticket items like furniture, appliances and electronics rose slightly by 1.1 percent.

Resident purchases overseas are also down — dropping 5.3 percent to $5.4 million from September of 2011. The amount of items purchased overseas and claimed in Bermuda has declined every month, with the exception of June, since last November when the rate for bringing items through the airport rose temporarily to 35 percent. It went down to 25 percent in April.

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Published Nov 22, 2012 at 8:00 am (Updated Nov 21, 2012 at 7:10 pm)

Surging liquor sales defy recession

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