Big (and little) Alc’s Fall From Favor

The large alcohol companies are sounding their alarms. People aren’t drinking as much as they used to. Their business is down. Their projections are also down for FY25, just to let their shareholders know not to expect double digit returns any time soon.

Meanwhile the younger generations aren’t drinking as much as the older ones did when they were young. Adding to that, it is estimated that about 5,000-6,000 baby boomers die a day. It is estimated also that there are now 11 million less Baby Boomers than there were in 2020, and about 21 million less than in 2016.  So, yeah, the liquor and wine businesses are in the crapper.

But it’s not like the mega corporations didn’t have something to do with it. Let’s take a look.

Diageo last 12 months

 

Whenever something in the adult beverage world gets popular, there is often, if not always, a tsunami of imitators and copycats. The beer world is notorious for that. Remember lite beer? How about dry beer, which seems to be making a not-so-spirited comeback.

Wine wise, fighting chardonnay back in the 1980’s was a thing. And every Tom, Dick and Harry with a bonded winery number jumped on that bandwagon, or so it seemed. So much that the sheer weight of the category was daunting. Until Trader Joe came along with their “Two Buck Chuck” and put the nail in the coffin. And while they didn’t kill the category, they pretty much put everyone else out to pasture.

How about rosé wine? In the 20^th century there was Tavel. Domaine Ott was also around, but rarely seen outside of Provence, Paris, Monte Carlo and London. There were inexpensive rosé wines from the Languedoc and Anjou, but in large part, rosé wines were underappreciated. And then White Zinfandel reared its ugly head. From there it was a couple of  (wine) generations till we got to Miraval, thanks to Brangelina. And then the floodgates opened to all manner of Provence rosé and beyond. All of a sudden, we were seeing the bleached onion skin color coming from California, Italy, Australia, South Africa, Germany even. It was a hot mess. 

LVMH last 12 months

And now? Well, rosé wine is still a thing, or so some influencers like to think. But scan the shelves in your favorite wine shop and notice if the selection has been downsized. Where I live it has.

Look, I had a wonderful rosé wine from Sicily a few nights ago. And my fridge is bulging with them. As are the wholesaler’s warehouses. Is la commedia e finita? It could be. Folks just aren’t drinking as much vino puro.

Oh sure, they’re trying variations of ranch water, flavored spritzers and seltzers, cannabis infused coolers, and so on, but the ship has sailed. Health reasons, caloric concerns (thanks Ozempic!), THC vape pens, and not least of all, the price of alcohol. Now a rosé wine is $20+, not $10 or $15. Yeah, the economy, stupid.

Microsoft last 12 months

Have you ordered a cocktail out lately? Had more than one? Or could your budget not take it?

We ordered a Prosecco spritzer (to try it, just once) and it was quite good. But it was also $19. So, we aren’t going to be taking that journey anytime soon.

So, the old people are dying and the young people are pivoting to no-alc, low-alc, alc-alternatives, or alc-celibacy based on economic and healthy lifestyle reasons. No wonder the Diageo’s and LVMH’s of the world are revising their projections.

Pernod Ricard last 12 months

For my part, the few Italo-centric wine lists I have looked over in my little corner of the world, there were few wines under $80, and most of them over $100. I don’t know about you, but a modest pizza and pasta house (where lasagna is $30!) with a starting price of $80 for a red wine from Tuscany or Piedmont is probably not going to get me back for a second bite. Fortunately, we have a few BYOB places that are good enough. So, if I want to drink a 15-year-old bottle of Barolo or a 25-year-old bottle of Brunello, I can do that without blowing the monthly budget or going into short-term debt. But how about the rest of the world? Most folks don’t plan that far in advance.

But back to the problem – jumping on the bandwagon of the latest trends. The liquor industry lives off it. Remember when it was hard to find Bourbon? And then as if by magic, multitudes of brands appeared.

Nvidia last 12 months

Anything, you name it. You want orange wine, there is actually a wine called “Orange Wine” from Italy. Over in France they have a “brand” called Trouble, a Cloudy wine. As if the waters haven’t got murky enough with flavored wines, infused wines, spritzed wines and the like, now we have companies capitalizing on trend names. It is the march of the lemmings, and the business leaders wonder why their business has gone over the cliff?

Those men (and women) in the boardrooms might try looking in the mirror, asking the question, “Why are we losing market share?” Maybe it starts with their (limited) vision and (waning) leadership skills. Perhaps try innovation, rather than following some dead-before-it-is-launched trend. Or try leading. Or how about this: Take a beat and decamp.

"Storm? What storm?"

 

 

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