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By Emma Rumney and Jessica DiNapoli
LONDON/NEW YORK (Reuters) - Meaghan Dorman's five New York bars look just as full as they always do in December - packed with couples on dates, holiday get-togethers and business meet ups. But when takings are counted, it's clear that customers are spending less.
Dorman, bar director and partner of Raines Law Room and Dear Irving bars, each with multiple locations, said customers were buying fewer expensive craft cocktails, priced between $26 and $40, before switching to a cheaper tipple like wine.
"You feel like you are busy all night, and we will be full all night," but revenues are down versus previous years, she added.
Difficult economic conditions, such as high inflation, have left some U.S. drinkers, especially middle-income earners who used to splurge during the holidays, looking for ways to rein in their booze spending, three of the largest U.S. spirits distributors told Reuters.
The trend poses a challenge for major spirits producers like Diageo and Pernod Ricard, for whom October, November and December are critical to help drive annual sales. Pernod, for example, made 30% of its annual sales during that period last year.
Diageo and Pernod declined to comment on current trading.
As well as buying less, some drinkers are switching to cheaper liquor brands and venues or reducing the amount of out-of-home celebrations they attend, Southern Glazers Wine & Spirits, Republic National Distributing Company and Breakthru Beverage Group, which count Diageo and Pernod among their suppliers, said.
Annually, wholesaler sales of spirits are expected to decline by 5.65%, with year-over-year trends pointing to potentially severe volume decreases over the festive period, trade group the Wine and Spirits Wholesalers of America told Reuters.
"Everything is slower," said Francis Creighton, the CEO of the wholesalers' group. "Consumers have to pay for rent, cars. There's a lot more competition out there for the last dollar in someone's wallet than there used to be."
In bars and nightclubs, a shift away from more expensive bottles to those in a price tier below was underway across categories of spirits, data from the wholesalers' group showed - challenging major producers' central strategy aimed at getting consumers to shell out for more expensive liquors.
The companies are already struggling with a sharp downturn in U.S. sales following a post-pandemic boom; a relatively weak holiday season may compound their problems.
SOME CHRISTMAS CHEER