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Recession-weary consumers drive up alcohol sales

Liquor sales rise by 5 per cent as Canadians choose a drink at home over going out

Globe and Mail Update

Freelance video production assistant Jay Duc used to hit the Montreal clubs pretty much every week before business dried up.

Now, he parties at home or, when invited to a friend's house for dinner, turns up with a modestly priced Chilean wine.

University of Ottawa public administration student Jarett Lalonde has also cut back on nights out – typically picking up a 12-pack of beer – “or a two-four in a good week” – to share with friends in someone's living room.

Statistics Canada reported Thursday that Canadian consumers have retrenched in many areas, but not when it comes to their booze, with beer, wine and liquor store sales up 5.4 per cent year-over-year.

“I guess in line with some other entertainment, it does have some substitute effect,” Toronto-Dominion Bank economist Charmaine Buskas said, adding that drinking and entertaining at home can be cheaper than going out to a show or a restaurant.

Spending on other luxuries such as clothing and accessories, sporting goods, hobbies and books is down. But the beer, wine and liquor store sales indicate that Canadians are finding other ways to relax, Ms. Buskas said.

Between January and February alone, alcohol sales increased by 2.3 per cent – and the increase does not appear to be due to higher prices.

“It would appear to be a volume thing,” Ms. Buskas said.

Mr. Lalonde, who is studying for final exams, said he is not consuming any more but he is not consuming any less, either. “And I certainly haven't socialized any less,” he said in an interview.

Mr. Duc said, in an email, that he “is much more on the lookout for beer sales now.”

When it comes to vodka, “Troika and Polar are now my new best friends because of the $20 price.”

Mr. Duc said he rarely dines out any more, unless the meals are less than $10 a plate. And when he does eat at a restaurant, “I drink tap water.”

Bill Kennedy, executive director of corporate communications at the Liquor Control Board of Ontario, has noticed the changing consumer patterns. Preliminary figures for the fiscal year ended March 31 indicate that sales increased by just under 4 per cent year over year, but the mix of products has shifted.

There is a perception that beverage alcohol is recession-proof, Mr. Kennedy said.

“I think the term that is probably more accurate is recession-resistant.”

The economic downturn is reflected in sales patterns, “with some slowing at the premium end of the business,” and more demand for less-expensive brands.

Gary Robertson, a credit manager in Ottawa, said the recession has not necessarily changed his own habits. “End of the day, it is about being smart in good times and in bad …that way, you get to enjoy a good drink no matter what.”

Mr. Robertson said he is a big fan of Scotch, “but I learned years ago that if I want to enjoy the good stuff I have to plan ahead.

“I buy bottles when I travel, I love duty free, and ensure that I have a good backup stock of my favourites like Oban and Dalwhinnie.

“I also have the luxury of living in Ottawa, which allows us the ability to cross the border and save $10 on a case of beer.”

Annette Borger, an account director with a Toronto communications firm, said she and her husband have become more cost-conscious consumers as a result of the recession.

They entertain at home with friends – “we have a young child, and babysitting prices have not reflected these recessionary times,” Ms. Borger said.

Statistics Canada reported that overall retail sales edged up 0.2 per cent in February, to $33.7-billion.

“This comes after large declines in retail sales in November and December, followed by a partial recovery in January,” Statscan said.

Total retail sales were down 5.1 per cent year over year.

“Retail sales have now risen for two consecutive months, as consumer confidence edged up relative to the last few months despite four months of disappointing employment figures,” Toronto-Dominion Bank economist Diana Petramala said in a research note.

“However, the gains of the last two months have not been strong enough to recover losses of the last half of 2008, and retail sales are still down 6.6 per cent from their peak in September of 2008. So far, peak to trough, retail sales have fallen three times as fast as the 2.1 per cent decline during the 1990's recession,” Ms. Petramala said.

“The headline number was largely driven by a strong 3 per cent increase in building and outdoor supplies. This is a bit of an anomaly given the housing market correction witnessed in the Canadian economy, although we did see a turn around in existing home sales in February which continued into March,” she said.

“The other star of the report was a 0.7 per cent increase in food and beverage stores, likely due to significantly higher prices for these goods. Normally we would say that food is a bit more recession proof given that people still have to eat, however the main driver was a 2.3 per cent increase at beer, wine and liquor stores,” Ms. Petramala said.

“This may reflect a shift from purchases at restaurants and bars to the more cost effective choice to eat in.”

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