by Emma Rumney and Jessica DiNapoli

LONDON/NEW YORK (Reuters) – Meaghan Dorman’s five New York bars always seem so packed in December: couples on dates, holiday parties and business meetings. But when revenue is tallied, it’s clear that customers are spending less.

Meaghan Dorman, bar manager and partner at Raines Law Room and Dear Irving bars, which each have multiple locations, says customers are buying fewer expensive craft cocktails, which range in price from $26 to $40 ($25.03 to $38.00). 50 euros), before turning to cheaper drinks, such as wine.

“It feels like we’re busy all night, and we’ll be full all night,” but revenue is down compared to previous years, she added.

Difficult economic conditions, such as high inflation, have pushed some Americans, particularly those with middle incomes who used to splurge during the holidays, to reduce their spending on alcohol, three major U.S. alcohol distributors told Reuters. spirits.

This trend poses a challenge for major spirits producers such as Diageo and Pernod Ricard, for whom the months of October, November and December are key to boosting annual sales. Pernod, for example, achieved 30% of its annual sales during this period last year.

Diageo and Pernod declined to comment on current transactions.

Besides buying less, some consumers are switching to cheaper alcohol brands and venues or reducing the number of out-of-home celebrations they attend, said Southern Glazers Wine & Spirits, Republic National Distributing Company and Breakthru Beverage Group, which counts Diageo and Pernod among its suppliers.

Annual spirits sales by wholesalers are expected to decline 5.65%, with year-over-year trends pointing to potentially significant volume declines during the holiday season, trade group Wine & Spirits Wholesalers told Reuters of America.

“Everything is slower,” said group CEO Francis Creighton. “Consumers have to pay their rent, their car. There is a lot more competition than before for the last dollar in everyone’s wallet.”

In bars and nightclubs, data from the wholesale group shows that, across all spirits categories, consumers are turning away from more expensive bottles in favor of lower-priced ones, calling into question the central strategy from large producers, which aims to encourage consumers to pay more money for more expensive alcohol.

Companies are already facing a sharp decline in U.S. sales after a post-pandemic boom, and a relatively weak holiday season could compound their problems.

A LITTLE JOY AS CHRISTMAS APPROACHES

Trends vary by market. In Britain, for example, pub major Marstons announced an 11% rise in Christmas Day bookings compared to last year, having seen a recovery in consumer spending

In the United States, the largest market for most major Western spirits producers, Southern Glazers expects “one of the most cautious, if not toughest” holiday seasons in a long time, although all three distributors said they did not expect a dramatic decline in sales.

“Sales of spirits for at-home consumption, while lower margin, are up from last year. Higher-income consumers also remain resilient, and lower-priced restaurants are taking advantage of consumers’ search for value, said Zach Poelma, vice president at Southern Glazer’s Wine & Spirits.

Casual restaurant chains Chili’s and Applebee’s, for example, offer festive cocktails for $5 to $7, with more expensive options reaching up to $13.

These cocktails are unlikely to compete with others, such as the $28 Weaving Weber, a version of the Old Fashioned at Dorman’s Dear Irving in Gramercy Park, New York, which features craft tequila, agave syrup spicy with xila and bitter angostura.

People tend to settle for just one such craft cocktail today, whereas they used to be able to have up to four, added Meaghan Dorman.

According to Emily Xu, senior vice president of Republic National Distributing Company (RNDC), these trends are accompanied by longer-term changes, such as reducing alcohol consumption or experimenting with alternatives like infused beverages. tetrahydrocannabinol (THC), the psychoactive compound in cannabis.

Joseph Gabelli, portfolio manager at spirits investor Gabelli Funds, said the U.S. deals raise questions about the ability of spirits makers to keep sales of more expensive brands at a pace comparable to those in the past .

(Reporting by Emma Rumney in London and Jessica DiNapoli in New York; with contributions from Waylon Cunningham in New York; Elena Smirnova; editing by Augustin Turpin)

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