Alcohol Spending Returns After Consumers Cut Back

High-income earners spent 31% more on alcohol in the second quarter than the year-ago period.

August 17, 2022

ALEXANDRIA, Va.—Spending on alcohol is back, according to Morning Consult research, after consumers reported trimming consumption frequency and amount in the spring because of high gasoline prices and inflation. But further economic pressures and evolving social calendars are further shaping consumers’ drinking habits and could have long-term implications for the alcohol industry, said Morning Consult.

Now that gas prices have dropped and inflation is starting to ease, alcohol spending is flat year over year, with adults spending an average of $34 on alcohol in June. The increase in alcohol spending is heavily influenced by high-income earners. They spent 31% more on alcohol year over year from April to June, while middle- to low-income earners spent less on alcohol than they did a year ago. Overall, all adults spent 4% less on alcohol year over year from April to June.

Morning Consult reports that high earners are concealing the full impact of worsening purchasing power in the alcohol category, but this trend is consistent with Morning Consult’s latest consumer spending data, which finds robust spending by higher-earning adults is masking the degree to which purchasing power is deteriorating across the income spectrum.

Additionally, consumer drinking habits are changing. More people are completely abstaining from consuming alcohol—58% of adults said that they imbibe in June, compared to 63% answering the same way in October 2021. For those who do drink alcohol, nearly 3 in 10 (29%) reported in July that they drank less than in the prior month.

The top three reasons for changing alcohol habits include saving money, fewer social plans and managing weight. Cost pressures in other categories, from gas to groceries, are impacting consumers’ purchasing behaviors in alcohol, despite the fact that price growth hasn’t been as pronounced in this category. Saving money is the goal for around 1 in 3 consumers who say they are drinking less.

Another reason that drinking habits are shifting is the health-conscious movement. In July, 30% of drinkers (and 36% of millennial drinkers) said they’ve intentionally taken breaks of a month or more from drinking alcohol, and health is the primary goal. Ninety-one percent of Dry January participants said they committed to the month-long alcohol fast because they were trying to be healthier.

“Longer term, consumers’ focus on physical and mental health will continue to shape their relationship with adult beverages, including when, what and how much they are consuming. Brands should stay the course with relevant innovations around low/no alcohol and health and wellness,” said Morning Consult.

Beam Suntory recently reported that it believes pandemic-influenced drinking habits are here to stay. Consumers are moving toward premiumization, or higher-end brands, and e-commerce sales have increased dramatically since the pandemic began. For over half of consumers (54%) who bought booze online during the pandemic, it was their first time buying libations via the internet. However, it’s ready-to-drink (RTD) cocktails and premixed drinks that have seen the biggest boom.