Liquor stores struggle, but local bars withstand recession
By Blake Arambula
Edited by Kimi Timmers
Feb. 25, 2009
Alcohol sales can suffer in a recession, according to two recent national reports. In the Midlands, local liquor stores are feeling the pinch, but local bars report business is fine.
The Distilled Spirits Council of the United States in Washington, D.C., reported that the value of alcohol sales at bars, restaurants and nightclubs fell 2.2 percent last year in a report issued Jan. 30. In July 2008, the New York City-based Nielsen Co. found that 55 percent of consumers surveyed are going out less often to those venues.
Consumption also may be decreasing statewide. The South Carolina Beer Wholesalers Association and the S.C. Department of Revenue reported the sale of 49,419,177 cases in 2008, 153,171 fewer than in 2007.
But local bar owners and managers said their businesses haven't yet felt the sting of the recession.
People are just so used to going out, relaxing and spending money on drinks that it will be hard for them to change, said Andy Ugarte, owner of the Publick House in Five Points. The disparity between the national and local results may lie in Columbia's status as both a college town and state capital, he said.
"Alcohol sales are notoriously known for doing well in recessions," Ugarte said. "Because we are a capital city, we aren't affected in the same way."
Michael Derby, general manager of the Flying Saucer in the Vista, said he's convinced many people are still in denial about the economic downturn and that the lines outside restaurants prove that.
Derby said he thinks the recession is still in its early stages.
"If this thing doesn't turn around in the next three, four or five months, that's when people will start waking up. Reality just hasn't set in for a lot of people yet," Derby said.
Derby said his sales were about the same as last year, in part because of customer loyalty programs like the UFO Club, which tracks customers' beer choices, and the Ring of Honor, earned for sampling 200 of the 220 beers available.
The Flying Saucer also banks on customers returning because it reaches a niche market by selling unusual types of beer, he said.
"Normally we grow our sales every year, usually at least 5 percent," Derby said. "Our sales aren't down, and I think I'm seeing the same amount of people, but they might order one less round of drinks than they normally would."
But package, grocery and convenience stores say sales are going down, even if the number of customers remains the same.
Those customers are hurting from reduced personal incomes, and in Ken Scherer's case, job loss. In December, Scherer was laid off from his job in the office of a West Columbia trucking company. Scherer said that before this, he bought costly brands like Jack Daniels.
Now, Scherer said, "I always go for the cheap stuff or what's on sale.
"You can take a cheap whiskey and put it in a nice bottle, and people will come over, try it and say, ‘This is good stuff.'"
Rob Thomason, owner of Thomason Wine & Liquor on Garners Ferry Road said Scherer isn't the only one buying cheaper.
"For the past 5 1/2 months, my numbers have been off last year's numbers by as much as 10 to 15 percent," said Thomason who bought the store in 2004. "The majority of it's got to do with people going from top-shelf stuff to bottom-shelf, from Grey Goose to Burnett's."
Thomason said that in 2007 his average customer spent $17.84 per visit. Last year, that dropped to $15.42, though the number of customers was off by less than 1 percent.
"Bottles are still going out the door, but the gross margin is different," he said. "Business has been rough, but we've still got the doors open."
Dollar-conscious drinkers are adapting to the downturn just as retailers are. Many of Thomason's customers are still going to bars, but they stop by his store first to buy a few $1 mini-bottles to bring with them, rather than paying more for pricey liquors at the bars, he said.
Ken Scherer said job loss won't keep him from buying liquor, but he may just have to keep buying cheaper brands.
"Since there are so many people getting laid off, I think liquor sales are going to go up," Scherer said.
