Cautious Consumer Spending Means Trade-Down From Champagne to Prosecco

Cautious consumer spending habits could mean fewer people ringing in 2023 with Champagne.

After years of growth, sales of higher-priced wines and spirits have begun to slow, The Wall Street Journal (WSJ) reported Thursday (Dec. 29), part of a larger trend of consumers trading down to cheaper brands in search for greater value.

The report cited data from Nielsen analyzed by the Bump Williams Consulting Co., a beverage-sector consulting firm, showing U.S. retail-store sales of “superpremium” spirits falling 3.7% in the 48 weeks ending Dec. 3, following a 4% uptick in 2021.

Growth in sales of “ultrapremium” spirits — $50 bottles of tequila, for example — slowed to 2% in the same period after climbing 24% last year, per the report.

Online alcohol seller Drizly announced a boom in prosecco sales as consumers seek an affordable alternative to Champagne, the report stated.

As PYMNTS reported earlier this month, consumer perception of the price of alcohol is worse than reality.

Research from our Consumer Inflation Sentiment study, “Consumer Inflation Sentiment: In It for the Long Haul,” which drew from a survey of more than 2,300 U.S. adults, found that consumers perceive the prices of alcoholic beverages to have climbed 23.1% year over year.

However, data from the U.S. Bureau of Labor Statistics (BLS) showed that the prices of these items have only gone up 5% during that time frame, about a fifth of the amount that consumers perceive it to be.

Regardless, we’ve also seen that consumers are increasingly switching to lower-cost brands and retailers in the face of inflation.

In an earlier edition of our Consumer Inflation Sentiment study, “Consumer Inflation Sentiment: Consumers Buckle Down on Belt-Tightening,” PYMNTS found that 47% of consumers are switching to cheaper merchants.

That news follows data from BLS showing grocery prices have risen 12.4% year over year, far above the inflation rate for all items, 7.7%.

That’s allowed retailers who are known for their lower prices to make gains with higher-income shoppers. Walmart told analysts last month that its efforts to attract higher-value food customers are paying off.

“We’ve continued to gain grocery market share from households across income demographics, with nearly three-quarters of the share gain coming from those exceeding $100,000 in annual income,” Chief Financial Officer John Rainey said.

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