• by Karlene Lukovitz , July 9, 2008

While historical patterns suggest that Americans drink alcohol as much (or more) during tough economic times, the budget drain is causing many consumers to economize by cutting back on drinks purchased in bars, restaurants and nightclubs.

That's the primary finding of a new survey of more than 500 managers, owners and bartenders in bars, nightclubs, hotels and casual and fine-dining restaurants conducted by The Nielsen Company and Bevinco, a global provider of independent data services/solutions for on-premise operators in the hospitality industry. Nielsen consumer research also confirms the stay-at-home trend.

Among bar managers, bar owners and bartenders, 40% surveyed report having seen a downturn in consumer traffic, 25% report having seen a decline in number of drinks ordered, and 22% say that customers are ordering less expensive drinks -- compared to 42% reporting no overall impact.

East- and West-Coast establishments reported the greatest declines. For example, of those in California and Florida, 55% and 52%, respectively, reported that consumer traffic is down. In addition, 43% of Florida establishments reported a decline in number of drinks ordered (although just 9% of those in California said that the number of drinks ordered had decreased). Just one-third of Florida and California establishments reported seeing no overall impact.

In Texas, 51% of respondents indicating a decline in customer traffic, and while a relatively low 35% reported a decrease in number of drinks, 30% (the highest among the states) said customers are ordering cheaper drinks. In Ohio, "just" 38% of establishments said that traffic is down, and 23% and 24%, respectively, reported a drop in number of drinks, and more ordering of cheaper drinks.

Beer has been least affected, while wine has been impacted the most.

Asked to name which category is showing the "best" sales trend, nearly 50% of bar managers named beer, 40% named spirits, and just 11% cited wine. (See chart.)

"Wine is more likely to be consumed in dining establishments, which have been more heavily impacted by the economy than bars or nightclubs," observed Danny Brager, VP, client service, beverage alcohol for Nielsen. "Beer and spirit companies vigorously market their products to bartenders, likely resulting in greater 'share of mind' among servers/bartenders as compared to wine."

In addition to a marked decline in customer traffic, operators report some relatively minor price-related changes in behavior. For instance, 14% say customers are ordering more "house" spirits, and 13% report greater sales of "on draft," as opposed to bottled, beer. About 9% also report greater numbers of customers ordering house wines.

Consumers verify their growing inclination to stay home. In May, Nielsen surveyed 3,500 who said they had purchased alcoholic beverages from a store during the past three months. Two-thirds (66%) of fine-dining patrons said that they are going out less often compared to a year ago. The same pattern was confirmed by 65% of nightclub patrons, 55% of bar patrons, 59% of casino/resort patrons, and 52% of casual dining patrons.