Difficult times spark a shift to budget booze

The “liquor indicator” is showing that consumers are still worried about losing their jobs. When times get tough, consumers tend to shift to lower-cost booze, said Charles Norton, portfolio manager of USA Mutuals Funds Vice Fund (VICEX), which is managed by Mutual Advisors Inc. of Dallas. The fund company is located in Milwaukee. The fund keeps 80% of its holdings in companies that produce alcoholic beverages and tobacco products, or in firms involved in the gaming and defense/aerospace industries. “For many years, we saw a "premiumization' trend” with liquor, “where the higher the price, the greater the growth. That was true for both spirits and beer, but that has reversed now, very clearly,” Mr. Norton said. Most of the liquor industry's growth is coming on the lower-priced end, driven by higher unemployment, he said. “In the United States, at least, we've seen a shift away from craft beers and imports ... and more strength in the mainstream domestic beers,” Mr. Norton said. Counter to what many might think, people don't drink more once they have been laid off, he said. “It's just that the way they drink is a bit different.” Consumers on a budget tend to drink more at home rather than at bars or restaurants, Mr. Norton said, and that in turn “tilts consumption toward beer over spirits.”