By Charles Passy
January may be the month of fresh starts. But for the booze and hospitality businesses, it’s also proving to be a time of unprecedented challenges.
A number of factors are potentially affecting sales of spirits and wine. And bars and restaurants are suffering in the process, as well.
Begin with the growing popularity of Dry January, the movement that encourages foregoing alcoholic beverages during the first month of the year as a kind of sobriety check. In a recent story, the New York Post reported that some local watering holes are feeling the pinch because of the temperance-minded campaign.
The Post even likened the sales-dampening effects of Dry January to the COVID-19 omicron surge, which has resulted in bars and restaurants seeing a significant decline in patrons. The publication referred to the alcohol-free movement as its own “deadly new variant.”
The anti-alcohol chorus has found its way to Reddit, the social-media platform, as well. A trending thread looks at the idea of making booze illegal , pointing to the high number of drinking-related deaths annually.
There’s other troubling news for those whose livelihoods are tied to booze. In a recent policy briefing, the World Heart Federation (WHF) stated that enjoying an occasional drink, which has often been seen as a way to boost cardiovascular health, can have just the opposite effect. In fact, its new policy warns that no amount of alcohol is good for the heart. “The evidence is clear: any level of alcohol consumption can lead to loss of healthy life,” the WHF said.
The American Cancer Society has also updated its dietary guidelines to urge people to cut out alcohol completely. While it used to advise limiting the consumption of alcoholic drinks to no more to than one per day for women, and two for men, its revised guidelines state that “ it is best not to drink alcohol,” period.
Meanwhile, a much-watched annual wine-industry report, from California’s Silicon Valley Bank, indicated some other sobering issues ahead. In particular, the report pointed to the challenge of attracting “younger, health-conscious, multi-cultural consumers,” who are seemingly more interested in sipping hard seltzer or beer than wine. “The lesser interest in wine among younger consumers, coupled with the encroaching retirement and decreasing wine consumption of wine-loving baby boomers, poses a primary threat to the business,” the author of the report wrote.
In short, 2022 could be a rough year for lots of reasons.
“It’s a dire situation for so many in the restaurant and nightlife industry,” said Andrew Rigie, executive director of the New York City Hospitality Alliance, a trade group.
Rigie said it’s hard to calculate the effects of Dry January, but he added there’s no question that the recent virus surge has done its share of financial damage, especially since it came at a time when bars and restaurants were looking forward to the traditional holiday sales boost. Moreover, he noted there’s been no effort to provide federal financial support for these businesses, unlike the case earlier in the pandemic.
Some dining and drinking establishments are looking for ways to recoup any lost revenue. Black Tap, a chain that specializes in burgers, beer and milkshakes, has introduced an alcohol-free cocktail, called the Mad Piña, as a way to entice those observing Dry January. It’s also made a push to boost business in other ways — for example, by rolling out a Monday-to-Thursday happy-hour program at its New York locations.
Owner Julie Mulligan said it’s been a rough month in any case, with sales at least 25% below what they were during January in the pre-pandemic era. And she’s hearing much the same from colleagues in the restaurant world. “A lot of people are on the edge of closing down their business,” she said.
David Fleming, editorial director of Shanken News Daily, a trade publication that tracks the wine and spirits business, said the booze industry is nevertheless used to seeing a sales decline at the start of the year — not just because of Dry January, which is a newer phenomenon, but because of the larger post-holiday slowdown. “The air goes out of the balloon after the fourth quarter” of the year, he said.
Fleming also questioned if any warnings from a medical organization would result in people curbing their consumption of alcohol. He said consumers tend to respond more to the positive news about drinking — he pointed to a famous segment on CBS’ “60 minutes” program touting the health benefits of drinking red wine — than the negative.
As troubling as some signs may be for the booze and hospitality businesses, the fact remains that alcohol sales actually grew during the pandemic — driven especially by home consumption. IWSR Drinks Market Analysis, a market-research organization, said that annual U.S. sales increased by about 5% in 2020 to $179 billion (figures for 2021 aren’t yet available).
And speaking of Dry January, there’s one “booze” category that’s poised to continue growing — namely, no-alcohol or low-alcohol products. IWSR said that category, which already constitutes about a $10 billion market across key countries, should see 8% annual growth through 2025.
“While January has become a popular month for people to cut back or abstain from alcohol, interest in no- and low-alcohol drinks has increasingly become a year-round trend among consumers across the world,” said Emily Neill, chief operating officer of IWSR Drinks Market Analysis.