High prices, low pour: How the cost of living crisis is drying up alcohol sales

Persistent inflation and economic uncertainty have led consumers to cut back on discretionary spending, with restaurants, clothes and groceries hit the hardest – but the high cost of living is also taking a toll on alcohol sales. 

In 2024, US spirits sales saw a 0.9% decline in volume, wine sales dropped by 8%, and beer sales decreased by 0.6% [source: WSWA]. It’s a similar story in the UK, where analysts expected to see alcohol volume and value declines of 1% CAGR over the next five years [Source: IWSR].

Our own research shows that 42% of UK consumers and 31% of US consumers have cut back on alcohol purchases to help manage the cost of living. For the survey, we qualified-in those respondents who said they had scaled back on booze to find out how much they’re spending now, how else they’re economizing in the category, and how committed they are to their alcohol purchases [view the survey dashboard].

Quick summary

• 54% of Brits and 44% of Americans are going out less often to save money.
• More than a third of consumers in both markets have started consuming alcohol at home instead of going out.  
• Around half of consumers are drinking less often to cut back on spending.
• 24% of Americans and 12% of Brits have given up alcohol completely to help manage the cost of living.
• A quarter of shoppers are buying cheaper alcohol brands.

UK results

More than a third of over 50s no longer buy alcohol at venues

Bad news for operators of bars, pubs, clubs and restaurants: 54% of Brits say they are going out less frequently. Consequently, they’re now more likely to buy alcohol for home consumption than go drinking in venues. 

A significant 23% of those who have scaled back their spending on alcohol typically spend nothing on buying drinks when going out, while 23% spend just £1-£19 per month (which won’t go far unless you’re in Wetherspoons). A further 23% spend £20-£39, while the percentage spending in excess of £40 stands at 31%.

Older Brits are significantly more likely to have stopped buying alcoholic drinks on-trade: 36% of over 50s spend nothing, in comparison to 14% of 18-30s and 20% of those aged 31-49 (although it’s consumers in the 31-49 age bracket who are most likely to have reduced their attendance at bars and restaurants: 60% are going out less). 

There’s a clear gender divide too: 27% of female consumers have curbed their spending on drinks in venues to zero versus 19% of men. On the other hand, 36% of men are committed to still getting the drinks in, spending over £40 per month, versus 26% of women. 

Brits typically spend less than £20 per month on alcohol at home

Despite drinking at home being the new going out, Brits aren’t spending huge amounts on it. The majority spend less than £20 per month on off-trade alcohol. Just over 38% spend between £1-19 per month, while 11% typically spend nothing. But a quarter spend between £20-£39, and 26% spend in excess of this amount. 

Consumers aged 31-49 are the most likely to say they have swapped going out for drinking at home (39%), and this is reflected in their higher spending compared to other demographics: 30% spend in excess of £40 per month on home drinking. Consumers aged 50-65 spend the least: 43% spend less than £20 and 12% make no outlay at all, while only 16% spend in excess of £40. 

Interestingly, women are more likely to say they have started drinking at home instead of going out (37% versus 33% of men), yet men still spend more on alcohol for home consumption (25% spend in excess of £40 per month versus 20% of women).  

Is Alcohol an industry in overall decline?

One of the core themes of this research is that drinking is becoming less important for Brits – a trend that clearly has big implications for alcohol brands. Half of the respondents in our survey say they’re “generally drinking alcohol less frequently” in order to save money, and 46% say that buying alcohol is a low priority (12% have given up drinking altogether). 

This sentiment is highest among older, more seasoned drinkers, with 55% of over 50s deeming alcohol a low priority, and the same percentage having reduced their consumption. Young Brits aged 18-30 are more committed to drinking, being most likely to rate buying alcohol a high or medium-high priority: 21% (versus 10% of 31-49 year olds and 8% of over 50s).

But despite this ray of light, younger drinkers are taking other measures to manage their spending on alcohol – all with possible drawbacks for drinks brands. Just over 27% say they have started drinking cheaper alcohol brands, while 25% are drinking cheaper types of alcohol, for example switching spirits for beer. And on-trade will be affected by the 28% who are purchasing smaller measures, and 33% who put a limit on the amount of drinks they buy on a night out. Under 30s also over-index for buying soft drinks instead of alcohol (38%). 

One quirk of this demographic is that they’re not the most motivated by promotions on alcohol: 23% look out for them versus a third of their older counterparts, so keeping RRPs down will be more important than deep discounting. 

US results

A third of Americans no longer spend on-trade

Operators of bars, pubs, clubs, and restaurants face a challenge as 44% of Americans report going out less often. This shift means consumers are now more inclined to purchase alcohol for home consumption rather than drinking at venues.

Avoiding alcohol when visiting hospitality venues appears to be a key way of cutting back, with nearly a third of respondents making no outlay on it. Of those still enjoying a drink when out, 30% spend less than $40 per month, a further 14% spend between $40-$59, while a total of 24% spend in excess of $60.

Older Americans are significantly more likely to have stopped buying alcoholic drinks on-trade: 45% of 50-67 year olds spend nothing in comparison to 26% of their younger counterparts. 

Consumers in the 31-49 age bracket are the highest on-trade spenders, with 31% spending in excess of $60 per month in comparison to 24% of 18-30 year olds and 16% of over 50s.

Drinking at home trend boosting off-trade sales

A third of American consumers say they have swapped going out for drinking at home, so how much are they typically spending off-trade? It’s fairly evenly distributed, with around 20% in each of the first three spending brackets ($1-$19, $20-$39, $40-$59) but spending in excess of $60 per month is less common. 

Meanwhile, 17% of respondents say they now don’t make any expenditure on alcohol for home consumption. Those aged 50-67 over-index for saying this: 25%, compared to around 15% of their younger counterparts. 

As well as being the highest on-trade spenders, consumers aged 31-49 are also the biggest off-trade spenders: 33% spend in excess of $60 per month on home drinking. Only 20% of under 30s spend this much, and 16% of over 50s. 

And while men and women are equally likely to say they have started drinking at home more instead of going out, men are higher spenders on alcohol for home consumption (30% spend in excess of $60 per month versus 19% of women).   

Millennials at the vanguard of alcohol changes

This research points to one thing – drinking culture is on the decline in America. Just under half of the respondents in our survey say they’re “generally drinking alcohol less frequently”, while a significant 24% have given up drinking altogether. Critically, 47% say that buying alcohol is a low priority (12% ). 

One segment in particular stands out for having changed their behavior in relation to alcohol, and that’s consumers aged 31-49. While they remain the biggest spenders overall, they’re most likely to say they’re drinking alcohol less often to save money (50%), and they over-index for employing money-saving tactics.

To manage costs when visiting bars, clubs and restaurants, 31% are limiting the number of drinks they purchase, while 28% are buying smaller measures. This age group is also most likely to opt for soft drinks instead of alcoholic beverages when out (27%). Additionally, over 27% have switched to cheaper alcohol brands, and 22% are choosing less expensive types of alcohol, such as beer instead of spirits.

Despite this, consumers aged 31-49 remain the most committed to drinking, being most likely to rate buying alcohol a high or medium-high priority: 25% (versus 17% of under 30s and 11% of over 50s).