01 July 2011

Booze is "recession-proof"? Maybe not......

An article from the Southern Maryland Newspapers (Calvert and St. Mary's Counties) suggests that the alcohol beverage retail industry is not as recession-proof as typically believed, and considers the implications of the new sales tax increase:
Though there is a “very good possibility” the increase could drive down sales, Calvert County Commissioner Gerald “Jerry” W. Clark (R) expects his customers will bear the cost more than he will.
“It’s just another tax on the people, another tax on the consumers,” said Clark, who owns Port of Call Wine and Spirits in Solomons. “I assume that food will probably be next.”
“This is going to hurt the guy who comes into our store, works all day and wants to get a six-pack of beer, go home and relax,” [David Dent, who owns WJ Dent & Sons in Tall Timbers and is the St. Mary’s County co-director for the Maryland State Licensed Beverage Association] said. “That is the guy this is hurting the most.”


The Oriole Way said...

Instead of his six-pack costing $7.42 after tax it will now cost $7.63. If instead of drinking six beers to relax he drinks five, he'll break even after just six six-packs. But hey, keep up the scare-mongering!

Alexander D. Mitchell IV said...

Read the article:
"Like many other businesspeople across the nation, Weems is trying to outlast the ongoing economic downturn. In February he was down 25 percent from the year prior. 'You hear the statement that liquor stores are recession-proof, but trust me, that’s a fallacy,' he said."

Also, "'Individuals that were buying Grey Goose are now buying Smirnoff, and from Smirnoff to Burnett’s. Basically they’re just buying down and in less quantities.'" And I've heard the same thing from liquor store folks around here. Weekly or biweekly cases became two six-packs or half-cases of wine.

Are you willing to make a wager? Let's see where Maryland liquor sales stand a year from now, both in quantity purchased and retail value spent, as well as the projected tax revenue versus actual. I'm predicting a drop between five and ten percent in traffic just on the tax alone; if the economy stays down, double that.