As alcohol prices spike, drinkers don't seem to care
Diageo and Anheuser-Busch say they've raised prices this year, which hasn't kept Americans from slinging back the drinks.
Americans may finally have an explanation for the $100 margarita.
Smirnoff Vodka owner Diageo (DEO) boosted the price on its "super premium" scotch by 9%, reports Bloomberg Businessweek, citing comments from a Wednesday conference call. Drinkers also paid 10% more for Popov vodka and 7% more for Gordon's Gin.
Given that North America represents 40% of Diageo's profit but only one-third of sales, that indicates that Americans are buying more premium liquors, such as Johnnie Walker Blue Label, which can cost $200 per bottle.
Anheuser-Busch InBev (BUD) saw a similar pattern of consumers opting for pricier brands, although sales by volume at the world's largest brewer slipped 1.2% in the second quarter, the story noted. Yet revenue rose 3.9%, after the company raised beer prices last year.
Anheuser-Busch's earnings report hid a troubling trend for the brewer: the preference for higher-end drinks came at the expense of mainstream beer. No wonder AB InBev has been promoting its more expensive beers, such as Budweiser Black Crown.
That brew, which made a Super Bowl advertising debut earlier this year, costs about $7.99 for a six pack, compared with about $6.59 for regular Budweiser.
The trend raises the question of whether the relatively high unemployment rate for young adult men is eating into their beer money. The jobless rate for men between 20 to 24 years old stood at 15% in June, almost double the country's 7.6% rate, according to the U.S. Department of Labor.
But for those living high on the hog, witness the "Winston," which in February set a Guinness World Record for the most expensive cocktail. Selling for almost $13,000, the drink included 1858 Croizet cognac ($6,000 per shot), as well as some Grand Marnier Quintessence ($800 per bottle) and chocolate nutmeg dust.
Follow Aimee Picchi on Twitter at @aimeepicchi.
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