Americans have tended to drink less whisky and more wine and bear in the past few years, and that, say liquor industry officials, is a significant indicator of an unhealthy economy.
"When the economy is bad, not as much liquor is consumed, it's as simple as that," said a spokesman for a national organization that monitors the industry. "Since 1973, the rate of growth has declined."
An analyst specializing in the distilled spirits market disagreed, saying the industry has "several problems to overcome.
"The economy is growing modestly, and there is talk that growth in the economy is slowing down," said a Value Line Investment Survey analyst who asked not to be identified. "The economy is not good, but neither is it bad."
Value Line said in a recent publication that "increasing use of marijuana may be another negative factor, especially with the general movement to decriminalize possession of the drug." The analyst also said cocaine may be cutting into the liquor market.
Industry surveys indicate fewer people drink as much as they did in the late 1960s. And many people have decided they'd rather drink cheaper beverages, such as beer and wine.
Distilled spirits manufacturers aren't getting as much return on investment as they'd like and earnings are down, but most major companies plan to boost prices this fall, said the spokesman for the national monitoring group, who also requested ananymity.
People are switching to wines, beer and "white goods" like vodka, gin and tequila, because they can be mixed more readily than whisky, he said. But distillers plan to begin advertising campaigns stressing that "dark spirits" also make good mixed drinks.
Another spokesman for a major distiller said "if you analyze the statements of most of the major companies you begin to realize there has been an attrition of profits, growing each year. We have gone from a 12 per cent return on investment to 7 per cent in five years.
Seagrams said it will boost prices between 6 per cent and 7 per cent to beef up advertising. Liquor manufacfused to raise prices," he said. "Prices turers have been "waiting for Seagrams to announce price increases, and the rest will follow suit," the spokesman for another distillery said.
Roy Stevens, president of Hiram Walker Inc., of Detroit, Mich, said that firm also plans to boost prices.
Stevens said moderate-priced spirits have suffered, but that premium brands, such as Jack Daniels whisky, have flourished.
He said if the major distillers follow Seagrams' move it "would equate to a 10 to 11 per cent increase at the retail bottle shelf rate."