Alternative Indicators: What Pinched Consumers Are Buying at the Liquor Store

Summary of Alternative Indicators: What Pinched Consumers Are Buying at the Liquor Store

by The Wall Street Journal

15m•November 19, 2025
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Overview of Alternative Indicators: What Pinched Consumers Are Buying at the Liquor Store

This episode of The Wall Street Journal’s What's News (part 4 of the Alternative Indicators series) examines a surprising retail trend: growth in sales of small-format liquor bottles (50 mL, 100 mL and 375 mL) even as overall U.S. spirits volume is down. Through interviews with Bernstein analyst Nadine Sarwat and WSJ columnist Spencer Jacob, the show uses this micro-behavior as a window into consumer finances and the broader, uneven shape of the U.S. economy.

Key takeaways

  • Small-format bottles (50 mL “nips”/airplane bottles, 100 mL, and 375 mL) are growing across major spirits companies while standard 750 mL sales are declining.
  • The rise in minis is driven primarily by financial pressure: consumers want to keep buying premium brands but buy smaller quantities to save money.
  • This behavior differs from past downturns (e.g., 2008): instead of down-trading to cheaper brands, consumers are buying less of the same brands.
  • The trend is an indicator of a “K-shaped” economy: pockets of strong spending (wealthy, tech/AI-related sectors) alongside broader moderation or weakness for low- and middle-income consumers.
  • Other factors affecting alcohol demand include health-and-wellness trends, immigration-related reductions in socializing among some groups, and local demographic shifts for certain premium imports.

What was discussed (details)

  • Industry observations: Executives at Diageo (Johnnie Walker, Smirnoff, Don Julio) and Brown‑Forman (Jack Daniel’s) noted rising momentum in smaller bottle formats on earnings calls.
  • Sizes in focus: 50 mL, 100 mL and 375 mL — all smaller than the standard 750 mL bottle.
  • Analyst view (Nadine Sarwat, Bernstein):
    • This is an unprecedented pattern in her six years covering the sector.
    • Consumers are experiencing “death by a thousand cuts” from years of inflation; they prefer to keep premium brands but reduce volume.
    • BEA data suggest alcohol’s share of consumers’ wallets is flat to slightly up versus 2019 — but people are getting less volume for each dollar.
  • Alternative explanations considered:
    • Health and moderation trends would depress all bottle sizes equally, but they don’t — suggesting affordability is the main driver.
    • Immigration concerns have reduced shopping and socializing among some Hispanic consumers, hurting certain beer imports.
    • Tariffs and other macro forces were mentioned as possible contributors but not presented as primary drivers here.
  • Survey signal: Industry consumer surveys (September referenced) showed health/wellness was the top reason to cut back, with economic constraints a close second — especially among younger Americans.

Why this matters as an economic indicator

  • Small-bottle sales are a low-cost coping mechanism that signals wallet stress earlier than aggregate sales dollars might show.
  • The behavior reveals that consumers are protecting brand preferences (not trading down) by reducing quantity — a sign of persistent inflationary pressure on everyday budgets.
  • It illustrates consumption divergence: top-income consumers account for a disproportionate share of spending and remain relatively resilient, while lower‑ and middle-income groups show strain.

Implications and recommendations

For investors/economists:

  • Track unit sales by bottle size (50/100/375 mL vs 750 mL) as a near-real-time indicator of consumer pressure among lower- and middle-income cohorts.
  • Monitor BEA consumption shares, consumer sentiment (age/income splits), and spending concentration among the top 10% to assess the breadth of demand.
  • Watch policy signals (dietary guidelines on alcohol) that could alter social norms and consumption over the medium term.

For producers/retailers:

  • Increase focus on small-format assortments and pricing strategies that preserve price per impression (premium branding in a small pack).
  • Target promotions and assortment for budget‑conscious premium buyers rather than assuming a broad down-trade to cheaper brands.
  • Consider marketing and distribution adjustments in demographic pockets (e.g., Hispanic communities) affected by immigration or local social conditions.

Notable quotes

  • Diageo CEO (paraphrase): 50 cL/smaller Don Julio formats “have been doing amazingly well” because they permit consumers to enjoy premium brands at lower cash outlays.
  • Brown‑Forman CEO (paraphrase): Small sizes are “driving momentum and share” in the U.S. market.
  • Nadine Sarwat (Bernstein): “Consumers want to keep the brands that they love, but are going to consume less.” She calls this pattern “unprecedented” compared with previous downturns when consumers tended to down-trade brands.

Context in the series & bottom line

This episode closes a four-part series using alternative indicators (Nevada employment, copper prices, heavy truck sales, and now liquor small-format sales) to read the economy when some normal signals are noisy or delayed. Together the indicators paint a portrait of uneven strength: concentrated booms in some sectors and significant moderation or strain for broad swathes of consumers. Small-bottle liquor sales are a practical early signal of squeezed wallets — consumers preserving brand choice by buying less.