Want to drink for cheap this summer? Stay home

Budget drinkers might want to skip the bar and raise a glass at home this summer.

Alcohol prices are up 2% since last year, according to the consumer price index for April, but beer and hard liquor served at bars and restaurants saw steeper hikes, jumping 4% and 2.7%, respectively.

The booze squeeze comes as households rethink what they spend on food and drinks at home versus out and about. With grocery prices 1.1% higher than a year ago but restaurant checks up a steeper 4.1%, many eateries are seeing slower demand as diners balk at climbing menu prices.

Consumers have long been used to paying a premium for drinks outside the house, but the inflation gap is stark heading into the summer: Prices for distilled spirits and wine consumed at home each rose just 0.8% from April 2023 to last month. Liquor prices at home fell 1% between March and April — a period when alcohol prices overall have been largely flat or declining slightly.

Even so, costs for alcoholic beverages are 15% higher than before the pandemic, federal data shows.

“That’s quite a lot,” said Neil Saunders, managing director of the retail consultancy Global Data. “Consumers are spending or having to pay a lot more for alcoholic beverages than they were historically. That is obviously a very negative thing.”

To help offset the blow at bars and restaurant tables, beverage-makers are pushing more ready-to-drink (RTD) cocktails.

Bud Light’s parent company, AB InBev, told investors in its latest earnings call that its canned margarita and vodka seltzer brands “continue to grow strongly.” Even juice- and jam-maker Welch’s is getting in on the action, unveiling a line of canned cocktails last week.

Premixed cocktails were the fastest-growing spirits category last year, rising nearly 27% to hit $2.8 billion in revenue, according to the Distilled Spirits Council of the United States (DISCUS). The RTD category was the alcohol industry’s only segment to show both positive dollar and volume growth over the past year, NielsenIQ found in research released last month.

“Compared to traditional categories like beer, wine, and spirits, RTDs are experiencing explosive growth,” Nielsen said. “This is due to factors like convenience, variety, and portability, while targeting specific consumer need-states and occasions.”

Within the category, spirit seltzers — distinct from malt seltzers, hard sodas and hard teas — are growing fastest.