Soaring inflation has made life harder for most of the world — but some people are still smoking expensive cigarettes and doing shots of fancy tequila. READ:
From British American Tobacco to Tanqueray gin maker Diageo, cigarette and alcohol companies cited strong demand for high-end products people can’t seem to shake when they reported results last week. Far from buying cheaper alcohol and tobacco, shoppers are instead trading up.
Diageo, the world’s biggest spirits maker, last Thursday beat full-year sales forecasts, helped by demand for “super premium” brands such as Don Julio tequila, Johnnie Walker Blue Label, and Bulleit Bourbon. Bottles of Don Julio start at roughly £40 onand go up into the hundreds, as do several special edition versions of Johnnie Walker Blue Label.
“There’s a fundamental difference in how consumers think about something like baked beans versus a cocktail when you’re celebrating a special occasion,” Ms. Chandrashekar said. “As consumer budgets come under pressure, we may see some downtrading, so still buying a bottle of spirits, but maybe the next price tier down,” Ms. Frikkee said.
Meanwhile, sales of luxury tobacco products — cigars, cigarillos, and smoking tobacco — are expected to rise 7.5% to over $95 billion, according to Euromonitor. “Consumers are sticking much more with their brands and that’s why we didn’t see downtrading. We see premium growing in a lot of places,” Mr. Bowles said.
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