Price Of Alcohol May Soon Increase by 2%

It seems like all alcohol consumers will be paying fairly more than what they are used to. Due to economic conditions and failing markets a new tax hike might be coming soon to raise liquor prices. If you read the alcohol facts that we compiled last week, you will see that more than half (approximately 51%) of what consumers pay for a bottle of spirit goes towards taxes and fees. If the tax hikes are implemented (which we are certain) it is said that New York plans to more than double its beer and wine tax and other states are considering the same to lower the deficit and balance out state budgets.

The US alcohol market has seen a steep decline in sales and the market has rose the least in the last eight years. Pretty alarming. Most states are looking directly to hit the alcohol industry and it is estimated that the retail price of alcoholic beverages might increase by as much as 2% . The alcohol industry however isn’t taking this situation lightly. More taxes means having to increase prices of their products which means consumers will end up paying more without businesses really making any profit. Looking at the current economic situation most consumers might limit their alcohol purchase which is going to hurt the comapnies directly and the economy as well.

The master distiller of Pernod’s Wild Turkey was so aggravated with this decision that he ended up pouring a bottle of bourbon in the State Capitol’s steps. Other companies aren’t taking this situation lightly either. Miller Coors spokesman Peter Marion said that increasing taxes during this economic condition isn’t a wise decision as it will hit the consumers and their purchase behavior will hurt the industry and the economy as a whole.

The alcohol industry has been hit pretty hard by the recession. Pernod, the Paris-based maker of Ballantine’s whiskey and Martell cognac says the first half sales fell 2% in the US and the US sales of Absolut Vodka fell 2% by volume. This tax hike will cause quite a stir among the distillers and as you see it already has. The last time the taxes were increased on alcohols during the last major recession, the volume declined as much as 6% .

The reason for the tax hike is to revive the failing economy and balance out state budgets. We don’t think this will help revive the overall economy by increasing taxes. According to Robertson Williams, senior fellow at the Tax Policy Center

Any federal increase that singled out alcohol producers would only depress demand and would not be consistent with trying to revive the economy

We agree. What do you think? Would you be willing to pay 2% more for your favorite drink? If you are willing to pay the higher prices would you be drinking as often? Please share your thoughts.

credit : 1, 2

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9 Responses to “Price Of Alcohol May Soon Increase by 2%”

1. Lid says:

   February 23, 2009 at 5:34 pm

   No matter the tax hike, unfortunately I will pay. Same thing applies to cigarettes – when they went from $40/carton (in Australia) – to $90 – guess what – still had to have. Luckily we moved here; so much cheaper (alcohol too).
2. TChed says:

   February 23, 2009 at 7:27 pm

   Either they are preemptively trying to avoid what happened in Russia when their economy went to crap (alcohol binging) or they are just capitalizing on it.
3. embee says:

   February 23, 2009 at 10:57 pm

   “The master distiller of Pernod’s Wild Turkey was so aggravated with this decision that he ended up pouring a bottle of bourbon in the State Capitol’s steps”

   So he was so angry that he poured a bottle of cheap whiskey on the pavement? Wow. He must’ve been real mad.

   BTW: I think that’s the first time anyone used “master distiller” and “Wild Turkey” in the same sentence.
4. Stephen says:

   February 23, 2009 at 11:23 pm

   I dont see this being much of a problem. A two percent will barely be noticed by normal consumers. We’re talking 2 dollars on a 100$ bottle of wine 1 dollar on a 50$ handle and 40 cents on a 20$ fifth. The only people this will affect are those buying in bulk for bars/clubs/restaurants but they’ll jsut tack an extra nickle/dime onto drinks. Again if you go out and your drink costs a dime more are you really going to not order one.
5. It’s Time To Play The Game…. | Laknet says:

   February 23, 2009 at 11:54 pm

   [...] I’ll end this ridiculously short entry with a link and a warning…DRINK MORE ALCOHOL!  SUPPORT YOUR ECONOMY! [...]
6. Rob says:

   February 24, 2009 at 12:59 am

   Allegheny County, PA instituted a 10% tax on all poured drinks containing alcohol, including beer, in addition to the existing 7% sales tax. Here’s a quote from the county treasurer website:

   “All sales of alcoholic beverages, including mixed drinks, wine and beer (opened or unopened) are taxable transactions under law. There are no exceptions to this law as every PLCB licensed establishment is responsible for collecting the tax at point of sale. Purchases from Pennsylvania liquor stores, beer distributors and complimentary alcoholic beverages are exempt from the tax.”

   The tax was meant to create around $2mil in revenue over a period of 5 years, but made quite a bit more than that in the first year, so they dropped it to 7%. The unfortunate lesson is that you can pretty much tax the crap out alcohol, and we’ll still buy it.
7. donna says:

   February 25, 2009 at 2:44 pm

   I dont see this being much of a problem. A two percent will barely be noticed by normal consumers. We’re talking 2 dollars on a 100$ bottle of wine 1 dollar on a 50$ handle and 40 cents on a 20$ fifth. The only people this will affect are those buying in bulk for bars/clubs/restaurants but they’ll jsut tack an extra nickle/dime onto drinks. Again if you go out and your drink costs a dime more are you really going to not order one..
8. Ruby says:

   March 3, 2009 at 5:11 pm

   Either they are preemptively trying to avoid what happened in Russia when their economy went to crap (alcohol binging) or they are just capitalizing on it..
9. It’s Time To Play The Game…. - LakNet says:

   June 11, 2009 at 5:19 pm

   [...] I’ll end this ridiculously short entry with a link and a warning…DRINK MORE ALCOHOL!  SUPPORT YOUR ECONOMY! [...]