The growth of consumption of alcohol
Last year the US Dollar reached a 14 year high. As a result, the imported alcohol became cheaper for the importers and thus, imported wines, beer and spirits were widely available in stores. Figures show the imports of alcohol last year reached $17 billion, thus rising by 6% making it one of the biggest increases in last two decades. Also, this trend will also impose a positive influence on the wholesale online store in Australia.
The influence on international and domestic business
The consumption of foreign liquor has increased drastically since last year in spite of the US currency gaining strength last month. It is good news for wholesale buyers, but definitely, this has taken a toll on the domestic alcohol producers.Besides, domestic retailers and small business also have been influenced greatly. Kentucky whiskies and Californian wines which are all domestically produced are facing stiff foreign competition. Reports suggest that the retail sales only saw an increase of 2% last year. The exports like the domestic demand have fallen, thus affecting the local producers more. Additionally, the producers should take advantage of the Dollar Strength to export more goods to gain more benefits.
How retailers response to it
The importers are taking advantage of the situation and are expanding stocks. Wines from Spain are available at 40-50% lesser prices, and this has increased their profits. The earnings have increased for the importers and retailers also because the advantage of reduced prices has not been passed on to consumers. As per the research statistics available, the prices of alcohol increased last year. The reason given by the retailers is that they are not comfortable reducing the price as the dollar might not be so high in a few months or this situation might change, and then increasing the price for them will be a Herculean task and will not be easily accepted by the consumers. They are saving the profits and are also using it to increase stocks of the more expensive and higher quality variants. In spite of the prices being same or greater, the consumption of imported alcohol has increased, and the reason behind is the availability. There is a better variety available in stores, and also the supply is higher as well, giving a wider choice to the consumers.
Bad news due to the new policy
The situation though has benefitted everyone involved, but this might not be the case for long. The reason behind this is that the Donald Trump government might levy an import tax of 20% on countries like Mexico besides the others. The strategy of this administration is “America first” and “buy American”, and if they increase the import tax, the prices of imports of wholesale alcoholic beverages will increase which will bring back the higher process and less selection at the retail shops. Till the policy does not come into effect the importers for sure can take advantage of the situation and also the consumers are happier with the availability of better alcohol. A lot of other products, like cheese and coffee coming from other countries, have also witnessed increased demand from the US economy. This trend is very different from what the US economy had seen the last 10-15 years when the dollar was weak, and the domestic products were preferred and were cheaper than their imported counterparts.