WSJ What’s News – Alternative Indicators: What Pinched Consumers Are Buying at the Liquor Store

Date: November 19, 2025
Host: Alex Osola (Wall Street Journal)
Guests: Nadine Sarwat (Bernstein, Director & Equity Research Analyst), Spencer Jacob (WSJ Investing Columnist)

Episode Overview

This episode is the finale of a four-part series on “Alternative Economic Indicators,” exploring how changes in U.S. liquor store shopping—specifically, a noted surge in small-format liquor bottle sales—shed light on broader consumer behaviors in a time of financial pressure. Host Alex Osola investigates why Americans are squeezing their spending, what it means for the liquor industry, and how this fits into the larger economic landscape.

Key Discussion Points & Insights

1. Trend: Shift Toward Smaller Liquor Bottles

• Big Brands See ‘Small Format’ Growth: Liquor giants Diageo and Brown Forman report increased sales in smaller bottles (50ml, 100ml, 375ml), despite overall declines in U.S. liquor sales.
• Quote:
  • Diageo CEO:

    "I think the small format that we have of the 50 CL in the Don Julio 1942 has been doing amazingly well... because people are able to use that from an affordability play or a cash outlay play." (01:03 – 01:28)

  • Brown Forman CEO:

    "...we have noticed recently...small sizes are driving momentum and share in the US Market." (01:34 – 01:47)

• Widespread Trend: Nadine Sarwat confirms this rising preference for smaller bottles is observed across all major spirits producers and even in beer, indicating broad changes in consumer behavior. (03:37 – 04:19)

2. Drivers Behind the Trend

• Economic Pressure, Not Down-Trading:
  • Even as wallets tighten, consumers prefer to maintain brand quality, choosing to buy less rather than "down-trading" to cheaper brands as happened during previous downturns.
  • Quote (Sarwat):

    "The consumer today is saying I still want to purchase premium brands. I do not want to down trade the quality or type of brand that I am buying. I'm just going to buy less." (04:24 – 05:21)

• Unprecedented Pattern:
  • Unlike the Great Financial Crisis, when people chose cheaper brands, today people stick with their favorites but purchase smaller quantities—a "break in the pattern." (05:24 – 06:06)
• Pressure Across Income Levels:
  • Economic pinch spreading from low to middle-income Americans—reflected in spending patterns and affirmed by both sales data and consumer surveys. (08:04–08:54)

3. Other Contributing Factors

• Health & Wellness Trends:
  • While moderation is part of the story, the size discrepancy suggests economics play a bigger role, as only large-format sales are dropping significantly.
• Changing Social Habits:
  • Some of the trend could stem from different ways of socializing and showing up to gatherings with premium—albeit smaller—bottles.
• Broader Economic Challenges:
  • Tariffs, concerns about inflation, and even immigration enforcement affecting certain brands’ sales (notably in beer geared towards Hispanic consumers).
  • Quote (Sarwat):

    "A lot of Hispanic consumers for fear of immigration crackdowns are not shopping and socializing. So that is clearly another factor that is driving weakness in alcohol from the beer perspective." (09:44 – 10:39)

4. Bigger Picture: Piecing Together Economic Indicators

• K-Shaped Recovery:
  • Wealthy consumers maintain spending, buoyed by stock and housing wealth, while everyone else feels notably pinched.
• Significance of Small Bottles in Context:
  • Surging small-format sales seen as a microcosm: Americans want to preserve quality-of-life choices, but are forced to cut back in volume.
  • Quote (Jacob):

    "You have pockets of extreme strength... and then you have general moderation to even weakness in almost everything else. Normal people... are feeling a bit anxious, a bit pinched for various reasons.” (11:43 – 12:11)

  • The top 10% of earners now drive about half of all consumer spending:

    "...if you look at the top 10% by income or by wealth versus the other 90%, about half of personal consumer spending is happening from that 10%. Everyone else is the other half." (12:24 – 13:07)

Notable Quotes & Memorable Moments

• Alex Osola’s personal reflection on "inner bargain hunter" sets a relatable tone.

  "I'm always tempted to buy those big bottles of liquor. Less money per ounce, right? ...But even so, I usually don't get them because I get sticker shock." (00:16 – 01:03)

• Sarwat: "Death by a thousand cuts" vividly describes extended inflation’s impact on consumers' ability to enjoy former staples. (04:24)
• The "billion dollar question": Sarwat’s phrase for whether these shifts are temporary or a sign of something structural. (08:04)

Timestamps for Key Segments

• 00:16 – 01:47 – Introduction, anecdotes, and recent earnings call quotes from Diageo and Brown Forman CEOs.
• 03:37 – 06:06 – Nadine Sarwat details the surge in small-format sales and explains it as unprecedented behavior.
• 08:04 – 09:34 – Discussion of consumer health, spending pressure, and how different income groups are affected.
• 09:44 – 10:39 – Exploration of other factors (e.g., immigration, tariffs) impacting alcohol sales.
• 11:43 – 13:07 – Spencer Jacob connects the liquor market indicator to the broader theme of economic divergence and spending inequality.

Conclusion

This episode underscores how close scrutiny of liquor sales, particularly the surprising growth of smaller bottles, serves as an "alternative indicator" of American economic anxiety and resilience. Instead of sacrificing brand and quality, more consumers choose to cut back quietly, one bottle size at a time—a microcosm of how many Americans are navigating today’s bifurcated economy. The discussion puts these subtle economic signals in context alongside other unconventional indicators, revealing both the strengths and vulnerabilities running through the current U.S. economic landscape.