One nugget that stood out to me from last class was Jessica Kogan's comment about promoting Cameron Hughes during the 2016 election. She noted that social crises present optimal times to do a massive marketing push for adult beverages--in a bipartisan manner, of course.
Intuitively, this strategy made sense to me. If people are stressed and need a release, and alcohol can take the edge off, why not facilitate the happy union of the two?
I was curious, though, if there were research on the relationship between alcohol consumption and broader societal malaise. There unfortunately isn't much written about the topic in the U.S., though there are several reports pertaining to alcohol consumption trends in Eastern Europe, Russia, and Greece. In general, it seems that economic crises don't reduce the amount of alcohol that people buy but do change the type of alcohol they consume. In countries with poorly-enforced regulations, one often sees a significant increase in the illegal trade of alcohol. For countries that are deeply divided but still prosperous, the relationship between alcohol sales and the national level of social angst is still more anecdotal.
That said, there does appear to be a relationship between unemployment and alcohol: the rates of substance misuse and addiction are nearly twice as high for the unemployed as they are for employed workers. Thus, when Cameron Hughes is busily promoting its wares during America's next great social trauma, they might want to remind people to avoid risky drinking.
George--this is such an interesting post! The points about increased alcohol consumption during times of social and economic stress stood out to me, as well. In particular, I was fascinated to learn that people tend to "trade down" in quality with respect to alcohol when they are feeling pinched.
ReplyDeleteYour post also jogged my memory of Jessica's and Alyssa's commentary regarding the wine industry Global Financial Crisis. My career to date has been spent in the financial industry in the wake of the GFC. I have become accustomed to hearing 2008 horror stories from the financial industry, but I was shocked to learn that the GFC was equally devastating for other industries. In fact, I was struck that, in describing the GFC's impact on the wine industry, Alyssa and Jessica repeatedly said, "The world stopped."
I was curious about this emphatic statement, so I looked into the GFC's aftermath on the wine industry. I found an interesting article in The Journal of Small Business Management called: "Export Commitment and the Global Financial Crisis: Tales From the New Zealand Wine Industry." Research shows that economies and industries highly dependent upon exports were severely impacted by the GFC. In particular, the New Zealand wine industry (known for high quality wines and heavily dependent upon exports) was deeply impacted by the crisis, although interestingly, the effects were at a lag. Year-over-year growth was 24% during 2008 and 2009, but declined steeply to just 5% between 2009 and 2010. Yet note: the industry was still growing (albeit at a much slower pace). One theory is that this slow growth could also be attributed to declining profitability in exports, as wineries flooded the markets with bulk wine and grapes as international demand for higher quality bottled wine had been declining. Of course, the question is whether declining international demand for bottled wine resulted from endogenous or exogenous factors. Was it the crisis or something else?
Thanks for the insightful post, George. I too was struck by Jessica’s comments that political strife led people to drink more wine, no matter their political affiliation. But unlike you mentioned and we discussed in class, my reaction was not necessarily that alcohol as a substance helps people cope (and this is not only because I felt defensive of what that might imply). Rather, I thought this could be viewed as another example of the lipstick effect: “the theory that when facing an economic crisis, consumers will be more willing to buy less costly luxury goods,” like lipstick (Wikipedia). This theory was first introduced during the Great Depression and has been revisited in more recent decades. During a stressful time, people are willing to spend money on things that make them feel good. Having a nice glass (or two) of wine is a way to “treat yourself” when you are stressed, much as a woman might buy lipstick to make herself feel more beautiful if life is otherwise overwhelming.
ReplyDeleteSo this makes me wonder: how do we separate these two critical characteristics of wine, the luxury versus the chemical effect? How do we know whether people are buying it because they get a high from purchasing and experiencing a luxury good, or because it is an alcoholic substance that has a direct chemical impact on their brain? What weight do we put on each of these qualities? To me, it seems very hard to separate the two, and I think we should keep that in mind as we consider all economic impacts, whether related to sociopolitical strife or otherwise.