The alcoholic beverage category has proven to be resilient, but not recession proof. Sales were up slightly—at 2 percent, for the 52 weeks ended Sept. 5 compared to the year prior. Wine saw the biggest spike at 5.1 percent followed by spirits (2 percent) and beer (0.7 percent).

Not long ago consumers were looking to trade up and experiment with the hippest new product. This is not the trend anymore. Consumers are increasingly shopping based on price which has helped domestic brands since the price gap between imported and homegrown brands is significant. American vodka and gin, on average, is 50 percent less than imports. Domestic beer is 35 percent less and wine is 25 percent cheaper.

As a result, sales of domestic brands have surged. Domestic wine led the way, growing 5 percent for the 26-week period ended Aug. 22. During the same span, domestic vodka grew 8.1 percent. Domestic beer sales grew 3.2 percent for the 24-week period ended Aug. 22.

Overall, pricing has been flat across all of the categories with certain exceptions in beer category (notably among craft brews). This hasn’t stopped consumers from trading down to private label offerings which are a small, compared to consumer packaged goods, but growing segment within the category. Private label wine and spirits sales were up more than 20 percent and nearly 10 percent respectively, for the 52-week period that ended Aug. 22 compared to the year prior.

These changes in consumer preference have created pressure on retailers to optimize their space. Retailers are reducing their assortments of flavored malt beverages, imported wines and cordials. Instead they are giving craft beers, vodka and mid-range wines ($9 to $15) more attention.

Retailers are benefiting from a shift in consumption behaviors—namely more consumers are drinking at home versus at a bar or restaurant. In April, 68 percent of consumers said they were doing less fine dining. Fifty-nine percent also said they were going to bars than less before.

This shift became highly noticeable last year when share of on-premise dollars fell 3.3 percent for wine, 3 percent for spirits and 1.3 percent for beer, according to the Beverage Information Group (2009 Handbook).

This has prompted a significant increase in off-premise channels adding beer, wine or spirits. The total number locations selling alcoholic beverages grew by 2,392 stores in Aug. 2009 compared to the year prior. Drug (684 locations), convenience stores (637) and mass merchandisers (432) led the way.

On the flip side, the number of U.S. on-premise locations offering alcohol has slipped. There were 944 less bars and clubs and 769 less dining choices. Overall, the number of new locations offering alcohol (on- and off-premise) minus the number of closed locations was a 5,445.

I found myself at our client meetings last week in San Francisco, Seattle and LA, repeatedly making the point that CPGs had been increasing their online ad spend. This was based upon conversations that I’d been having with folks in the CPG space and the intense interest that we’ve been seeing lately from CPGs in online advertising. As I had a few spare minutes today, I checked AdRelevance to make sure that I was right about this. I was relieved to see that online ad impressions among Food and Drug and Personal Care categories had indeed increased by 32 percent over the past 12 months (Oct 06 – Sep 07 compared with Oct 07 – Sep 08). Interestingly, there is a big difference in the growth between the two big subcategories within CPG. In the most recent 12 months, impressions did not grow relative to the same period in the previous 12 months in the food and beverage category. In personal care, on the other hand, impressions grew by 87 percent.

What happened? Well, when we dig into the data, we see that it’s mostly a story about a few big advertisers significantly curtailing their online ad budgets with many others showing modest increases. During the two periods that we measured, Coca Cola’s ad impressions dropped from 276 million impressions to 50 million. Miller Brewing’s impressions dropped from 184 million to 52 million. On the personal care side, though, we saw the big advertisers generally keeping their impressions up.

Is this about personal care, or about food and beverage? I don’t think so. I think that it’s mostly about the immaturity of the media in tough economic times. As one big advertiser pulls back, we’ll see many others plodding along with modest increases in the online ad budgets, reflecting even greater increases in the allocation of ad dollars to the Internet. Given the tough economic climate that many advertisers are going to be operating in, I think that this is the story that we’re going to be seeing for another year or two. Some big advertisers will scale back significantly, a rare advertiser will dramatically shift dollars to the Web, and many others will continue to execute a modest shift of dollars from traditional vehicles to Internet.