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Oregon State Economist's presentation to the Oregon Liquor Control Commission on demand for alcohol, employment in the broader industry and Washington's experience post-privatization. Examining trends by age, income, occupation, and city size.
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OregonEconomic and Demographic
Determinants of the Demand for
Alcohol
Spending on Alcohol Is Influenced
by the Business Cycle
-10%
-5%
0%
5%
10%
15%
20%
1970 1975 1980 1985 1990 1995 2000 2005 2010
Spending on spirits for off-premise consumption
GDP
-10%
-5%
0%
5%
10%
15%
20%
1970 1975 1980 1985 1990 1995 2000 2005 2010
Spending on alcohol at eating/drinking establishments GDP
3
Consumer Spending Will No
Longer Drive Growth
25%
30%
35%
40%
45%
50%
1950's 1960's 1970's 1980's 1990's 2000's 2010 to 2020
Gross Domestic Product
Consumer Spending
Real spending and output, % change by decade
Exposure to Consumer Spending
4
0%
2%
4%
6%
8%
10%
12%
Mo
rro
w
Wh
eele
r
Polk
Co
lum
bia
Lake
Jeff
erso
n
Gra
nt
Cro
ok
Lin
n
Har
ney
Do
ugl
as
Yam
hill
Um
atill
a
Jose
ph
ine
Wal
low
a
Un
ion
Mar
ion
Mal
heu
r
Kla
mat
h
Bak
er
Cla
ckam
as
Co
os
Was
hin
gto
n
Lan
e
Ben
ton
Cu
rry
Ave
rage
Was
co
Jack
son
Gill
iam
/Sh
erm
an
Tilla
mo
ok
Des
chu
tes
Mu
ltn
om
ah
Ho
od
Riv
er
Lin
coln
Cla
tso
p
Leisure & Hospitality Employment, % share of population
Drinking is Discretionary
5
0.5%
0.6%
0.7%
0.8%
0.9%
1.0%
1.1%
0
200
400
600
800
1000
1200
Allconsumer
units
Lessthan
$5,000
$5,000to
$9,999
$10,000to
$14,999
$15,000to
$19,999
$20,000to
$29,999
$30,000to
$39,999
$40,000to
$49,999
$50,000to
$69,999
$70,000to
$79,999
$80,000to
$99,999
$100,000to
$119,999
$120,000to
$149,999
$150,000and
more
Spending on Alcohol Increases With Household Income
Average annual spending on alcoholic beverages (Dollars, Left)
Share of total spending (right)
Rural Areas Have Not
Improved Until Recently
6
Mid-Sized Cities Drink the
Most
7
0.6%
0.7%
0.8%
0.9%
1.0%
1.1%
0
100
200
300
400
500
600
All Consumer Units
Outside urban area
Less than 100,000
100,000 to 249,999
250,000 to 999,999
1,000,000 to 2,499,999
2,500,000 to 4,999,999
5,000,000 and more
Average annual spending on alcohol (left)
Share of total spending
Missing Rungs on the Income Ladder
Recent Oregon Job Gains By Occupation
8
$0 $20,000 $40,000 $60,000 $80,000
Management
Healthcare Practitioners
Legal
Arch/Eng
Comp/Math
Biz/Finance
Scientists (including Social)
Construction
Teachers
Protective Service
Install, Maint, & Repair
Arts, Design, Ent
Community Service
Admin Support
Production
Transp & Material Moving
Healthcare Support
Sales
Bldg Cleaning & Maint
Agriculture
Personal Care
Food Prep
Median Wage by Occupational Group, 2012
-10% 0% 10% 20%
Job Growth 2010-2012Total: 2.6%
Alcohol Spending Across
Occupations
9
0.6%
0.7%
0.8%
0.9%
1.0%
1.1%
0
100
200
300
400
500
600
700
800
All otherConstruction workers & mechanicsService workers RetiredOperators, fabricators and laborersManagers & professionalsTechnical, sales and clerical workersSelf-employed
Average annual spending on alcohol (left)
Share of total spending
OregonDemographics
Deaths Now Outnumber Births
In Many CountiesW
ashin
gto
n
Bento
n
Jeff
ers
on
Morr
ow
Malh
eur
Deschute
s
Lane
Lake
Um
atilla
Dougla
s
Yam
hill
Lin
n
Kla
math
Marion
Cla
ckam
as
Cro
ok
Colu
mbia
Ore
go
n
Harn
ey
Polk
Jackson
Wasco
Unio
n
Coos
Till
am
ook
Baker
Wallo
wa
Gra
nt
Josephin
e
Multnom
ah
Cla
tsop
Curr
y
Hood R
iver
Lin
coln
Gill
iam
Sherm
an
Wheele
r
0%
50%
100%
150%
200%
250%
300%
350%
1980 2010
Ratio of Births to Deaths: Oregon Counties
Migration Matters
12
Alcohol Spending and Age
0.50%
0.60%
0.70%
0.80%
0.90%
1.00%
1.10%
1.20%
0
100
200
300
400
500
600
Allconsumer
units
Under25
years
25-34years
35-44years
45-54years
55-64years
65-74years
75 yearsand older
Average Annual Spending on Alcohol (Left)
Share of total spending
Age-Based Alcohol Sales
Forecast
0.82%
0.84%
0.86%
0.88%
0.90%
0.92%
0.94%
345
350
355
360
365
370
375
380
385
390
395
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Estimated Average Annual Volume of Alcohol Sales Based on Oregon Age Mix
Estimated Share of Spending on Alcohol Based on Age Mix
OregonOregon’s Alcohol Cluster
Local Employment Trends Buck
the RecessionIncluded
• Breweries (NAICS 31212)
• Wineries (NAICS 31213)
• Distilleries (NAIS 31214)
• Beer & Ale Wholesalers
(NAICS 42481)
• Wine & Alcohol Wholesalers
(NAICS 42482)
• Beer/Wine/Liquor Stores
(NAICS 44531)
• Drinking Places (NAICS 7224)
Missing
• Brewpubs that are classified
as Restaurants
• Grocery stores, other places to
purchase beer/wine
• Likely do not impact the trend
much, but certainly the total
employment count.
16
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Alcohol Cluster EmploymentBreweries, Wineries, Distilleries, Beer/Wine/Alcohol
Wholesalers, Beer/Wine/Liquor Stores, Drinking Places
United States Oregon
+4,000 Jobs
+51,500 Jobs
OregonPrivatization: Washington’s
Experience
Customers Feel the Squeeze
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
-5%
0%
5%
10%
15%
20%
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Washington Liquor Sales, Retail
Year-over-Year Growth (lhs) Average Price per Liter (rhs)
Privatization
Retail customers have faced a 10% to 15% price increase.
Consumers purchased more post-privatization, likely due to the novelty of being able to purchase anywhere. Flat sales since novelty bump.
Source: Washington State Economic and Revenue Forecast Council
Restaurants and Their
Distributors, Less So
Restaurants
have faced less
of a price jump.
Restaurants
stocked up
considerably
prior to
privatization.
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
-30%
-20%
-10%
0%
10%
20%
30%
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Washington Liquor Sales, Restaurant
Year-over-Year Growth (lhs) Average Price per Liter (rhs)
Privatization
Source: Washington State Economic and Revenue Forecast Council
Increased Border Sales Post
Privatization
June-October 2012 Sales Relative to June-October 2011
21
For More Information
Standard Contact:
155 Cottage Street NE
Salem, OR 97301
(503) 378-3405
www.oregon.gov/das/oea
Social Media:
oregoneconomicanalysis.wordpress.com
@OR_EconAnalysis