Regular readers are aware that the “Heisenberg Effect” is showing up everywhere you look.
Earlier this month, I noted that my abstention from alcohol (beginning in late November) seems to be having a knock-on effect in the US beer market. As I put it:
There are market consequences when an enormous, previously reliable source of insatiable demand suddenly dries up.
Then, just three weeks later, we got further evidence that a dramatic shift in the Heisenberg consumption mix is rippling through markets and triggering profound shifts in supply/demand when the National Coffee Association reported that coffee consumption recently soared to its highest level in three years on “consumer enthusiasm for gourmet coffee varieties, exponential growth in single-cup brewing, and dramatic increases in espresso- based beverages.”
Well it was just a matter of time before all of this came full circle and hit the market most affected by the great Heisenberg sobriety push: liquor.
On Thursday, Goldman threw in the towel, cutting Diageo to “Sell” citing a “US slowdown.”
One of the problems: plunging demand for scotch and cocktails…
Alas, I cannot confidently predict a return to the glory days anytime soon.
Yours truly on a Friday,
Price elasticity of demand and substitutes … what gives???
Prices of craft beer and single malt (two items in a market basket I closely track) seem to be defying gravity in my geographic locale … over the past couple of years or so, the retail price of a 12-pack of craft brew has about doubled and shows no sign of mitigating … single malt Scotch pricing doesn’t seem to have been quite as ‘hockey stickish’–however, has still shown dramatic and persistent price inflation …