The Raleigh News and Observer reported yesterday that top-shelf liquor prices in North Carolina will begin to fall drastically as of August 1, 2009, as the depression crunch continues forcing consumers to opt against buying high-quality liquors. In order to boost sales, brands like Grey Goose are slashing prices competitively as incentives for buyers.

“High-end booze has been taking a sales hit as consumers have increasingly turned to bargain-priced liquor,” wrote journalist Mark Johnson. “Distillers of the good stuff are chopping their prices to hang on to recession-weary customers.”

In reality, “free market in action” may not be the best way to describe this instance of sudden price drops, since the prices of the various available brands themselves aren’t the only factors working against consumers of quality spirits. With economic constraints greatly limiting expendable income, regular consumers and frequent buyers are literally being forced to trade quality for quantity. Therefore, long term effects resulting from prices falling, especially in this case, may not look so good in terms of state revenue.

For instance, last year in North Carolina liquor sales provided more than $235 million to state and local treasuries. End-of-year projections for 2009 are predicting aready that overall sales will remain fixed, as opposed to the steady growth witnessed in years past. In addition, “state alcohol regulators predict that mixed drink sales at bars and restaurants, which carry an additional tax, will be down by as much as $4 million this year, the first decline since 1977,” the News and Observer reported.

Rejoice while you can… if price drops lead to significant losses that continue to affect state economies, a new threat may loom on the horizon: heightened state taxes on the sale of distilled spirits. This, the American Distilled Spirits Council warns, is a bullet that could easily shoot down alcohol’s wavering “recession-proof” status.

Tags: alcohol, depression, economy, recession, revenue