More Criticism, Less Consumption : Alcohol Under Attack by ‘New Temperance’

At Bullfeathers in Washington, Gordon King now features a variety of mineral waters, promotes fancy “virgin” cocktails and sells freshly squeezed orange juice for $2 a glass--hardly the traditional libations associated with Capitol Hill watering holes.

King is adjusting his beverage menu to what he perceives as a “major national trend” toward moderation in the consumption of alcoholic beverages. Some in the business have labeled it “the new temperance.”

The same shift is evident at Bobby McGee’s USA, operator of 16 Bobby McGee’s Conglomeration dinner houses in California, Arizona, Hawaii and Texas. While the Phoenix-based company has managed to keep beverage sales at 40% of revenue, a decline in sales of alcoholic beverages has been made up only by increased consumption of no-booze drinks.

Beverage industry figures bear out what these restaurateurs have found in their own houses: As Americans continue to pay unprecedented attention to nutrition, diet and health--and enact more stringent drunk-driving laws--they are moderating their drinking and turning to non-alcoholic beverages, especially soft drinks but also bottled waters.

For the first time in a generation, Americans last year consumed less wine, beer and spirits than the year before. Distilled spirits experienced their third straight year of declining consumption, slipping 1.4%.

Leading the decline among alcoholic beverages were whiskey and other “brown goods,” as the industry labels Scotch, blended whiskey and bourbon.

As recently as 1980, whiskey was what one beverage newsletter, Impact, called “the undisputed king of the hill.” Americans drank more whiskey than table and dessert wines, vermouth and sparklers combined. But since then, whiskey sales tumbled 26% while the table-wine market doubled and today is more than twice that of whiskey. Meanwhile, sales of “white goods” (such as vodka and light rum), which also have overtaken whiskeys, remained flat last year.

Beer sales fell 0.61%, marking the first such drop since 1957, the Impact newsletter noted, following several years of a declining growth rate. Even wine sales managed to increase last year only because of spectacular sales of the fizzy, sweet new wine coolers. While wine showed a 5% increase, it would have declined 1.2% if wine cooler sales had been excluded.

For the distilled-spirits business, at least, the odds for reversing the downward trend are dim: The federal excise tax on such beverages will increase by 19% on Oct. 1, adding about 50 cents to the price of a typical bottle. The levy on beer and wine, already much lower, is unaffected. Federal taxes thus will represent 30% of the price of spirits but only 6% for beer and 1.5% for wine.

Buffeted by that fiscal fact of life and reduced alcohol consumption, companies in the booze business have started fighting among themselves. The curious intramural battle began last spring when the House of Seagram, an old-line purveyor of liquor, argued that typical portions of wine, beer and liquor contain the same amount of alcohol. Seagram compared 12 ounces of beer, 5 ounces of wine and 1 ounces of liquor.

“It’s time America knew the facts about drinking,” Seagram declared in launching its advertising campaign ostensibly supporting moderation in the consumption of alcohol.

Wine makers uncorked a counterattack, arguing that Seagram’s depiction of a “typical” cocktail’s alcohol content understated the distiller’s own recommended dose by at least a quarter of an ounce.

While the federal Bureau of Alcohol, Tobacco and Firearms also objected to the ads as promoting consumption of spirits, last month the federal agency accepted Seagram’s contention that the drinks mentioned do in fact contain “equivalent” amounts of alcohol.

Wine makers later were able to prevail on the bureau, however, to restrain Seagram from claiming in future ads that the physiological and psychological effects of wine, beer and liquor are equivalent.

Wine Makers Disagree

To wine makers, Seagram’s “moderation” campaign is little more than an attempt to win back a declining market by making all forms of typical alcoholic beverages appear “equivalent” in terms of their abilities to intoxicate. Competitors suspect that Seagram also has another agenda and another audience in mind.

“The next thing you know,” said Robert P. Hartzell, president of the California Assn. of Winegrape Growers, “Seagram’s will try and tell us a bottle is a bottle--and they should all be taxed equally.”

The Washington-based Center for Science in the Public Interest seeks to do just that--and more. First, the center hopes to persuade Congress to double the levy on spirits to $25 a gallon. Then it hopes to impose a tax on beer and wine that is equivalent to that levy in terms of their lesser alcoholic content.

The tax on beer would be raised from the present 29 cents a gallon to $2.25, and on wine from 17 cents a gallon to $5.80. Doing so, the center estimated, would generate a net increase in tax revenue of $11.8 billion per year.

The “equivalency” debate highlights the hard times that have befallen the alcoholic-beverage industry as a whole. Not since Prohibition has it faced such a hostile sales environment, concludes the 1985 survey of beverage trends conducted by Impact.

“The problems faced by the alcoholic beverage industry arise from social factors which are ultimately beyond the industry’s control,” the New York newsletter observed.

Impact’s survey attributed some of the decline to “highly vocal campaigns” waged by such groups as Mothers Against Drunk Drivers (MADD) and Stop Marketing Alcohol on Radio and Television (SMART) that have encouraged legislative action discouraging the consumption of alcohol. It noted that:

A growing number of states, including Massachusetts, Ohio and Michigan, have banned or tightened regulation of so-called happy hours, which typically promote drinking by offering discounted prices, such as two drinks for the price of one.

Congress has encouraged a national minimum drinking age of 21 by threatening to withhold federal highway funds from states having lower minimums.

Many states have increased penalties for drunk driving, including a mandatory jail term on a first offense.

Court decisions in recent years have encouraged passage of laws that hold bar operators liable for damages caused by intoxicated customers.

Finally, SMART, a coalition spearheaded by the Center for Science in the Public Interest, has gathered more than a million signatures in support of its proposal to either ban alcohol ads on the air or require stations broadcasting them to offer equal time for so-called counter ads.

Already, Rep. John Seiberling (D-Ohio) has introduced legislation (HR 2526) requiring counter ads, and the center intends to mobilize its petition signers into a grass-roots lobby in support of such a bill.

The alcoholic-beverage industry also has had to confront Americans’ changing tastes, an attitude that has stimulated demand for diet soda, decaffeinated coffee, skim milk, light beer, fruit juice and bottled water, Impact reported.

Soft drinks have adapted so successfully to the taste for fewer calories that last year they surpassed even water as America’s most consumed beverage.

Soft Drink Boom

“Soft-drink companies have utilized market segmentation to produce not only a range of products with certain attributes, like orange flavor, for example, but also a whole range of products without certain attributes, like salt, calories, caffeine, sugar and now saccharin,” according to Impact.

These changing consumption patterns are inspiring a response among market-sensitive restaurant operators and bar owners.

“The only answer is to bring in more customers, not to have people consume more,” said Jerry Murphy, executive director of the National Licensed Beverage Assn. in Alexandria, Va. With “happy hours” illegal or in disfavor, he said, many outlets are offering food promotions instead and featuring low-alcohol or no-alcohol drinks.

According to a survey by Nation’s Restaurant News, most operators are managing to maintain beverage sales by catering to their clients’ changing tastes. Still, 26% of the respondents said sales of wine, beer and spirits declined.

Gordon King said beverage sales at Bullfeathers traditionally contributed half of the house’s $4 million in annual sales but have slipped recently to about 45%.

He attributed some of the slippage to what he thinks will be a temporary chilling effect of tougher enforcement of drunk-driving laws. This year, beverage sales, which plunged 20% in 1984, are on the upswing as Bullfeathers stresses so-called virgin drinks, fresh fruit juices and mineral waters.

On the other hand, he said, while Bullfeathers’ typical patron may be consuming less, he is showing more willingness to trade up. That’s true, too, at Bobby McGee’s outlets, said Executive Vice President John Schwimmer.

Nationally, this trend is visible in “We Proudly Pour . . . “ promotions of higher-priced premium “wells”--the stocks from which bartenders mix drinks for customers who don’t specify a specific brand.

But the alcoholic-beverage industry, worried by the economic effects of “the new temperance,” is trying to make the best of a difficult situation.

The Distilled Spirits Council of the United States, the industry’s lobbying arm, has launched a national “moderation” campaign, which the Seagram “equivalency” ads support. Moderation , as the council defined it in a position paper, “is a practice--the number of drinks consumed--not a beverage type. . . . No type of alcohol can be considered more ‘moderate’ than another.”

The council’s message obviously strikes at the heart of the wine industry’s strategy to position wine as “the beverage of moderation.”

The wine makers agree that no alcoholic beverage, including wine, is safe for either alcoholics or motorists. “Certainly, any alcoholic beverage can be abused if consumed to excess,” Hartzell said.

But wine makers remain adamant that their product possesses special digestive qualities that buffer the absorption of its alcohol into the bloodstream, and they cite a bibliography of 41 medical and scientific studies to support that contention.

“Alcohol use and abuse are serious and very complex issues--certainly far more complex than the . . . Seagram ad conveys,” Hartzell argues.

U.S. ALCOHOLIC BEVERAGE CONSUMPTION In millions of gallons

1960 1970 1975 1980 1981 1982 1983 Beer 2,737 3,806 4,659 5,515 5,639 5,651 5,698 Wine 164 267 368 479 505 514 528 Distilled Spirits 240 388 446 452 456 444 440

1984 Beer 5,666 Wine 552* Distilled Spirits 434

*Includes 37 million gallons of wine coolers Source: Impact Databank