On a scorching Boxing Day in Melbourne’s inner city, Andrew Crompton is busy inside his store, Act of Wine, meticulously placing bottles of prosecco and Yarra Valley pinot noir on display shelves.
The Southbank bottle shop owner is preparing for the lead-up to New Year’s Eve, traditionally one of the biggest weeks for alcohol retailers. But he’s the only employee in the store.
Andrew Crompton owns Act of Wine, a boutique liquor store in Melbourne. Credit: Simon Schluter
Crompton opened the store in 2018, but has recently operated it solo after witnessing a steady decrease in sales in Australia’s liquor industry over the past 18 months.
“I’ve really had to restructure the business and make changes to suit the changing demand and economy … that includes having less staff available to work in the business,” he said.
The Australian retail sector has weathered a tough 2024, with higher interest rates forcing consumers to tighten their belts. But despite consumers forking out $1.3 billion at shopping centres and stores on Boxing Day, the liquor industry is still struggling more than the rest, and the end of the festive season is unlikely to lift spirits.
Australia is one of the world’s wealthiest countries per capita and traditionally has one of the highest spending on alcohol per capita. Bottle shops around the country thrived during the COVID-19 pandemic, with a national surge in alcohol sales.
However, spending on liquor has been trending downwards over the past few years. A key factor behind the decline is changing attitudes among young people.
‘Spend my money on more important things’
Khaléla Romano will be ringing in the new year with friends while watching fireworks, but she won’t be drinking alcohol.
The 23-year-old Queensland university student has elected not to drink on Tuesday evening, admitting she would rather spend her money elsewhere.
“I live with three other people in their 20s and none of us are particularly big drinkers,” she explained. “We don’t really have alcohol in the house.
“A night out or purchasing liquor in general can be pretty expensive … To be honest, I’d rather spend my money on more important things like food, rent or experiences in general.”
According to data from the Australian Institute of Health and Welfare, young people are drinking less and also driving a long-term increase in abstaining from alcohol. From 2007 to 2022–2023, the proportion of people aged 18-24 who abstained from alcohol increased from 13.1 per cent to 23 per cent.
These statistics could reflect the cost-of-living crisis, changing cultural attitudes towards drinking or young people simply turning towards other substances.
The 2024 Alcohol at Schoolies Study found 71 per cent of attendees enjoyed alcohol-free days at the beach, with DrinkWise chief executive Simon Strahan citing a “general shift in terms of younger people’s attitudes towards alcohol”.
Coles’ reported earnings for the liquor division slid 6.5 per cent in its latest full-year results.Credit: Eamon Gallagher
Crompton noted a key difference in attitudes towards alcohol between younger and older generations, noting customers under the age of 27 leaned towards more health-conscious and lower-alcohol options, especially for celebrations like New Year’s Eve.
“Younger people tend to reach for the RTD [ready-to-drink] options that are on the more natural, low-sugar, gluten-free, vegan-friendly side of things,” he said.
Meanwhile, older generations were more inclined to purchase Australian sparkling wine and champagne to ring in the new year, he said.
“Older people are far more likely to spend more, both on quantity of purchasing and quality in dollar value.”
Crompton said the lower demand for alcohol also stemmed from the current cost-of-living crisis which had compelled consumers to limit their discretionary spending.
“Alcohol consumption is being lowered to match people’s lower budgets … so people end up buying less,” he said
Crompton said his Southbank store was across from a construction zone and was being impacted by road closures, concluding his experience compared to other liquor stores might be “more pronounced”.
General manager Tom Ryan has worked at Oak Barrel – an independent bottle shop in Sydney – for nearly 2½ years and has witnessed a decrease in sales across all metrics.
Spending on liquor has been trending downwards over the past few years.Credit: Simon Schluter
“We’ve noticed a decrease in overall sales numbers, volume, cart sizes as well as the amount people are spending,” he said.
“No one has any expendable income … older generations have more cash to splash but at the same time, people who were buying a $150 or a $200 bottle of champagne may have decreased this year to something closer to $100.”
Ryan said independent stores across the liquor industry were “really hurting”.
“A lot of people now, if they are going to drink regularly, which many people aren’t, they’re picking up something cheap and cheerful at the big guys,” he said. “I know sellers like Dan Murphy’s are recording losses ... but if they’ve lost a finger, everyone else has lost their hands.”
Investors tip large liquor retailers for a rocky 2025
Independent bottle shops aren’t the only liquor stores suffering in 2024.
In August, ASX-listed Endeavour – the biggest liquor store and pub owner by sales in Australia– flagged expected softer market conditions going into the new year. Sales over July and early August at its outlets (Dan Murphy’s and BWS) grew a meagre 0.6 per cent.
Investors have tipped a rocky 2025 for large liquor retailers such as Dan Murphy’s. Credit: Louie Douvis
The update has triggered a wave of bearish sentiment from investors who are betting Endeavour is going to have a choppy 2025.
Meanwhile, supermarket giant Coles, the second-largest alcohol retailer by sales in the country, had its otherwise latest full-year results tarnished by its liquor division. While Coles’ overall revenue for the period rose 2.3 per cent, its reported earnings for the liquor division slid 6.5 per cent and underlying profits before interest and tax dropped 8.3 per cent.
Coles’ results highlight a key challenge with alcohol sales – while cash-strapped consumers don’t have a choice when it comes to essential items like food, they can choose to hold fire on discretionary spending on items like alcohol.
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