Is cheap vodka crushing Myrtle Beach’s booze economy?

For Weekly SurgeOctober 9, 2013 

If it is cheap, or, better yet, free, I tend to make concessions as to my preferences in taste. Be it clothes, shoes or drinks. I think plenty of people feel the same way.

However, cheap and free are rarely synonymous with high quality when it comes to spirits.

I am not sure when the idea of $2 vodka drinks hit our beach, but the notion took off, for obvious reasons, and has permeated nearly every watering hole on the Grand Strand. No doubt, the purpose behind the discount price is to bring people into the bar to drink the cheap drinks and stay for awhile.

As with anything that seems good these days, there are repercussions to offering a $2 cocktail. There is a backlash, on a large scale, that we are going to have to face, eventually.

Let me start by pointing out the obvious. Two-buck vodka drinks are not made with recognizable brands. If you go into your local liquor store and scan down to the bottom shelf among the generic labels and plastic bottles, you will find the bottles that populate what is known as “the well” or “house” brands. Find the cheapest of those and you will find your $2 vodka labels.

What is so bad about the cheap stuff? Nothing when it comes to our personal budgets or a cheap buzz. However, poorly made vodka has been scientifically proven to create more symptoms of the dreaded hangover than premium spirits. Purity of the liquid is to blame for that.

Aside from hangovers, another hurdle that we will have to deal with on a larger scale is the perception of our bars by tourists. Not every sign, but a large percentage of signs that sit in front of our bars and restaurants advertise $2 vodka or the like. The same holds true for some advertisements in this very magazine. A tourist actually asked me about it this summer. “What is up with $2 vodka around here?” He then asked where he could go to get a “real drink”.

As we invest in the expansion of our airport and our outreach to make Myrtle Beach more accessible to people that live farther away, we need to start considering what it is that they are looking for. What is popular where they come from? If you fly to Myrtle Beach, the chances seem to me that you are likely to have a drink somewhere. Vodka being the No. 1 selling spirit in the world, why do we have to make this particular product so cheap?

I am not saying that we need to try to be like other places in the world, but, economically, it makes sense for a tourist destination to be aware of other markets. If tourists are looking for “real drinks”, whatever the definition of that is, but a majority of advertising involves $2 cocktails, it may appear that we have little to offer them during their vacation.

Let us run some numbers to see if there is another way.

If $2 vodka is offered and the bar uses Gilby’s Vodka that costs approximately $9.99 for a liter, the cost of goods sold is 29.6 percent based on a two-ounce pour. We will assume, for sake of argument, that your bartenders are pouring only two ounces. However, reality dictates that they are not. The breakdown is that the bar will profit $23.81 from each bottle. That is 16.9 drinks per bottle at $2 each. I have omitted taxes on all accounts because no one really makes money from taxes, apparently.

For the counter point, let’s use one of the most recognizable brands of vodka in the world. Absolut Vodka costs approximately $26.99 for a liter bottle. If we charged $4 per two-ounce pour using Absolut, which is still a pretty good price for the quality, the bar would operate at a 39.9 percent cost, but would profit $40.61 per bottle. Again, assuming that the bartenders are pouring exactly two-ounce pours and there is no waste.

To sum it up, the bar would operate at a higher cost for this particular item, but would profit more by using a premium brand at a discounted price. The benefit is that you can advertise a premium pour that has world wide name recognition. Using their advertising dollars as our advertising dollars to enhance the image of our bar.

Now for the bartenders. A patron that orders an “Absolut on the rocks” versus one that orders “House vodka on the rocks”. Who, generally, tips better? I know this is a loaded, profiling and ethically unstable question, but everyone still reading knows the answer. The bad tips will remain bad, but you just might attract more patrons that have no financial conscience in regards to gratuity because you have a premium brand on your sign out front.

As we focus our efforts in Myrtle Beach to attract more people, more business and more money, these are little things that require consideration. Image is everything. The real question is: “will people show up for $4 Absolut drinks?” I guess we will have to wait for a bold soul to give my theory a try.


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