What an Empty Wine Glass Says About the Next Recession

American households pay the landlord and the bank. When those payments go up, wine becomes an early casualty – and thus, wine consumption is worth keeping on the radar.

That’s the “first claim” thesis of a veteran analyst, Alan Longbon. Rent and debt service are contracts that “do not shrink because the household would rather have a nicer dinner,” he writes.

Rent plus household interest took 8.5% of U.S. disposable income in 2025, up from a 6.8% low in 2021, Bureau of Economic Analysis data compiled by Longbon show. Interest payments jumped to $1.18 trillion from $713 billion as rates rose on a $20.9 trillion debt pile.

Wine peaked as the squeeze bottomed. Apparent consumption hit 0.44 gallons of pure alcohol per person in 2020–21, per the National Institute on Alcohol Abuse and Alcoholism, before slipping to 0.41 gallons in 2023. Meanwhile, the U.S. wine volume fell another 6% in 2025, IWSR noted.

Why This Isn’t 2006

In the mid-1980s, when both rent and interest peaked, wine fell until 1993-94. Then, the 2000s were the exception: in 2003–06, new household borrowing ran about $500 billion a year ahead of interest paid as home-equity extraction kept wine rising into the bust.

Under Longbon’s net credit cash flow measure — an extension of economist Wynne Godley’s sectoral-balances framework — that spigot is shut. Interest paid outran new borrowing by $485 billion to $568 billion a year in 2023–2025, and consumer credit growth is near zero.

Since 1952, five-year changes in the squeeze show a −0.41 correlation with take-home alcohol spending, which slid to 1.01% of income in 2025 from 1.13% in 2022.

Structural Headwinds & Housing Market Roll Over

Treasury Wine Estates wrote down U.S. vineyards and brands again in August, and Constellation Brands, Inc. (NYSE:STZ) sold Woodbridge and Meiomi to The Wine Group last year.

“Affordability concerns are forcing many consumers to cut discretionary spending,” IWSR President Marten Lodewijks said in May.

The UN expects single-person households to reach 35% worldwide by 2050, and The Economist reported that almost 25% of American adults ate every meal alone on a given day in 2023.

“There is a disconnection in society,” University of Southampton anthropologist Marion Demossier told the magazine. Multinational advisory Gallup found in July that just 54% of U.S. adults drink, tying the record low, and weight-loss drugs add pressure.

BMO puts 2025 sales at a record of about $115 billion, showing fewer bottles at higher prices. Per IWSR, wine is the only major category shrinking across all price brackets; small cans are a rare bright spot.

Housing, which economist Edward Leamer says leads the cycle, is turning. Freddie Mac’s 30-year rate hit 7.24% on Oct. 29; starts fell to an annualized 1.22 million in September, and NAHB builder sentiment sits near 30, an early-2010s low. Challenger job cuts are elevated; unemployment has hit 4.2%. Robert P. Balan’s yield-curve signals point to slower growth into 2027–2028.

Relief requires Fed cuts, yet the latest Fed commentary is anything but – instead, Governor Christopher Waller has a 50 bps hike under consideration, according to Reuters.

Trading the Thesis

Longbon’s playbook is simple – underweight drinks producers like Constellation Brands, Diageo plc (NYSE:DEO), Brown-Forman Corporation (NYSE:BF) and Treasury Wine Estates, and also homebuilders like the iShares U.S. Home Construction ETF (BATS:ITB) and State Street SPDR S&P Homebuilders ETF (NYSE:XHB).

He also favors staples like the Consumer Staples Select Sector SPDR Fund (NYSE:XLP) over the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY).

Finally, he’d add long Treasuries – iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) or, for experienced traders, Direxion Daily 20+ Year Treasury Bull 3X Shares (NYSE:TMF). He’d buy drink producers and broad consumer discretionary only after falling rates shrink rent-and-interest burdens.

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