This file photo dated Dec 11, 2018 shows bottles of Bulleit Bourbon, in Dublin, California. (BEN MARGOT / FILE / AP)\

LONDON - Soaring inflation has made life harder for most of the world - but some people are still smoking expensive cigarettes and doing shots of fancy tequila.

From British American Tobacco to Tanqueray gin maker Diageo, cigarette and alcohol companies cited strong demand for high-end products people can't seem to shake when they reported results this week. Far from buying cheaper alcohol and tobacco, shoppers are instead trading up.

"In hard times, I think people just want that little moment to celebrate, you know, to unwind with family, with friends with colleagues," Diageo's finance chief Lavanya Chandrashekar told Reuters.

From British American Tobacco to Tanqueray gin maker Diageo, cigarette and alcohol companies cited strong demand for high-end products people can't seem to shake when they reported results this week. Far from buying cheaper alcohol and tobacco, shoppers are instead trading up

The trend contributes to a pattern of affluent consumers spending big on luxury items following the COVID-19 pandemic. Lockdowns resulted in average bank balances rising and record stock markets boosted wealthy people's investment portfolios.

Diageo, the world's biggest spirits maker, on Thursday beat full-year sales forecasts, helped by demand for "super premium" brands such as Don Julio tequila, Johnnie Walker Blue Label and Bulleit Bourbon. 

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Bottles of Don Julio start at roughly 40 pounds ($49) on Amazon.co.uk and go up into the hundreds, as do several special edition versions of Johnnie Walker Blue Label. 

Food and personal goods companies such as Procter & Gamble and Kraft Heinz have seen increased competition from cheaper private label brands as consumers trade down in the face of a cost of living crisis.

People who smoke cigarettes, buy luxury products and drink alcohol, however, tend to stay loyal to their brands even if they're more expensive.

A picture taken on Aug 22, 2014 shows the exterior of the headquarters of British multinational drinks company, Diageo, in west London. (CARL COURT / AFP)

"There's a fundamental difference in how consumers think about something like baked beans versus a cocktail when you're celebrating a special occasion," Chandrashekar said.

Diageo doesn't have much competition from supermarket-owned brands, she said, highlighting the United States where private label represents less than 2 percent of the spirits market.

US sales of premium spirits have risen nearly 3 percent to $3.76 billion, according to NielsenIQ. Globally, sales of fine wines, champagne and spirits are expected to rise about 6 percent to $155.2 billion in 2022, according to Euromonitor.

Sticking by their brands

Alcohol consumption increased worldwide during the pandemic as people stuck at home had limited options for entertainment.

Many are now trying to drink less, but better, said Tineke Frikkee, fund manager at BAT and Diageo investor Waverton Investment Management. But the cost of living crisis and rising energy bills this winter mean that trading up may not last.

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"As consumer budgets come under pressure, we may see some downtrading, so still buying a bottle of spirits, but maybe the next price tier down," Frikkee said.

AB InBev, the world's biggest brewer and maker of Stella Artois and Budweiser, on Thursday reported higher-than-expected profits, helped by many drinkers switching to premium beers. 

Many are now trying to drink less, but better, said Tineke Frikkee, fund manager at BAT and Diageo investor Waverton Investment Management. But the cost of living crisis and rising energy bills this winter mean that trading up may not last

Since the start of the conflict in Ukraine, US sales of premium spirits have risen nearly 3 percent to $3.76 billion, according to NielsenIQ. Globally, sales of fine wines, champagne and spirits are expected to rise about 6 percent to $155.2 billion in 2022, according to Euromonitor.

Meanwhile, sales of luxury tobacco products - cigars, cigarillos and smoking tobacco - are expected to rise 7.5 percent to over $95 billion, according to Euromonitor.

British American Tobacco (BAT) has raised prices more than its competitors in some categories and is investing more in its high-end New Port and American Spirit brands, chief executive Jack Bowles said in an interview. He highlighted growth in BAT's American Spirit organic range.

Price hikes and luxury brands helped BAT beat first-half revenue and margin forecasts on Wednesday.

A customer smokes a cigar in the Buena Vista Cigar Club in Beverly Hills, California, May 21, 2019. (KYLE GRILLOT / AFP)

Sales of luxury tobacco products - cigars, cigarillos and smoking tobacco - are expected to rise 7.5 percent to over $95 billion, according to Euromonitor

"Consumers are sticking much more with their (cigarette) brands and that's why we didn't see downtrading. We see premium growing in a lot of places," Bowles said.

READ MORE: Report: Global smoking rates fall for first time, but rise for kids, Africa

Outside of alcohol and tobacco, earnings on Thursday continued a pattern of affluent consumers trading up.

Stellantis said strong pricing power and sales of high-margin cars including electric ones helped it top profit forecasts in the first half, despite rising energy and raw material costs, and semiconductor shortages. 

While production problems hampered Volkswagen's mass-market businesses, premium brands boosted the carmaker's finances, with Audi seeing a 51 percent jump in operating profit and Porsche up 22 percent.