You’d never know judging from the people I hang out with, but beer sales are down by about 2% in 2013. This yearly decline isn’t an anomaly either, beer sales peaked in 2008 and have since declined in 2009, 2010, and 2011 before rising slightly in 2012 then falling again this year.
In an analysis of why beer sales have declined, experts point to financial changes in the blue-collar American male, who is the product’s largest consumer. Experts at Bernstein Research suggest the pay-roll tax hike and high unemployment in this demographic has led to the downturn in beer sales. In general, as taxes go up, beer sales go down and as the economy tumbles, so do beer prices. When times are tough financially, people tend to stay away from beer.
That being said, the percentage of Americans who drink alcohol has remained constant since the 1990s, but people have migrated from beer to wine and liquor. In 1992, 47% of people said their drink of choice was beer compared to 27% who favored wine. In 2013, beer is now only 37%, one percentage point ahead of wine at 36%. Good news for the wine industry, bad news for big beer.
Breweries like Anheuser-Busch InBev are trying to get people to drink more expensive beer to compensate for the decrease in volume. High-end beer represents about 23% of beer sales in the U.S. and that number is even higher at 35% for France and Italy. AB Inbev beat financial predictions in the most recent quarter despite their decreased sales volume as they had some success with their Budweiser Black Brown brand that is marketed as a higher class brew. Despite the success of Black Crown, AB InBev’s purchase of Grupo Modelo (the Mexican beer giant makes Corona and Modelo) was the largest factor in their success as it enabled the company to cut operating expenses (jobs).
Given that selling better beer is the strategy most breweries are trying to employ, Boston Beer Company (maker of Sam Adams) shipped 29% more in volume year on year and increased their income by 24% in 2013. The company accounts for 1.3% of all beer sold in the U.S. making it the largest craft brewer and 5th largest brewer overall. Boston Beer founder Jim Koch because the first craft beer billionaire after shares of the company hit highs in September.
It seems to me like the future of beer is with smaller craft breweries. When I go out, I’m equally likely to order a good whiskey as I am a craft beer. The only time I order a bud light or the like is after midnight on a Friday or a Saturday, but like my football coach used to say, the only good decision you can make after midnight is to go home.
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