Crying in Their Beer

Shelf of craft beers

For the past several years, we’ve heard that sales of expensive wine have been in decline. This may be true, but total alcohol sales were up 9% in 2010, and rose 10% in the year ending May 31—according to Sageworks, which describes itself as “the leader in the financial analysis of privately-held companies.” Total wine sales have increased, although most of the action has been in the $10 range.

It’s almost axiomatic that alcohol consumption tends to rise during periods of economic stress, and you might expect beer sales to have skyrocketed. The figures are actually complex and interesting. Consumers seem to be reaching for either the cheapest or most expensive brands, leaving the “legacy beers” to suffer. Thus, sales of Pabst Blue Ribbon are strong, and craft beers are doing very well despite their price.

“The unemployment rate among core blue-collar beer drinkers remains three times that of more affluent, white-collar consumers,” says Dave Peacock, president of Anheuser-Busch. The figures bear him out. While sales of Coors Light actually increased 1.1% last year, other famous brands have suffered declines: Miller High Life (4%), Budweiser (7.3%), Busch (6%), Bud Light (2%) and Natural Light (3%).

Meanwhile, craft beers are more popular than ever. Consumers seem to have a solid perception of value associated with the category, and tend to reach for these labels despite their hefty prices. Sierra Nevada sold 7.8% more product last year, even though a bottle of its Pale Ale ranges from $1.29 to $4 around the country. Magic Hat Brewing Co. was up 14.8%, and their Pale Ale averages $3.50. Sales at the New Belgium Brewing Co. were up a staggering 18.3%, and bottles in their Lips of Faith series range from $6 to $9. In case you’re wondering how this stacks up to the global market, the world’s cheapest beer is found in Tadjikistan ($0.46 per pint) while Greenland takes the prize for most expensive ($11.75).

Part of the appeal of craft beers is undoubtedly due to the growing locavore movement, and the insistence of consumers to support their local economies. Much of it, however, probably comes down to the simple appeal of a distinctive product, and the lure of quality despite the drawbacks of price.



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