Beer Pressure

With almost $100 billion and over 200 million barrels a year, the American beer industry is nothing to brewed about! But beer executives are foaming at the mouth as sales of mainstream product continues to fall. Were it not for a steady increase in craft beers (up 15% by volume and 17% by dollars in 2012), the three straight months of declining sales this year would have been even worse. Yet craft beers represent only about 6.5% of the market. Why the decline?

Americans are buying more hard spirits – times are tough so the more powerful anesthetics are seemingly more… well… anesthetizing. And those at the top of the food chain, most likely including those 1% who own 42% of America’s wealth, are sucking down more wine. Beer, well, is a budget item that can be sacrificed. “In fact, it’s been a pretty brutal year so far. [Beer s]ales continue to limp along, hurt by a string of problems -- mainly the weak economy, the cold weather, and a long-term shift in consumer preference for wine and liquor… Analysts say consumers are increasingly likely to uncork a bottle of wine than to pop the cap on a bottle of beer. And it's the biggest names that are suffering the most: Anheuser-Busch InBev (BUD), SABMiller, Molson Coors Brewing (TAP) and Heineken.” DailyFinance.com, May 27^th.

But beer executives are not exactly tapped out, since their share prices seem to be holding reasonably well; even merger and acquisitions activities in this sector are continuing apace. Anheuser-Busch InBev recently bought out Corona, and “[d]espite the sales weakness… [d]uring the past year [beer stocks have] outperformed the market in general. Anhueser-Busch is up 39 percent, SAB Miller shares traded in London are up 45 percent and Molson Coors, up 30 percent.” DailyFinance.com.

With marketing executives over a barrel and hopping mad, they seem to be willing to be trying new formulas before this whole thing comes to a head: “In order to boost sales, the big beer makers are pushing out more upscale and pricier brews, including fruit and margarita flavored lagers… Anhueser-Busch also rolled out a higher alcohol content brew, Budweiser Black Crown, in January. It also offer Bud Light Platinum. Both cost about a third more than regular beers.” DailyFinance.com. Are consumers getting more choice or just getting mugged with these higher prices?

With lots of rain around the country, putting a damper on traditional Memorial Day celebrations, the lowered sales were precipitous (Memorial Day reflects 5% of annual sales). Hey, as long as share prices hold. There is a silver lining, beer fans; this could be a turnaround moment for the beer world: “As if the sound of Hanson's mega-hit ‘MMMBop’ wasn't intoxicating enough, the adorable band of brothers has produced something that could really get you buzzing: a new beer called – what else? – MmmHops. The awesomely-titled IPA [India pale ale] – created with the help of a craft brewery in their home state of Oklahoma, according to BeerPulse.com – was introduced by the brothers at The Hangover Part III afterparty in L.A. on May 20^th].” People.com, May 24^th. I am…er… greatly relieved.

I’m Peter Dekom, and while I don’t always make lite of such subject matter, I certainly hope I don’t get a frosty reception for my blog, so quit yer winin’!