Beer sales booming as economy goes bust
WASHINGTON — Life’s guilty pleasures usually thrive during tough economic times. Though we may forgo new frocks or fancy dinners out, we have traditionally turned to the three big vice industries — gambling, smoking and drinking — to help ease our pain.
But this time around is different. Smoking has fallen into such ill repute that many municipalities ban it. Fuel costs have made driving or flying to a casino a pricey proposition. Now it seems the only acceptable — and affordable — sin left is alcohol, namely beer.
“It’s really considered a consumer staple kind of industry,” said Dan Ahrens, author of the book “Investing in Vice.” He put it on par with toothpaste or soap. “People gotta drink no matter what’s going on with the economy.”
More than 16 million barrels of domestic beer were sold in the United States in July, and annual sales through that month are up 1.4 percent, the largest increase since 1990, when the economy was headed toward a recession, according to the Beer Institute.
The uptick is significant for a mature industry with roughly $50 billion in annual sales, particularly as consumers reduce spending on other discretionary purchases, such as lattes and designer jeans.
Trade groups for the liquor and wine industries report that consumption of those beverages has also increased. But beer is America’s most popular alcoholic beverage, claiming more than half the market, and the go-to drink during these times of economic distress.
According to a Nielsen survey this summer, 13 percent of consumers said the economic downturn had significantly affected how much they spend on beer, the smallest percentage of any category. Nearly half said there had been no impact; they were still drinking the same number of six-packs. At supermarkets and convenience stores, Nielsen research shows, sales of craft and “superpremium” beers such as Michelob and Rolling Rock have jumped by double digits this year.
Economist Donald Freeman, a professor at Sam Houston State University in Texas, published a report in 1998 titled “Beer and the business cycle” that examined sales from 1955 to 1994 — through the post- World War II boom and the oil bust, Reaganomics and recession. He factored in income per capita and industrial production, unemployment and the excise tax. Beer held steady.
“No matter which way you test it, it turns out the economy really doesn’t have much effect on beer sales,” Freeman said of his four-page study. “That’s why it’s not a longer paper.”
