Why are Americans drinking less beer?

[BHKrystal06]

Welcome to Miller Time, Loser
The great American beer crisis.
By Daniel Gross
Posted Monday, May 2, 2005, at 1:06 PM PT


When the economy is booming, we pound a six-pack of Bud with our buddies and watch the game. When the economy is lousy, we pound a six-pack of Coors with our buddies and watch the game. When the economy is flat, we pound a six-pack of Miller with our buddies and watch the game. This is why companies that make beer—like those that make diapers, electricity, and cereal—have countercyclical stocks. When the economy hits a soft patch, investors take refuge in them.

But now there's a fear in our beer. Last week, two leading beer companies reported disappointing results. Anheuser-Busch, which claims more than half the U.S. beer market, announced it was suffering from falling demand and rising costs. The volume of Bud and Michelob sold in the U.S. fell 2.7 percent from the year-ago quarter. Newly merged cross-border beer powerhouse Molson Coors reported a loss, with net sales in the U.S. down 2 percent, and U.S. operating income off by nearly one-third. The most recent trading statement of Miller, the No. 2 U.S. beer brand now owned by SABMiller, showed marginal growth. In the past two years, according to Gary Hemphill, managing director of Beverage Marketing Corp., beer volume has risen at a meager 0.5 percent annual rate.

Why are brewers crying in their beers? In part, they're facing the same difficulties as other manufacturers. Costs for raw materials and energy are rising, and they're having difficulty passing costs along to consumers. But beer companies are also butting up against some powerful demographic and cultural trends that may flatten sales for years to come.

Americans have always liked their alcohol, as historian W.J. Rorabaugh notes in his entertaining The Alcoholic Republic. And they still do. In fact, alcohol consumption has probably risen in the past 10 years. According to the Census Bureau (go to this link and then scroll down to table 201), between 1995 and 2002, per-capita consumption of alcoholic beverages rose from 24.7 gallons to 25.2. It's just that there are different drinks on the bar.

In all sorts of traditional retailing categories, Americans are becoming more yuppified and upscale. Williams-Sonoma is increasingly replacing Sears as a housewares supplier, and Home Depot opened the fancy Expo home design chain. The trend is particularly pronounced in food and drink. Millions of consumers have in recent years become connoisseurs (that is, insufferable snobs) when it comes to coffee, cheese, chocolate, you name it.

It's happening with alcohol, too. In the 1980s, beer-drinking yuppies, just as they did with automobiles, turned away from domestic brands and toward imports. That has continued. The Beer Institute reported that total beer imports in the first nine months of 2004 rose a solid 3.7 percent. But that's not enough to take the fizz out of Bud and Miller's growth.

The real problem is that Americans increasingly tipple with wine and hard liquor. Health-conscious baby-boomers, fretting about waistlines and heart murmurs, are eschewing high-carb beer for cardiac-friendly merlot (or, post-Sideways, pinot noir). According to the Wine Institute, U.S. wine sales have risen smartly in recent years, from 558 million gallons in 2000 to 627 million gallons in 2003. Meanwhile, the young and hip—traditionally the biggest consumers of beer—are looking for harder stuff. Club-goers want less Molson Ice and more Maker's Mark. The spirits crowd has become better at marketing, too, especially to younger consumers. That is one of the reasons a bidding war may be erupting over Allied-Domecq (Courvoisier, Kahlua, Stolichnaya), which recently agreed to be bought by Pernod Ricard.

Beer may be headed for long-term stagnation. The Wall Street Journal in March cited a Morgan Stanley survey that suggested that for the next five years sales of wine would rise 3.5 percent per year, sales of spirits would rise 2 percent per year, and beer sales would rise by a meager 0.5 percent.

The diverging fortunes of beer, on one hand, and wine and spirits, on the other, may be yet another illustration of the two Americas shopping meme. For the past few years, companies that sell baubles to affluent crowds have been thriving, while those who supply staples to the masses have been struggling. Alcohol may be the newest front. To caricature it, coastal professionals are filling their walk-in wine cellars with $30-a-bottle pinot grigio and Grey Goose. Meanwhile, working folks in the interior aren't buying quite as many six-packs.

Beer fans and investors can take some solace. Apparently, at least one denizen of the heartland has been seriously loading up on cheap domestic beer. Last month, Anheuser-Busch announced that Warren Buffett had acquired a significant stake in the company.

[spiveyrat]

I have every confidence that jason will help pull them out of their slump!

[BTEXDAD]

when economy is bad, i switch from premium bud and bud light to natural light

[scrub c]

LOL

[mikecheck]

Originally posted by BTEXDAD
when economy is bad, i switch from premium bud and bud light to natural light

But, all in the same day?

[BTEXDAD]

Originally posted by mikecheck
But, all in the same day?

LOL.
Stock market down, Natural light.
Stock market up, Bud light

[venomous tat2]

Miller lite = diet water
Bud lite = diet beer
Bud = real beer LOL

[BTEXDAD]

yes, venomous, i drink bud light for dieting purposes.
Double cheeseburger with fries and a bud light. If I drank bud, that would be way too many calories.

[jason]

between me and yaya last weekend, there will be no beer companies goin out of business any time soon...

[GOFOR2]

I dont know how we could be drinking less. I am doing my part, or more than my part, to keep overall consumption levels up.

[spiveyrat]

Originally posted by jason
between me and yaya last weekend, there will be no beer companies goin out of business any time soon...

LOL! That second smiley actually reminds me of an incident I witnessed at a frat party while I was in college. A buddy of mine had drank waaaaaaaaaaay past his limit and was lying on the floor unable to get up. As I entered the room where he was lying down, he held up his cup and asked me to get him another beer. I told him "I think you've had enough".

Disclaimer: Don't try this at home, kids... we were trained professionals back then.

[venomous tat2]

I drove a chartered bus afew years backfor a frat from A&M don't remember their frat name , but there were 3 buses and there was a keg on each bus and they had a blast, they would turn each other upside down and pump up the keg and let it go man
they weredrunk as all get out. they had to stop every 20 mins for a r.r break we left CS @ 2:30 going to Astro World and got there
@ 8:30 that night and I know they still do it we call it the drunk run. They bought a lot of 12 packs as well........LOL

[RiverRatDad]

OK, let me see if I have this right. If I drink more beer, then I will be keeping more brewery employees fully employed, who will therefore pay more in taxes which will reduce inflation by lowering the deficit, and enable us to fund the war on terrorism with the increase in tax revenue for the federal government. I therefore resolve to drink 16 oz Miller Lites instead of the regular 12 oz cans, being a good patriot doing my part to combat terrorism and help out the economy. I hope I can explain that to the officer when I get stopped.

[jason]

Originally posted by RiverRatDad
OK, let me see if I have this right. If I drink more beer, then I will be keeping more brewery employees fully employed, who will therefore pay more in taxes which will reduce inflation by lowering the deficit, and enable us to fund the war on terrorism with the increase in tax revenue for the federal government. I therefore resolve to drink 16 oz Miller Lites instead of the regular 12 oz cans, being a good patriot doing my part to combat terrorism and help out the economy. I hope I can explain that to the officer when I get stopped.

[spiveyrat]

Originally posted by RiverRatDad
OK, let me see if I have this right. If I drink more beer, then I will be keeping more brewery employees fully employed, who will therefore pay more in taxes which will reduce inflation by lowering the deficit, and enable us to fund the war on terrorism with the increase in tax revenue for the federal government. I therefore resolve to drink 16 oz Miller Lites instead of the regular 12 oz cans, being a good patriot doing my part to combat terrorism and help out the economy. I hope I can explain that to the officer when I get stopped.

If you explain it to him that way, he might have one with ya!