Craft Beer Can Win in a Tough Economy

[Bob Mack]

My 401k account balance is falling faster than the thermometer this fall, but I’m certainly not unique in my personal financial suffering during these trying economic times. Plenty of people are suffering. But professionally I cannot help but wonder what will become of the craft beer movement. So strong for several years now, will the increased popularity of craft beers become a casualty of a sluggish economy and an un-popular choice with cash strapped consumers? My intuition says maybe or even yes, but the craft brewers and the numbers so far appear to be telling a different story.

Attendees at the recent Great American Beer Festival in Denver were treated to plenty of questions about the flailing economy. At every available opportunity, print and television reporters were asking brewers about the near term effects of the economy on craft beer sales. I expected most brewers to nervously try and paint a rosy picture about their sales experiences so far, but they almost all seemed genuinely surprised and pleased that not only had sales not decreased, but demand seemed to show no signs of slowing.

As a distributor, I can only attest to our own sales numbers which project a 20+% increase for October 2008 over last year (as of October 29th) and better than a 25% increase for the year. In a time when we might expect consumers to be trading down to less expensive alternatives, we’re clearly seeing consumers stick with craft beer. In fact, given the continuing increases in craft beer consumption, it’s a pretty good bet that new drinkers are still coming into the craft category. Where are they coming from?

Craft Beer is Still a Great Value

Potentially wine and liquor drinkers are passing on the $20 - $40 bottles of great wines and picking up some $8 - $12 bottles of great beer. After all, the best beers in the world are an affordable luxury at those prices. We also know that our many of our good friends in the on-premise world are suffering as people choose to dine out and drink out less often while our off-premise friends are finding that the carryout beer business is staying pretty healthy as more people choose to drink at home. That same sort of consumer may be looking at staying with top quality alcoholic beverages while still trying to save some money.

For on and off premise stores who are in the craft beer category, craft beer can provide a little bit of financial diversity and profitability over the coming months, while those of us who have not yet taken the craft beer plunge might find that the addition of craft beer products to our shelves and menus while serving to attract consumers who demand high quality beverages but who might shy away from more expensive alternatives.

We’ve always known that ounce for ounce, beer is just about the best value in the alcohol industry. In these tough times it may be that craft beers will be even more sought after as passionate, quality conscious consumers spend less money than they used to by buying the best beer in the world.

[Dwight]

This seems to be true in NYC too where beer is a good value . . . and it's going to be the last luxury to go for many people. If you get to NYC, check out BeerMenus.com to find great beer and beer bars and beer events. They plan to move to other cities early next year. Time will tell...

[Eli the Mad Beer Man]

Great stuff, Bob. Like you've seen via your own sales figures... craft beer continues to increase despite the economy.

I was at the All Colorado Beer Festival this past weekend and 3 different PR/brewers told me the same thing: they can't keep up with the demand! One brewery here in Colorado Springs just opened a few months ago and they already have to hire an assistant brewer. Plus, they've limited growler sales to Sunday's only because they can't keep enough of the stuff on tap if they do it any other way. A brewery down in Trinidad, CO, is brewing 24/7 and has stopped selling growlers of various styles for the same reason. Another brewery here in Colorado Springs has seen a 650% growth over the last year!

The economy may indeed suck, but we all have to drown our sorrows in something, right? Might as well make it GOOD beer. ;)