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Beeronomics: Is Craft Beer Recession Proof After All?

May 8, 2009

What the Beer data means for Oregon
By Patrick Emerson
Oregon Economics Blog

I stumbled across this little tidbit when I was looking for some coverage of Boston Brewing’s Q1 report (the essence is business is down at Boston Brewing about 5%).  Here is the interesting passage from the Patriot Ledger of Quincy MA:

Craft beer sales appear to be holding up during the recession, boosted by customers strong demographics. Throughout the U.S. beer industry, overall shipments from brewers have declined 3 percent year-to-date compared with the previous year, said Benj Steinman, president of the trade publication Beer Marketer’s Insights. Import shipments have declined 19.3 percent, with domestic shipments down 1.8 percent.  For the 52 weeks that ended on March 9, craft beer sales rose 12.6 percent from the previous 52-week period, compared with 3 percent for all beer, according to data from market researchers the Nielsen Company.

What is particularly interesting to me is that I had assumed that imports were probably a decent proxy for craft beer sales and I knew sales of imports have been down.  But in reality it seems that consumers are very loyal to craft beers and not shifting to macro from craft.  In economics terms the cross-price elasticity of craft and macro brews appears to be very inelastic, or that beer drinker do not think of macro lagers as a good substitute for micro brews.

This is good news, I wonder if Oregon brewers are experiencing the same thing?  I hear through the grape vine that things have been tough, perhaps this is due to inventory depletion on the part of distributors and retailers (something that would explain the seeming 3 percent down 3 percent up contradiction in the second and third paragraph).  If this is the case, inventory depletions rather than sales, we might see a lot of new orders coming in soon as the inventories run out.

But Boston Brewing’s recent struggle also suggests that within craft beer the environment is getting more and more competitive and they need to continue to fight off the challenge of all of the new ‘it’ beers that come along.  As I mentioned a few days ago, I think this is precisely why Deschutes is pushing its specialty releases hard.

This is also good news for my brother, who is finishing his master brewer certificate program soon and is looking for work.  He has offers in hand, but nothing yet from Oregon.  Anyone hiring out there?

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Discuss this article

Bud May 8, 2009

Consumers are not always loyal to many things, but always to their beer. It makes them happy.

Alpha Dog May 8, 2009

And to think they wwant to tax our hapiness with a 1800% percent tax hike. Get a life.

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