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The Beer War on American Soil

testosteronepit's picture




 

Wolf Richter    www.testosteronepit.com

Disclosure: I love beer. Particularly certain kinds of what the industry calls craft beer. I’m a sucker for a good IPA, or an amber, or a pale ale. For special occasions, there is the expensive stuff. If I’m traveling, I try to discover local brews. And the first swig is one of the simplest great pleasures in life. But for now, I’ll stick to the numbers. And they’re morose for the US beer industry. Yet there is an astonishing exception: craft brewers.

There are a lot of them in the US: 1,989 last year, up 11% from prior year, and up from one in 1976, according to the Brewer’s Almanac. They employed 103,500 workers. 250 new breweries opened and 37 closed—it's still dog-eat-dog out there, and just because you know how to brew a good beer doesn't mean you get to stick around. The phenomenal re-birth of an ancient industry:

 

“These numbers are poised to rise even more in 2012,” said Paul Gatza, director of the Brewers Association, which represents small and independent brewers. “In February 2012, we already topped 2,000 operating breweries—a truly remarkable milestone.”

But before we get too tangled up in false euphoria about the American beer market, and the idea that it had somehow escaped the great recession, or has even emerged from it, let’s contemplate its possibly permanent misery.

Beer’s tragic fate: it used to be by far the favorite American alcoholic beverage. Even in 1992, long after wine had started climbing the popularity ladder, 47% of alcohol-consuming adults preferred beer; only 27% preferred wine, and 21% liquor. We know because Gallup began sorting out our alcohol preferences that year. Since them, beer zigzagged down and in 2005 plummeted to 36%, the lowest level of recorded Gallup history. Wine spiked to 39% to become America’s favorite drink. Then beer recovered but soon fell again, and in 2011, it was back at its record low of 35%, neck and neck with wine at 36%.

Preferences expressed in a survey don’t always translate well into gallons, barrels, and dollars. So here is a good swig of American reality: annual per-capita beer consumption. It makes mass-market brewers want to cry. There is no light at the end of the tunnel, no flattening out of the curve. America has been turning away from their product for over two decades:

 

 

In the good old days, US brewers fretted about imports, but over the last few years, imports have actually lost market share and are now down to 12.8%. For some astounding worldwide beer trends, read.... PROST! Germany Lost the Beer War, and China Won.

These days, what gives US brewers conniptions is the sheer terror of collapsing per capita consumption, an enemy they can’t shake. So far, they’ve had a powerful ally that helped obscure it on their income statements: population growth. A whopping 24% since 1990. But that is slowing down, and US beer production is getting slammed.

 

Three multinational corporations own most of the 20 gigantic, highly industrialized breweries that produce the vast majority of American beer. It’s been a great Wall Street bonanza, but the results are sobering. The largest brewer in the US, Anheuser-Busch, belongs to Brazilian multinational InBev, the largest brewer in the world. American number two, Miller, is part of SABMiller, headquartered in London, the second largest brewer in the world. Coors was acquired by Canadian brewer Molson, now the Molson Coors Brewing Company, fifth largest in the world. As if that weren’t enough deal-making, SABMiller and Molson Coors Brewing Company formed the joint venture MillerCoors. However, Pabst Brewing Company is still independent.

But craft beer brewers operate in their own micro climate. In 2011, production jumped 13% to 11,468,152 barrels, for a 5.7% share of the US beer market in volume, according to the Brewers Association. With craft beers being more expensive, retail sales jumped 14.5% to a record $8.7 billion—for a 9.1% share of the $95.5 billion US beer market.

 

Despite the fundamental moroseness of the beer industry, it’s been an awesome year for craft brewers. What it shows is just how successful American entrepreneurs can be with their scrappy outfits in an industry of giants.

Beer’s archenemy wine got clobbered worldwide during the great recession and is still getting clobbered in Europe. But American wine makers are proving to be the toughest competitors out there, and they have prospered and grown despite the mayhem around them. For the debacle that old-world wine makers find themselves in, and for what they sheepishly consider an inexplicable American phenomenon, read.... Liquid Economic Indicators.

 

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Thu, 03/29/2012 - 14:06 | 2301274 Rene-Paul
Rene-Paul's picture

 I make a Czech type beer. Lots of sazz hops and top ferment with an ale yeast at 70-80 deg f.  Good lighter beer. I am still a sucker for a Torpedo or an Eye Of The Hawk. Been trying for years to brew a good IPA. Cheers to you all!

 

 

 

Fri, 03/30/2012 - 00:48 | 2302755 astartes09
astartes09's picture

I tend to make the most alcoholic IPAs I can get with my home grown centenial and cascade hops.  Its all about efficiency.  

Thu, 03/29/2012 - 13:35 | 2301162 Barbarians_R_Us
Barbarians_R_Us's picture

Please people there are obviously too many beers on the market and too many people who like different beers. We need a two-beer system. Henceforth (by Executive Order #5150), there will only be two beers available: Pachedermy Pale and Ass Ale. You vill come to like them and you vill come to appreciate the elegant simplicity of two choices only.

Sincerely Mr. O

Thu, 03/29/2012 - 13:32 | 2301146 AchtungAffen
AchtungAffen's picture

Yes, I read about the success of craft brewers. Still they face the giants when it comes to distribution, where they still depende on the Anheuser's for the beer to reach the tracks. Or did you actually think that any segment of the US would be actually escaping the return of feudalism?

Thu, 03/29/2012 - 13:12 | 2301085 spekulatn
spekulatn's picture

Great post, great thread of comments. Thanks all.

Thu, 03/29/2012 - 12:32 | 2300936 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

It's not beer but maybe they could bring back the Vin Mariani.  I think this would stimulate the economy a little too.

http://en.wikipedia.org/wiki/Vin_Mariani

 

Thu, 03/29/2012 - 12:17 | 2300898 A Nanny Moose
A Nanny Moose's picture

An intelligent man is sometimes forced to be drunk to spend time with fools.

--Ernest Hemingway

Thu, 03/29/2012 - 11:56 | 2300841 Silver Dreamer
Silver Dreamer's picture

I stopped drinking beer when finding it without fluoridated tap water became nearly impossible and highly expensive.  I'll brew my own and avoid the poison.  Abita makes a fine amber beer made from spring water, but it is very hard to get in VA.

Thu, 03/29/2012 - 11:48 | 2300809 shutdown
shutdown's picture

 

 

Drinking beer is a sure path to financial ruin. Just say no.

Thu, 03/29/2012 - 11:43 | 2300785 prole
prole's picture

Best of luck with that Alfred.

I offer ZHers Heavy Seas Loose Cannon 

Naturally the bold option go nuts on me WTF??

Anyway Heavy Seas Loose Cannon taste like the Master of Beer made every bottle lovingly by hand just for you and I believe he did. Local Baltimore Brewery so the beer almost pours directly from the keg to your cup, Brewmaster is from the San Miguel Brewery in the PI that is a whole nother thread right there my friends.

Stay Thirsty

http://www.hsbeer.com/beers/pyrate-fleet

Thu, 03/29/2012 - 11:42 | 2300781 jimijon
jimijon's picture

Imagine the new wealth when they "legalize it!"

I would love to open a craft hemp house sampling great buds from around the world.

Thu, 03/29/2012 - 11:51 | 2300822 vintageyz
vintageyz's picture

You need a bloodshot, squinty eye...

Thu, 03/29/2012 - 11:23 | 2300711 Alfred E. Newman
Alfred E. Newman's picture

Funny to see this here, we are working on opening a 4000bbl /yr brewing here in the land of milk-n-honey and beer.  We have outlets ready and waiting too.

If we can take 0.01% of the industial breweries market in 10 years I will be very happy, 1% in 25 years is the target.

As we are finding out, startup expenses at 3x what we thought and timeline well 2x-3x as long as we planned for.

The feds permits are backed up to the tune of 900 apps in now, 2 years ago 100 on average.

When you are at a liquor store look at the beer cooler, the BUD holds 37% of the shelf space under several names.  My goal is to help make that 10%.

 

 

 

 

Thu, 03/29/2012 - 11:18 | 2300674 NEOSERF
NEOSERF's picture

$5 a beer and $11 a drink in any restaurant and $10 a sixpack is going to continue these declines...real opportunity for moonshine opening up

Thu, 03/29/2012 - 11:19 | 2300685 BeerBrewer09
BeerBrewer09's picture

Brewing/Distilling making a comeback.

Thu, 03/29/2012 - 11:51 | 2300821 scatterbrains
scatterbrains's picture

OT a little bit..  Anyone malting barley in the  NY/PA/NJ area or are the climate conditions not suitable? I ask because I can only imagine how cheaply this main ingrediant could be had if one could back a truck up to a local malting facility.. not sure if I'm using the right terms here.

Thu, 03/29/2012 - 11:09 | 2300627 BeerBrewer09
BeerBrewer09's picture

Homebrewz, bitchez.

Actually, I might start a nanobrewery soon.

*ahem*

Market Share, bitchez.

Thu, 03/29/2012 - 10:50 | 2300546 lostintheflood
lostintheflood's picture

life it too short to drink bad beer...

Thu, 03/29/2012 - 10:39 | 2300516 SubjectivObject
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Why do subsequent comments only show up where one last commented?  Rather than where one thinks they are placing them (i.e., at the end of the thread)

Thu, 03/29/2012 - 10:37 | 2300503 SubjectivObject
SubjectivObject's picture

Justa thought, but the beer will be resurgent at the point when the quality of the water supply becomes questionable.  Look at the history of beer, and watch for that (local) investment opportunity.

Thu, 03/29/2012 - 10:36 | 2300482 SubjectivObject
SubjectivObject's picture

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Thu, 03/29/2012 - 10:35 | 2300470 SubjectivObject
SubjectivObject's picture

__

Thu, 03/29/2012 - 10:22 | 2300442 SubjectivObject
SubjectivObject's picture

The micros are an example of fair and healthy distribution of profits as should be the case in a fair[er] capitalist system.  Too bad the preservation of the vitality of capitalism does not include justified restrictions upon gross size or the consolidation of market share.  Ergo, efficiency of scale is not otherwise socially, economically, or politically "efficient" given the free reign permitted of the baser motives of the humanimals.

Thu, 03/29/2012 - 10:12 | 2300417 yabyum
yabyum's picture

Even In Utah with its soviet style booze control we have great micro's.Cheers

Thu, 03/29/2012 - 12:07 | 2300873 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 

Indeed, it surprised me what fine craft beers there are in Utah when we visited the parks there three years ago.

Thu, 03/29/2012 - 10:08 | 2300403 adr
adr's picture

I only drink craft beer other than PBR. I dont know why but PBR tastes really good to me if I just want to drink a simple clean beer. Anything from ButtMillingCorpse tastes like water soaking a dead racoon. 

Maybe it was the can of PBR I accidentaly drank thinking it was a Pepsi when I was five.

Thu, 03/29/2012 - 10:42 | 2300520 RallyRoundTheFamily
RallyRoundTheFamily's picture

HEINIKEN fuck that shit.

Thu, 03/29/2012 - 09:57 | 2300366 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

You can't be a Real Country unless you have a beer and an airline. It helps if you have a football team or some nuclear weapons, but at the very least, you need a beer.
FZ

Thu, 03/29/2012 - 11:34 | 2300756 prole
prole's picture

IMHO all you need is gold and at least one killer, but I think we are on the same page

Thu, 03/29/2012 - 09:48 | 2300336 Nobody For President
Nobody For President's picture

I've been on the beer thing since about 2000. I am fortunate to be in Northern California, where some of the best  micro brewers are taking root, and I am good friends with the former brewer of a top regional (voted #1 in ski magazine a few years ago) brewery. Call me a beer snob if you will = fuck you asshole,. There is such an incredible difference in (everything) taste between a canned beer from the majors and a regional bottled brew that the mind boggles to point it out.

About 10 years back, I started traveling to Europe, looking forward to some good beer. What a disappointment - many, many English pubs and pints of various later - conclusion: what a bunch of horse piss. On to the continent: German, Belgium, French (ecch) = could not even come close to Sierra Nevada, Full Sail (Oregon), and mostly - Mendocino Brewing Company 'Raptor' brews: Red Tail, Eye of the Hawk, ec.

 

As a kid, I went out with my parents in Oregon and picked hops = you learn a bunch about good beer, even if you ARE a little shit.

I have drunk beer, literally, from all over the world: Oregon, California, Georgia, Alabama, New York, London, Glasgow, Oban, Paris, Stockholm, Bruge - and Vietnam, Thailand, you get the idea.

 

And yet, the best seems to be really local - Mendocino Brewing Company (100 miles away), North Coast Brewing }}{40 and 60 miles away), Sierra nevada Pale Ale - 200 miles.

Support yer local micro-brewery!

Thu, 03/29/2012 - 10:31 | 2300480 BandGap
BandGap's picture

Cehck out the Jack Russell Brewery just outside of Placerville if you get the chance. The tour is a good time.

Thu, 03/29/2012 - 09:34 | 2300276 stiler
stiler's picture

i'll have to try it. But I like Black Toad from Trader Joe's and Saranac's winter brew was good. At checkout once , the lady shouted, "Hey, Joe, how much for the Genius!" No kidding. 

Thu, 03/29/2012 - 09:18 | 2300246 purplefrog
purplefrog's picture

While in Maine, I was STUNNED at the quality of Harpoon IPA!!!

Thu, 03/29/2012 - 09:09 | 2300222 AN0NYM0US
AN0NYM0US's picture

The house that beer built

former Interbrew (now Inbev)  CEO Hugo Powell's modest abode

http://www.chatsworthproject.ca/projects/09/9.html

Thu, 03/29/2012 - 08:38 | 2300139 GMadScientist
GMadScientist's picture

Guinness is beer. That yellow shite is for day laborers.

Thu, 03/29/2012 - 10:59 | 2300581 DaveyJones
DaveyJones's picture

porters and stouts were indeed specifically developed as low alcohol high calorie / nutrient lunches for the european laborer. 

Thu, 03/29/2012 - 08:23 | 2300107 Hannibal
Hannibal's picture

Why does American beer taste like redneck piss?...."pop me a Beck's or Heineken!"

Thu, 03/29/2012 - 10:45 | 2300534 RallyRoundTheFamily
RallyRoundTheFamily's picture

heineken? fuck that shit

http://www.youtube.com/watch?v=snhiofL2Rh4

 

Thu, 03/29/2012 - 10:20 | 2300437 maximin thrax
maximin thrax's picture

You'll have to be specific - which redneck's piss have you been drinking?

Thu, 03/29/2012 - 08:20 | 2300103 GMadScientist
GMadScientist's picture

Writing off stills and hops on your taxes: priceless.

Thu, 03/29/2012 - 07:07 | 2299996 non_anon
non_anon's picture

Was ancient Egypt the first known brewers?

Thu, 03/29/2012 - 10:57 | 2300570 DaveyJones
DaveyJones's picture

likely anyone who was harvesting grain and leaving it out in the rain. But the egyptians were probably the first large scale brewers. 

Thu, 03/29/2012 - 06:54 | 2299987 DCon
DCon's picture

A beer article on zerohedge!

 

It's not quite the Olson twins joining me in the shower, but it's close

 

 

Thu, 03/29/2012 - 08:20 | 2300105 GMadScientist
GMadScientist's picture

A beer article is similar to 3 retards in a tub?

Thu, 03/29/2012 - 11:31 | 2300745 prole
prole's picture

Come on in ... The water's fine ....

Thu, 03/29/2012 - 07:16 | 2300006 johnQpublic
johnQpublic's picture

anorexic twins are your thing?

nasty

 

however the price of 9.75 a six pack for dogfishhead is just as nasty

but i like it

alot

Thu, 03/29/2012 - 10:54 | 2300562 DaveyJones
DaveyJones's picture

and you won't need a criminal defense attorney who specializes in sexual deviancy

Thu, 03/29/2012 - 11:28 | 2300734 prole
prole's picture

I heard the "King of Pop's" Lawyer is looking for work...

Thu, 03/29/2012 - 06:51 | 2299980 thurstjo63
thurstjo63's picture

If this trend continues, expect new legislation to make it prohibitively expensive for anyone to run a brewery!

Thu, 03/29/2012 - 06:22 | 2299946 barroter
barroter's picture

Old Aussie joke: 

Q. Why is American beer like having sex in a canoe?

A. It's fucking close to water!

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