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The Beer War on American Soil
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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Wine: small corporations (mostly private) and proprietors. Grapes traded in co-ops. Prices up maybe 10-20% in 4 years.
Beer: Conglomerates, publicly traded with executives to be pampered. Ingredients traded on the CME (except hops if they ever use them). Prices double 2007 levels easily. Also, tanks of corn and rice extracts (GMO?) are used in the mass-market beers.
beerflation
no more 12 oz bottles in my area, try 11.8 oz - same price
same with the 1 oz. flamin' hot cheetos...
now .1 oz. = same price.
Now we have to pick up ten-fold more bags from our yard, not to mention the discarded WIC cards (oxy-moron?) that were used to purchase them.
OBAMACHEAT O's FOR EVERYONE!
My favorite, "Half-Gallon" ice cream that is now 3/4's of a half-gallon or 48 ounces instead of 64 (25% less).
They make the top of the container large and narrowing to the base with the whole thing rounded instead of square to fool your eye.
I'm waiting for "One Dozen" egg cartons that have styrofoam blanks on either end to "protect" the inner 8 eggs.
@hairball48
fourloko, purple drank, sizzerup and bath salts...
Word, yo.
Tom T Hall!
Quality over quantity...
Declining income could mean that if you gotta drink on a special occasion or as a treat, make it good.
Big trend over last couple years. Even big brewers are trying to get into craft brewing. Some small brewers are listed on markets... been interested.....
Whisky's too rough
Champagne costs too much
Ane vodka puts my mind in gear
As a matter of fact I'll say this again
i Like Beer.
Any of you ZH pups know who penned this pithy song's refrain?
I don't know, but I've always thought beer was for folks who don't mind wasting time.
Was it those pesky Artesians?
Cole Porter?
Cole Porter would never have complained about the cost of champagne in song.
...or written an ode to beer.
+1
Yes too true. Noel Coward?
Tom T. Hall
http://www.youtube.com/watch?v=8i5k4I1AOEI&feature=player_embedded
Beer is tremendously more complex and "sophisticated" than wine. I have never understood why it does not get the respect it deserves. They think it is as old as bread and may be one of the oldest processed "foods" and that's what a real rich crafted beer is, food. True craft beer with yeast still in holds tremendous nutrition and taste. Those early Mesopotamians and Egyptians were making it out of the home at least five thousand years ago. Probably started when they discovered that a wet basket of barely would transform magically (by wild yeats) and when they drank the sweetened bubbly concotion, well... they felt like gods, at least for the night. People then continued to brew out of their homes for thousands of years and that tradition transferred into Europe and early American culture. Before prohibition, there was a strong tradition of local brew and variety. It is great to see it coming back. Homebrewing is not only a great hobby, these days, with high tax and other factors, it can save a good deal of money. The varieties of herbs and hops and adjuncts give you a never ending varitey to play with. Try Charlie Papazian's book. The complete Joy of Homebrewing
Amazing what people will do for a potable beverage when clean water is scarce. Watch out for ergot poisoning and "St. Vitus Dance".
Props to the Trappists though.
Some people view the introduction of alcohol into human culture as the first step away from the "garden of eden" to the dominator-driven shitheap you see before you now.
And it does get respect: in Germany.
ya funny how canada and the states went thru their separte prohibitions and revenuer attacks on the moonshiners. In canada the bankrupt breweries were all bought up by molson and labatt.
what a fortunate accident that they had banks to teach them the ropes
Beer! - It's not just for breakfast anymore!
Drink Guinness: It's good for you, gives you strength and doesn't leave you farty and bloated.
I like a good pilsner but the big names in canada are mostly without character. I have mostly given up beer because I get so much gas off the big names and the premium and imports are too expensive compared to scoth or wine. I'm not even sure what they put in beer with the modern continuous brewing processes. Even a mass produced beer like Becks is double what it costs in the states.
Also cut back on the beer because its easier to get fat
Nothing beats downing mass quantities of Greek Mythos Beer and pickled eggs the night before a protest.
Add a Bic lighter and you’ve got a rear firing flamethrower to use at the festivities in Syntagma Square.
I love pickled eggs.
those are nice but I really like the pickled turkey gizzards. Add some hot sauce and it's nearly the perfect food.
i'm gonna gag laughing picturing that party
In a positive note for Greek finances, the protestors are now gassing themselves.
+ 1 to the whole lot of ya from Moon Pie on down, nice!
Haven't had one in 3 weeks...going fucking crazy too. The IPA is the one wake up thinking about in the middle of the night. Torture, but ya know, I needed a break.
A friend with weed is a friend indeed.
CW
http://www.youtube.com/watch?v=nUQXVnfRCNE
You know why Bud has (seemingly) 8,000 packaging types on display at your local store? Space. They want the entire beer section for themselves, and that leaves a tiny section for the craft/medium sized brewers to put out a 6-pack or two. The mega-brewers also buy and brand certain beers in a way that makes you think it's a craft e.g. Blue Moon, a great beer... it's Molson/Coors.
There is a movie out there called "Beer Wars", documenting the competion between craft brewers, and the big boys, and includes a segment on shelf space.
A craft brewer manages to get his pumpkin ale (a traditional american beer) onto the grocery store shelf. Bud immediatly comes out with its own inferior pumpkin ale. The consumer, familiar with Bud, samples the shitty pumpkin ale, is immediatly turned off, and returns to the product he is comfortable with. Chances are he will never try the craft beer.
Three words - Rahr Brothers Ugly Pug! Oh wait - that's more than three, isn't it?
Guess how many doggies have already been run "down the hatch" tonight!
damn its fun reading posting about beer from the hammered...
+ 1 to you two!
And great article Wolf. You are an excellent researcher and writer.
Agreed. Nice article.
Finally something I can read without weeping - drinks all around!
Gross mass market beers are declining, but properly made 'hand crafted' beer, made the way every single beer, cheap, or expensive, was made before prohibition and consolidation, is going up. Sounds like consumers are saying no to thin, watery beer flavored gruel, not beer.
Finally ZeroHedge talking about the microbrewers versus the big brewers. Just finished a great IPA from California.
I'll drink to that!
The big brands taste like crap and cost too much for what they are. My new favorite beer is called Lobotomy Bock out of Indian Wells in California. 10.8% and tastes great at $8.99 per 6 pack. (At that ABV, it's more like a 12 pack!) In states where beer that strong is not legal, they have a shitty version. So check the bottle for the 10.8 before you buy!
Beer is my favorite food. A day without beer is a bad day.
The tax on any alchoholic product is sobering.
Cause you need a f**king lobotomy to live in Moonbeam's MexiFornia anymore?
You know they let them move the beer on trucks, right?
Maybe you and the three other people hiding in unabomber shacks in your flyover state didn't get the memo.
GMS, just continue flying over. We don't want your sorry ass around.
fuck your flyover state bullshit. The superiority complex is really unwarranted.
@Lost Wages
Miller High Life is a good, broad pilsner. Yeah, it lacks the crispness that a lot of microbrewer fans (i.e. IPA) like, but it's a great compliment across many foods, especially shellfish. I'd put money on MHL in any blind tasting with a local microbrewer.
If you never had the luxury of trying the Sam Adams Triple Bock, I weep for you. Forty proof. Seriously. And it tasted like a fine tawny port. Alas, it is out of production except for very rare small batches that are gobbled up by Jim Koch's best customers.
Miller High Life is about the best pilsner you can get these days. A bit too smooth (no bite) but goes down well. Grew up drinking Leinenkugel's (Menomonie Falls, WI), Rhinelander and Steven's Point Beer from northern Wisconsin in the late 70s. Man, that was some great pilsner for 1.50-1.80 a six pack. Even the Old Style and Stroh's was so much better when the brewers weren't global.
Miss the old local bock beer days. Every brewer in northern Wisconsin would come out with their version around Easter. Sigh.