What Declining Beer Sales Are Really Telling Us About The Economy

Don’t be blaming Dry January, there are too many delicious non-alcoholic beers out there. This problem runs deeper and it’s not a great indicator for the economy.

There are several factors at play…

Inflation is finally Impacting Consumers Decisions

Beer got pricier at the end of 2022 and beer lovers are rethinking what and how they buy their brews.

Dave Williams, vice president of Bump Williams Consulting has reported that people are increasingly buying 12-packs over 30-packs or even single servings of beer. They’re trading down too — opting for the more economic Keystone over comparatively pricey Coors.

According to the National Beer Wholesalers Association’s Beer Purchasers’ Index, the “below premium” segment was the only division to see an increase in demand in January compared to January 2022.

Consumer’s Expendable Dollars Are Moving from Beer to Spirits

There’s been a decades-long move away from beer to hard liquor…

“There was a point in time when beer owned the landscape,” said Lester Jones, Chief economist at the National Beer Wholesalers Association told FreightWaves. “It was the primary beverage of choice for people; it was the ultimate beverage of choice for the majority of Americans.”

And the introduction of Hard Seltzers and canned cocktails hasn’t helped, the latter of which saw purchases increase 35.8% from 2021 to 2022.

Beer Prices Are Only Going Higher

Craft brewers are in a particularly difficult space. Thanks to supply-chain shortages, rising shipping costs and even the war in Ukraine, the price of raw materials has skyrocketed and craft brewer’s already slim profit margins becoming paper thin. As a result brewers are being forced to raise their beer prices just to survive, a move that is equally devastating to cash-strapped bars and restaurants.

Big beer companies have the economic advantage of size and scale but they are hardly immune to the same pressures. The average price of mass-market beer in the United States rose nearly 8% from November 2021 to November 2022, according to Moody’s.

During the last 13 weeks of 2022, beer prices at retail rose “much higher than normal,” according to Dave Williams, and several major beer names including Bud Light, Miller Lite, Yuengling Lager and Coors Light saw prices rise by 10%.

Molson Coors, home to Miller Lite and Coors Light, upped its wholesale prices 5% in the spring of 2021 and another 5% in the fall. And retailors are adding to the overall retail price of beer at their end as well, to compensate for rising employee and location costs.

Beer No Longer Seen As Recession Proof

One thing’s for sure, beer prices aren’t going down anytime soon. And the long held concept that beer is recession-proof is faltering.

So fasten your seat belts beer fans because your favorite brew is facing troubling times as is our overall economy.

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