Beer Consumption? Yes, It's Declining. (And We Know Why.)

Our man-on-the-beer-beat in St. Louis, Jeremiah McWilliams of Lager Heads reports on declining global beer sales/consumption. No surprise, right?

Of course, twenty years from now, it'll be interesting to learn what an economic historian has to say about production and use of barley, rice, hops, etc., versus the purchase of those reported by brewing companies.

Because we can assume that some of the crops will end up in homemade beer, sake, spirits, and so won't be shown in tallies gathered by industry analysts or reported to taxing authorities. (That's one way that government officials were able to measure the amount of illegal alcohol production during Prohibition: What got planted? What got sold? What got taxed?)

Beer Sales: Down, Down, Down (As I Expected) -- And Those "Efficiencies" Are Paying Off

News today from MolsonCoors: Beer sales are down.

Of course they are. And you're scoffing at the idea that somehow this is all due to the dollar's strength against other currencies. That's because you read this and this. S

ee how all your new-found historical perspective is paying off when you read the news? History's not so bad. Really, it's not! (Note, too, that MillerCoors joint venture is indeed paying off, thanks to all those "efficiencies" the venture's leaders began working on a year ago. Which may be what saves them from the fate I predicted.) (Although to be fair to myself, when I made that prediction, I had no idea that InBev was about to ram the gates.)

Global Recession, Alcohol Consumption, and the Moments That Neo-Prohibitionists Crave

This from today's New York Times.

As I noted here and here, context and historical perspective alter the picture. But it’s worth contemplating the preachy subtext of the editorial piece in the Times: Hard times = propensity to drink to excess. People who enjoy alcohol, and the right to drink, ought to worry about that subtext.

Historically, prohibitionist sentiment flourishes during periods of economic, social, and cultural turmoil. A century ago, for example, Americans were adjusting to the upheaval that accompanied the birth of the industrial economy, and the emergence of technologies like electricity and the telephone.

Prohibitionists had little trouble persuading a troubled, frightened nation that alcohol made life worse, and that eliminating it would make life better.

We’re living through an even more tumultuous era now, as digitization and the internet force us to re-imagine media, education, and the economy, and as globalization and terrorism rattle our psyches. Neo-prohibitionists will seize the moment, and prey on Americans’ insecurities. They're already working to build a dry America one step at a time: A new local tax here, a more strict licensing regulation there; elsewhere programs designed to teach children to demonize, rather than respect, alcohol.

As the recession deepens, and turns to depression, we can expect new “scientific” studies demonstrating the dangers of turning to drink during hard times. Drys will blame alcohol for upswings in, say, crime or domestic violence, whose rates typically rise when societies are in turmoil.

As global demand for food increases, and food prices soar, drys may argue (as did their counterparts a century ago) that valuable crop land ought not be “wasted” on hops or barley; that corn should not be “wasted” on beer.

In short, in hard times, prohibitionists argue for restrictions on drink -- for a more intrusive nanny state -- on grounds that those hard times lead adults to drink. Drinkers: beware.

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Good source of information for all things alcohol: Alcohol Problems and Solutions

More Thoughts on Beer In A Bad Economy

First, an additional thought on declining beer consumption. As I noted in a previous post , the giant global beer companies are confronting declining sales in so-called "developing" and "third world" nations/regions. The ripple effect, however, will likely play out in the so-called "first world" countries/regions, like the U.S.

Why? Because companies like SABMiller and A-B InBev function on behalf of shareholders, and shareholders want healthy share price. So if demand for product drops in Croatia or Brazil, company managers will try to compensate for that decline in some other market. To do that, they'll devote more money to advertising in, say, the U.S., or use price-cutting to woo consumers.

Bottom line? Declining beer sales in China, Brazil, or Poland will spark beer wars in the U.S, Canada, or western Europe. And when the Big Brewers go after each other, small brewers get caught in the crossfire. (A matter I discussed in detail in two blog series I ran this summer, one here, and one here.

The second thought about beer-in-a-bad-economy concerns homebrewing. In the 20th century, interest in homebrewing soared during hard times, and then declined during good times. So we can expect to see traffic increase at brewing supply shops, on and offline.

But before you get too carried away with the do-it-yourself stuff, the always entertaining Patrick Emerson of the Oregon Economics blog studied the numbers. You may be surprised at the result. Read his thoughts here.

Historical Perspective on Declining Beer Sales

In the past ten days or so, global beermakers have reported declining beer sales. This surprises some observers, who assume that beer is the go-to drink during hard economic times. As Jeremiah McWilliams of Lager Heads notes:

At first glance, it would surprise us if the reason for slumping beer sales were weak economies. Beer is generally not that expensive. But we could be wrong about this — maybe people are cutting WAY back, starting with the six-packs.

Historical perspective puts the situation in context:

Put simply, and a bit crudely, when times are truly tough, poor people turn to hard liquor. And most people in the world are “poor,” at least relative to American or European living standards. For them, a “six-pack” is expensive, and, ounce for ounce, packs a smaller wallop than a bottle of spirits.

Here's a specific historical example: In the early 19th century, much of Europe was in political and economic turmoil. In what is now Germany, and in other parts of northern Europe, the “peasants,” as poor people were called then, could no longer afford beer or wine. Instead, they turned to “schnaps,” the generic name then for any cheap liquor made from whatever was available. In early 19th century Germany, schnaps was typically made from potatoes. (*1)

As the economy deteriorated, and more people switched from beer to hard liquor, brewers began closing their doors. Many migrated to the United States in search of work. (Among them was the Best family, which founded what eventually became Pabst Brewing.)

My educated historian’s guess tells me that the same thing is happening now in countries and regions around the world: Poor people who could afford beer a year ago are turning to cheaper spirits instead. In China, for example, the economy has all but collapsed in the past year. Many people in that rising middle class who might have drunk Heineken or Budweiser or Snow (the best-selling Chinese brand) will turn back to dirt-cheap -- and highly intoxicating -- spirits made from bamboo or rice. (*2)

So, too, in Latin America and eastern Europe, even if those regions seems relatively affluent. Brazil, for example, and Mexico, contain huge, sophisticated cities, but those cities are full of people who live close to disaster and who often scrounge for food. And most human beings don’t live in cities. They live in the country and are the first to feel the impact of global economic chaos. China may seem like a nation of urbanites, for example, but most Chinese people are still “peasants.”

So I’m not surprised that the global beer companies like SABMiller and others are reporting declining sales.

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*1: People viewed potatoes as fit only for animals, and turned to it for sustenance -- or drink -- only when “real” food was in short supply. (There’s a reason potatoes are associated with the Irish and the Irish famine.)

*2: The bamboo liquor will knock you flat on your ass in ten minutes flat. I speak from experience. We still have some in our house, leftover from our last trip to China. I keep my distance....

30 Years Of The AHA (Yep. You Gotta Keep Reading to Learn What And Why)

Nearly lost amidst repeal madness is another (upcoming) anniversary: On December 7, 1978, Charlie Papazian and Charlie Matzen launched the American Homebrewers Association. I wrote about that event and the organization in my book -- and as the anniversary approaches, I remember this:

Interviewing both of the Charlies about that day in December. They both told me (independently) about sitting on the floor of a friend's apartment, madly cutting and pasting, creating the first issue of Zymurgy. This was back when people still used mimeograph machines (most of you probably don't even know what those where) and real paper and scissors and bottles of glue.

They acted out of sheer passion, the kind that flows when you're young and you believe anything's possible. I think of it as the stuff of which history -- large or small -- is made.

So to the Charlies I say: Thanks for that day in December. And to Charlie Papazian I say: Salud! You've made our lives better, one beer at a time.

NOTE: I have tons of deleted prose about this event, material that never made it into the book. Starting Sunday, I'll be posting it in a series devoted to that moment in the history of American beer. (Gulp. Did I just promise a series of blog entries?? Oy.)