Winning the War of the Wallet: Big Beer Feels the Pinch

The cost of everything just keeps going up. Just putting enough gas in your car to get to work can seem more like financing a small home these days. It's not just the price at the pump that is rising, either. You'll find prices for everything else going up along with it – bread, milk, eggs and even beer. In fact, more and more big name breweries are reporting losses in the marketplace. The pinch is not confined to only larger breweries, though. Many smaller companies that produce expensive beer are also noticing a decline in sales.

The stagnant economy has not done brewers (or drinkers) any favors. Budget-minded drinkers all over the country are looking for alternatives to their preferred brews as the cost for a six-pack creeps up and up. When you add in new taxes being levied on beer by state governments, the picture becomes ugly very quickly. While you might think that all breweries are suffering the same here, that's not quite right. While beer sales in general are down, they are not down in all segments of the market to an equal degree.

Budget brews are the big winners in this economy. While major breweries like Budweiser and Coors (with lower-tier pricing than microbrews) are reporting declines, budget brews are actually making gains in the market. Consider Beer-30, a relative unknown just a few years ago. The company is represented in 42 states today, with more than 250 distributors carrying the brand. There is more. Beer-30 will also be coming to a Wal-Mart near you, as well as Rite Aid and quite a few other stores that are generally equated with "budget shopping." 

Beer-30 is not the only company that's experiencing growth in a difficult time. Anchorage Brewing Co. has inked a deal to add Wisconsin to their distribution area, bringing their total number of states up. Many other "budget brewers" are also reaping benefits here. As consumers keep looking for ways to save money on the products that they need (and beer is usually rated as a necessity rather than a luxury), lower priced beers will be the big winners.

What does this mean for higher priced microbrews and for big breweries? The first effect has already been felt – a decline in sales. That doesn't necessarily mean that they're going to go down the tubes, though. Most will recover – it's a matter of slogging through the slow times.

Posted on April 6, 2011 .