Comments on: Expensive Beers Selling Better Than Cheaper Beers. Huh?

By: Corporate Barbarian

Corporate Barbarian — Wed, 22 Jul 2009 19:56:11 +0000

Wal-Mart and other discounters are doing well in this recession compared to other retailers. But beer isn’t a discount item. There’s more brand loyalty when it comes to beer. If I need to buy a case of beer, I’m going to buy what I usually drink, which happens to be Sam Adams Lager. I wouldn’t buy Bud or Miller if they sold for 10 cents a bottle, because to me they are inferior products. I only drink a few bottles a week, so I’m willing to pay more for quality.
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By: Dave C.

Dave C. — Fri, 17 Jul 2009 15:25:39 +0000

On a related note, Chick-fil-a is a great company with a great product. I’m not surprised their sales keep going up.
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By: trevor

trevor — Fri, 17 Jul 2009 09:10:57 +0000

I think you can cut back on things but sometimes it is just nice to forget about cut backs. I agree that you can make cut backs in areas where you don’t really have to notice it. I think that we have cut back on certain foods which are expensive. I have been working hard to make sure that I do not have to make too many cut backs with a data entry home job to make passive income.

By: Brian

Brian — Fri, 17 Jul 2009 04:25:08 +0000

Yeah, Harpoon is a good example of a craft beer I’d say. Man, I want to talk economics in this, but I’m so focused on the beer now…ok, here goes:
Building off of what KC said, during a recession, rationality is that individuals will save mostly across the board, but will therein spend a similar (albeit less in most cases) amount on different products. Such as the craft beers (Let’s say Duvel and Chimay) and going to the movies. Not necessarily going to the restaurant, although I do love the substitution effect on Panera and chick-fil-a.

By: the weakonomist

the weakonomist — Fri, 17 Jul 2009 00:19:39 +0000

TIE, I see what you mean. Just from personal observations I’d guess restaurant sales of all beers are down because people are getting it from their local stores. Perhaps they’ve learned $5 Bud Lights at the Olive Garden are a rip-off.

Adam, thanks for the subtle hint of me picking the wrong word, I’ve edited the post to show they are in fact substitute goods.

You make a good point about the growth of an industry. Since alcohol deregulation (thanks Carter!!) the growth has been steady. Your argument deserves more scrutiny from those that are paid for scrutinizing. Great contribution!

By: Jeremy

Jeremy — Thu, 16 Jul 2009 23:39:47 +0000

I think it’s great that maybe Americans are waking up to the fact that the mass produced swill that is consumed by the millions of gallons is not what beer is meant to be, even though the funny commercials and talking frogs say otherwise.

The adjunct filled uber light pilsners of America have their place, but as Adam said, craft beers have been steadily on the rise for some time now as more people are trying microbrews and realizing there’s more to appreciate about beer drinking than choking down a case of natty light.

As I type this I’m enjoying a wonderful Dogfish Head 60 Minute IPA. It’s simply wonderful. The rest of my fridge is filled with beers from Bell’s, Sierra Nevada, Great Lakes Brewing Company, Rogue, and some of my very own homebrew.

I love beer.
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By: Adam

Adam — Thu, 16 Jul 2009 18:55:13 +0000

Most people who use the terms ‘craft beer’ and ‘craft brewer’ use them to refer to companies that are small, independent, (NOT owned by a larger company), and generally stay away from adjuncts like rice and corn. Blue Moon is not a craft beer, it is a product of Miller-Coors. At best, I suppose it could be a specialty beer. See http://www.beertown.org/education/craft_defined.html

And craft beers and your Bud Lights of the world aren’t ‘complimentary goods’ at all. Complementary goods are products that you buy along with each other (peanut butter and jelly is the classic example). I think what you meant was they are substitute goods.

But, really, there is no element of behavioral/irrational economics here. Craft beers, as its own unique market (which it is in my view), have seen steadily increasing demand over the decade, recession or not. Correspondingly, output (sales) has risen. Pure classical micro.

By: The Incidental Economist

The Incidental Economist — Thu, 16 Jul 2009 17:02:00 +0000

Do the data on beer consumption by brand/type include both private purchases (e.g. from a liquor or grocery store) and restaurant/bar sales? If it only includes the former than what we may be seeing is a substitution away from going out to staying in.

Otherwise, we’re seeing some other manifestation of substitution, as suggested by prior commenters.
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By: KC

KC — Thu, 16 Jul 2009 15:13:20 +0000

During a recession people don’t stop spending money and they don’t automatically reduce their habits across the board. They reduce costs in large areas and make up for them with smaller luxuries in life. You might not take that cruise to Cancun, but you might make up for that vacation by eating at nicer restaurants and drinking craft beer. There are lots of articles I’ve read recently, sorry I can’t remember any of them specifically right now, but they state the same thing – people aren’t skimping on small luxuries as much as they are the bigger ones. You may not be able to afford that lease on the Mercedes anymore, but you are still not going to skip drinking your Sam Adams.

By: Donnie

Donnie — Thu, 16 Jul 2009 14:49:44 +0000

Perhaps people are foregoing expensive wine/liqour for the expensive (but cheaper) beer.

Also, I don’t know if it is a craft beer or not, but Shiner Bock is the best beer for my money.

And thanks to wikipedia, I now know that Shiner is the #4 selling craft beer in the US and #1 in Texas.