2
Hard times are good for craft beer
Craft beers from Brooklyn Brewery
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Steve Chiotakis: For the beer business, it seems the better the brew, the more the bucks. Sales figures show craft beer -- you know, the fancy, pricier stuff -- is outperforming cheaper beer, even in the recession. Ben Calhoun reports.
Ben Calhoun: On a recent morning at Brooklyn Brewery, bottles marched single-file into a labeling machine and pirouetted out in shiny new labels. In the rumbling brewhouse was Steve Hindy:
Steve Hindy: Founder and president of Brooklyn Brewery.
Hindy's brewery sold its first beer in 1988. And is one of many breweries that have made American craft beer successful. But he admits he was ready for trouble when the recession hit.
Hindy: We actually tightened our belts. We cut back basically wherever we could.
Hindy froze hires and trimmed his marketing budget. But a funny thing happened: even as the economy tanked, sales of Hindy's craft beer didn't.
Hindy: In fact, the opposite has happened.
Even though a Brooklyn Brewery six pack can run you $10, sales are up 26 percent. Industry-wide, craft beer is up 10 percent, according to data from the research firm Information Resources Incorporated. Not only that, so-called "Premium Craft Beer," the ultra-pricey stuff, that's grown the most.
Hindy: Yeah, it is kind of counterintuitive, isn't it?
So the question is, why? Kaumil Gajrawala is a beverage market analyst for UBS, and says there's a few explanations.
Kaumil Gajrawala: If you can afford the better beer, you're probably less impacted by the economy.
He also buys into what a lot of craft brewers believe. That is: when people cut back on big things, they ease the blow by finding more affordable ways to splurge. So if you're not buying a fancy bottle of wine, not buying a new car . . .
Gajrawala: Not going on vacation, not buying a whole variety of things -- if you can't do any of that, you probably would like to trade up something like your beer, to something that you consider higher quality, something you enjoy more, some that gets you at least a little bit closer to feeling better about what's happening in the economy.
Feeling better in New York, I'm Ben Calhoun for Marketplace.
It's great that sales are up for craft brewers, but what will happen if the Senate (now sitting in the Finance Committee) passes higher tarrif on beer whose alcohol by volume is over 4.5% ABV. This tarrif is tied to the Health Care legislation to discourage the consumption of higher gravity beers, which the Committee deems "unhealthy." The higher ABV and more favorable beers are what craft brewers produce. That $10.00 Brooklyn Brewery six pack in your story may go up to $11.50 and squelch that increase in sales.
