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To understand the economy, look no further than beer

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If you didn’t already know, Planet Money on NPR has an excellent newsletter, and a featured segment of that newsletter this week laid out everything that beer sales can tell us about the state of the U.S. economy. It turns out to be a surprising amount, though the data can be a bit confusing. Just like the economy!

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Beers like Natty Light—the ones that taste only slightly more flavorful than tap water—are categorized as “subpremium,” and in the COVID-19 era, those varieties have experienced increased sales for the first time in a decade. Store sales of subpremium brands are up 11% over this time last year, a spike that could be attributed to the fact that they’re less expensive and sold in bulk, which you can’t say about heavier, more caloric, and more expensive six-packs of premium craft beer. Who wants to be running to the store right now more than they have to, or spending more money on non-essentials than a precarious employment situation allows for?

So you’d think that these figures would mean watery corporate brews are reigning supreme during the pandemic. But despite their rise in sales, they’re still not the leaders of the pack, and that’s because all beer sales are up in stores nationwide. Domestic subpremium brands are up 11%, sure, but imports are up 15% and craft beer sales are up 23%. And don’t even get us started on hard seltzer which is up 246.7% over last year. (That is not a typo.) Craft beer is more expensive, so it might seem odd that people are shelling out for it in a recession. As Planet Money points out, though, craft beer is largely impervious to economic downturn because its customer base is a self-selected group of young professionals with disposable income—the exact demographic favored to weather any recession, and the one that craft beer advertising has always targeted.

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Okay, so does that mean craft beer brands are positively making it rain over all the other beer brands right now? No, it doesn’t mean that either. Because all of the increased sales mentioned in the paragraph above are store sales, not draft sales, the latter of which occur at breweries, bars, restaurants, and all the other places we’re not supposed to go right now. While a brand like Natty Light has always relied on store sales for the vast majority of its revenue, craft breweries make a much larger portion of their revenue from taps—as much as 40%. Without tap rooms, baseball games, and the like, craft brewers are struggling despite the gains they’re seeing at the supermarket. The smaller the brewery, the worse the struggle.

If the recession lasts long enough and hits consumers hard enough, there’s a chance that premium craft breweries will eventually see their customers turn toward cheaper subpremium brands, but it’ll probably take a while for those consumption habits to change. As Bart Watson, chief economist of the Brewers Association, told NPR, “I mean, it’s hard to imagine somebody who loves to drink IPA suddenly saying, ‘I’m going to save money by going to Busch Light.’”

Marnie Shure is editor in chief of The Takeout.

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DISCUSSION

anavriniv
Zaphod's Heart of Gold

I’d rather drink no beer than drink nattys or bud lights. And really, it’s not even a tough decision...I’ve never once wanted a beer and headed for those or even considered them, they’re just not good. Especially bud light which is nearly undrinkable.

Actually I’ve been drinking a lot less beer in general