Wikinvest Wire

The price of beer is going up

Wednesday, August 26, 2009

Is it true that the business of making and distributing beer is largely recession proof?

I've been led to believe that, during economic downturns, bars and other drinking establishments might have a tough time keeping even their regular customers lubricated at retail prices (and unpaid bar tabs probably rise), but that doesn't mean those regulars are drinking any less than they did when times were good - they just do more of it at home.

This LA Times report details upcoming price increases by the nation's two major brewers who don't sound too concerned about losing any customers.

The nation's two largest beer sellers said Tuesday that they planned to raise prices, although they provided few specifics.

"We feel like we will take a moderate price increase on our portfolio," said Peter Marino, spokesman for Chicago-based MillerCoors, maker of Miller Lite, Coors Light and Blue Moon. He blamed higher costs for the price hike.

Like other food manufacturers, brewers have been hit by commodity price increases in recent years, but have not been as aggressive about raising prices, analysts said. Traditionally they raise prices in the fall.
The price increases are part of a strategy by the companies to protect profits rather than market share, said Harry Schuhmacher, editor of the trade publication Beer Business Daily. Consumers should expect to pay more because "retailers will not eat the price increases."
Now that sounds like a cool job - working for Beer Business Daily.


Aaron Krowne said...

But people will buy fewer beers, or buy fewer beers out -- so that's deflation, right? Right?

Maybe I'll get it if I have just one more cold one...

Tim said...

Instead of having three four dollar beers at the bar, they'll just buy a 12-pack and drink it all at home, completely unaware and uninterested in whether they are causing in-flation or de-flation.

sugbear said...

actually this is price fixing based on extroardinary supply concentration, and it will hit consumers all up and down the chain.

you can drink 12-pack in place of 6-pack or drink at home vs bar, but this is just moving along the chain. there are plenty of substitutes: just boycott these guys and prices will come back around. details and analysis here:

Anonymous said...

bah. nothing new. Beer's been going up sharply ever since that cold snap in the '07-'08 winter. Before then, a 6-pack of decent bottled beer was $4-6 and most bomber bottles were under $4. Now it's hard to find the big bottles for under $6 and six-packs of fairly common brands like newcastle and heinekin are up to about $8 in most supermarkets. At least, here in socal anyway.

me said...

This is a result of consoldation in the industry, remove one major player and prices go up.

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