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Yes, The Economy Is Slow -- It's Cutting Into Beer Money

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Cost-conscious consumers are opting for cheaper beer.

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By KEITH MORELLI | The Tampa Tribune

Published: May 16, 2008

TAMPA -- With gasoline and groceries gobbling more and more of their income, beer drinkers are seeking carbonated comfort in cheaper brews and slaking their thirst for suds at home rather than in bars and restaurants, distributors say.

Across the nation, beer brewers say the reeling economy is being reflected in the sales of beer, traditionally considered recession proof. The bottom line is that beer sippers and swillers have less to spend on expensive lagers and are opting for the cheaper brands.

Make no mistake, beer is still big business. Pepin Distributing of Tampa is making tons of money. They distribute high-end beers that sell for $25 or so a case to "value brands" that sell for $14 a case or less. All told, Pepin distributed 10 million cases of beer last year.

Marketing director Bill Gieseking said sales of beer in places like grocery, convenience and liquor stores is still strong and the rise in sales of cheap brews is somewhat mirroring the national trend.

"In April, Busch and Natural Light were up 13 percent over April of last year," he said. And between January and now, those cheaper beers are selling 5.4 percent more than over the same time last year. Busch and Natural Light are considered "value brands," as is Busch, which is up 7.4 percent over last year, having already sold nearly 200,000 cases, he said.

Sales of Corona, which is the most expensive beer distributed by Pepin, is down by 5 percent, he said.

Sales of kegs, which mostly go to restaurants and bars, is also down by slightly more than 1 percent, he said, indicating fewer people are drinking beer out. The rise in beer sales from retailers means people are choosing to drink beer at home, he said.

"People don't have that expendable income to go out to dinner and have couple of beers," he said.

The downturn in sales is enough to catch the attention of the industry, he said.

"Sales are soft," he said. And this is really the first time in this economy. Beer is not usually impacted, but this time we are."

Pepin is looking at ways to cut expenses. The distributor, which supplies 68 percent of the market in Hillsborough and parts of Pasco counties, isn't about to raise prices, even though the price of diesel fuel is ever rising. Layoffs aren't planned either, he said.

"We're just going to ride this storm out," he said. "We think this trend will turn around by the end of the year."

Beer drinkers in the Tampa Bay area make the business strong here, he said.

"The Tampa Bay market has always been a great market," he said. "We are driving the state."

Miller Brewing Co. officials this week in Milwaukee said that they are seeing a shift from higher priced premium beers to what they termed economy beers. The trend began in January, they said.

Beer companies say they are selling just as much beer, but are noticing the shift to the cheaper brands.

Beer distributors all over have reported a decline in beers delivered to bars and restaurants, while sales to retail outlets like package stores and supermarkets are on the upswing.

Joe Ciaccio, owner of Dewey's Liquors in Temple Terrace says he hasn't notice much of a shift in sales of one brand to another. That's because his prices are on par with or cheaper than those of some of the larger retail markets.

He has been in the retail liquor sales business for three decades, he said, and is second generation liquor store owner.

"I can't say we're seeing people go from Corona to Natural Light now," he said.

George Trinchet walked out of Dewey's with an 18-pack of cold Bud Light to help celebrate his wife's birthday.

"I haven't changed beers," because of the economy, he said. "I may drink a little less or not go out as much."

Information from the Associated Press was used in this report. Reporter Keith Morelli can be reached at (813) 259-7760 or kmorelli@tampatrib.com.

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