"The gap in growth rates between beer, wine and spirits has been narrowing," Brian Sudano, managing director at consultancy Beverage Marketing, told the news agency. "As economies go down, there [image-nocss] are a lot less parties. Beer is more of a casual, affiliation with friends, watching the game at home on television (drink]."
In recent years, beer has lost market share to spirits and wines in the United States as younger people turned to wine from beer. Sudano does not believe that trend has been reversed. But faced with hard times and leaner wallets, consumers may be more willing to reach for a cold brew.
"If the economy continues to struggle, we could see in the first half of next year beer gain a little share. But it's still too early to tell," he said.
So far, beer companies have reported fairly robust profits, said Reuters.
In November last year, MillerCoors, the North American joint venture of SABMiller and Molson Coors, posted a 13% jump in its third-quarter profit and said revenue growth outlook for the rest of the year was strong. Sudano predicts strong growth for the joint venture because of gains from the Coors brand. A-B in November won some praise from analysts after it announced its last earnings report as an independent company. The company reported a 6.5% jump in net sales and an expansion in gross margins. A-B has since merged with InBev.
"We are seeing some pretty aggressive pricing from beer, whereas pricing for wines and spirits seems to have dropped off," Richard Hurst, a senior vice president at market researcher Nielsen, told the news agency.
According to Nielsen statistics cited by Reuters, dollar volumes for beer grew 2.9% in 2008, compared with about 3.2% in 2007. Dollar volume for wine rose 4.7% for 2008 as of mid December, compared with a 6.1% rise in the previous year. The Nielsen data reflects sales at food, drug, liquor and convenience stores, but excludes restaurant sales of alcohol and sales at some big-box retailers like Wal-Mart.
"The beer business is actually accelerating in general during the economic downturn," said Constellation Brands Inc. CEO Rob Sands in a recent conference call. Constellation is the world's largest wine company by volumes, but has a beer joint venture with Mexico's Grupo Modelo called Crown Imports. The company said it continues to see a slight slowing in the U.S. wine category.
"Consumers simply aren't digging in their pockets anymore to buy those $25 to $30 bottles of wine, beverage industry consultant Tom Pirko told Reuters.
Beer, like other alcohol categories, faces its own set of challenges as consumers become more thrifty. Sales of alcohol in bars and restaurants have fallen, as consumers spend less on eating out. Consumers are showing signs of changing many consumption patterns.
"I think you are seeing what we would call trading-down activity in alcoholic beverages," Lauren Torres, an analyst at HSBC Global Research, told the news agency. She noted that there has been an improvement in the beer market this year. "People are changing their habits. For instance, they're not consuming as much in bars and restaurants, but they are still consuming at home."
A stratification can be seen among beer companies, the report said, with imported beers that are more expensive faring worse than many of the more mainstream commercial labels, such as A-B's Budweiser, Miller and Coors. Domestic brands continue to perform well, said Hurst.
The broad alcohol sector also had a weak December by some measures, said the report. "Coming into 2008, the business had a lot of momentum behind it," said Hurst. "Since then, it's been a lot more difficult to analyze and track what the longer term trends are. One of the things we've noticed is that December looked like a very slow month [with] a lot of declines in each of the categories."
But despite the pressures from a weaker economy, the major U.S. beer businesses may be able to benefit by cutting costs, particularly given the recent consolidation in the industry. Cost synergies were touted as one the big advantages of the newly formed MillerCoors joint venture, and A-B's new parent InBev is famous for being aggressive in pushing both sales and cost cuts.
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