Historical Perspective on Declining Beer Sales

In the past ten days or so, global beermakers have reported declining beer sales. This surprises some observers, who assume that beer is the go-to drink during hard economic times. As Jeremiah McWilliams of Lager Heads notes:

At first glance, it would surprise us if the reason for slumping beer sales were weak economies. Beer is generally not that expensive. But we could be wrong about this — maybe people are cutting WAY back, starting with the six-packs.

Historical perspective puts the situation in context:

Put simply, and a bit crudely, when times are truly tough, poor people turn to hard liquor. And most people in the world are “poor,” at least relative to American or European living standards. For them, a “six-pack” is expensive, and, ounce for ounce, packs a smaller wallop than a bottle of spirits.

Here's a specific historical example: In the early 19th century, much of Europe was in political and economic turmoil. In what is now Germany, and in other parts of northern Europe, the “peasants,” as poor people were called then, could no longer afford beer or wine. Instead, they turned to “schnaps,” the generic name then for any cheap liquor made from whatever was available. In early 19th century Germany, schnaps was typically made from potatoes. (*1)

As the economy deteriorated, and more people switched from beer to hard liquor, brewers began closing their doors. Many migrated to the United States in search of work. (Among them was the Best family, which founded what eventually became Pabst Brewing.)

My educated historian’s guess tells me that the same thing is happening now in countries and regions around the world: Poor people who could afford beer a year ago are turning to cheaper spirits instead. In China, for example, the economy has all but collapsed in the past year. Many people in that rising middle class who might have drunk Heineken or Budweiser or Snow (the best-selling Chinese brand) will turn back to dirt-cheap -- and highly intoxicating -- spirits made from bamboo or rice. (*2)

So, too, in Latin America and eastern Europe, even if those regions seems relatively affluent. Brazil, for example, and Mexico, contain huge, sophisticated cities, but those cities are full of people who live close to disaster and who often scrounge for food. And most human beings don’t live in cities. They live in the country and are the first to feel the impact of global economic chaos. China may seem like a nation of urbanites, for example, but most Chinese people are still “peasants.”

So I’m not surprised that the global beer companies like SABMiller and others are reporting declining sales.


*1: People viewed potatoes as fit only for animals, and turned to it for sustenance -- or drink -- only when “real” food was in short supply. (There’s a reason potatoes are associated with the Irish and the Irish famine.)

*2: The bamboo liquor will knock you flat on your ass in ten minutes flat. I speak from experience. We still have some in our house, leftover from our last trip to China. I keep my distance....