Friday, July 31, 2009

Beeronomics: Normal and Inferior Beer

Speaking of macrobrewing...

And so it come to pass: sales of beers like Bud, Corona and Miller are falling precipitously, while sales of beers like Busch and Keystone are up. Inferior goods are goods for which demand rises when incomes fall. Of course these infoerior beers are made by the same folks that make the normal stuff, so there is no reason for the beer companies themselves to be hurting.

I keep getting mixed reports about how craft beer is doing. I know anecdotally that some company's sales are soaring, like Ninkasi (proving that there is justice in the world) whole some are struggling. The question is, do consumers of craft beer think of it as distinct from macro lagers (as I do) or just a bit better? In economics terms, how close a subsitiute are macro lagers to craft beers (especially ales)?

At any rate, the recession is proabably a prime motivator behind the 'session' beers that are now becoming popular with craft brewers. I would be interested to know, for example how Full Sail's Session sales are doing compared to its regular line-up. My guess is pretty well since they just introduced a second Session.

None of my attempts to collect data to answer this question have yielded any fruit, so we can only wonder...

Anyway, my advice: if you are 'trading down,' go for the Session and skip the Keystone.


Ralph said...

Comparing macro lagers to craft ales is like comparing nails to screws.

- Price: $12
- Volume: 12/11oz 132oz
- Price per oz: 9.1c
- ABV: %5.1

- Price: $7
- Volume: 12/12oz 144oz
- Price per oz: 4.8c
- ABV: %4.2

As a substitute in economic terms we'd have to ask each person whether they are driven by utility-cost or benefit-cost (even benefit-cost can vary from person to person).

From a pure utility-cost perspective, getting alcohol into me, it is a no-brainer, Keystone it is. From a benefit-cost, meaning enjoying the flavor and subtleties, I might go with the Session. Session isn't my favorite, too much DMS for me.

I wish there were more competition in the Session price/value category.

Jacob Grier said...

I'm personally in the camp of not viewing macros and craft brews as even imperfect substitutes for each other. In most cases I'd rather just not drink at all than buy macros.

My own recession strategy has been to cut down on beer purchases altogether, dipping more frequently into my extensive collection of liquor bottles instead of buying new products. Bourbon and Scotch I already own turn out to be better substitutes for craft beers than Budweiser would be.

(Also, my captcha for this comment is "methe," perhaps suggesting another substitute good superior to Bud?)

Oliver said...

I would also be curious to know whether the locavore and sustainable food movement is blunting the effect of the recession on microbrews, at least in certain areas.

Vanessa said...

Apparently my subconscious has been tightening my belt for me for the last year because I always buy Sessions. Not because it's cheap, but because it's DELICIOUS.

Dylan said...

As an OSU student in the early 1990s, I frequently heard the urban legend that the Superette on Monroe sold more Keystone Light than any other store in the West, for what's it worth.....

And I agree with you Jacob - I've been raiding my liquor inventory instead of cashing out for more beer. I guess that it's better to use up a sunk cost than to incur a new one.