Monday, March 30, 2009

Beeronomics: Recession Proof?

The Portland Business Journal is reporting that Widmer-Redhook lost $33.2 million in 2008.

From the article:

In the [annual] report, the company said one-time charges related to the merger, the economic environment and fuller-flavored offerings from big-name domestic brewers have sliced into the company’s sales.

This is the first place where I have seen it said that offerings like Budweiser’s American Amber are starting to cut into craft brewer's markets. I hope this is not a reflection of the market, which only turned really grim in late 2008. As 2009 is horrendous, this would be very worrying for the state of craft brewers if it represents a general trend.


Ben Price said...

So much for beer having inelastic demand. I guess maybe that Beer tax was ill conceived.

Patrick Emerson said...

It is not clear how much income elasticity of demand is at the heart of Widhook's troubles. But what is perhaps most worrying for the Oregon craft beer industry is both the income and the cross-price elasticity of demand. In other words, in tough times do consumers switch to lower cost alternaitives and are they extremely relative-price sensitive. This matters in the beer tax debate as well.

What the industry needs is good data analysis, but my attempts to get real micro data have failed so far.