Beer sales slip across Europe; pricey brands down in U.S.

[TheLancinator]

Beer sales slip across Europe; pricey brands down in U.S.
By Jane Wardell, AP Business Writer


LONDON — Britons may be reeling from the international financial crisis, but few are crying into their beer.

Beer sales are falling as the economy worsens, defying predictions in some quarters that consumers would switch to drinking cheap supermarket booze at home even if they did shun more expensive pubs and bars.

The British Beer and Pub Association reported Monday that total beer sales fell about 7% in the third quarter — the equivalent of 161 million fewer pints (20 million liters) compared with the same period in 2007.

Sales of the iconic British pint in pubs have been in decline for years, leading to the closure of thousands of inns around the country.

But the association's Quarterly Beer Barometer reveals that the downturn has now broadened to supermarket sales, which have until now held up as grocers attracted consumers with packs of beer at lower cost.

"The accelerating decline in beer sales is a clear sign of a worsening economy, worried households and weakening spending," said Rob Hayward, the association's chief executive.

Supermarket and liquor store sales fell 6% from July to September compared with the same period last year, slightly behind the 8.1% drop recorded for pubs, bars and restaurants.

From the sidewalk cafes of Paris to the beer cellars of Berlin, there are signs Europeans are cutting back on their drinking.

Sales of French champagne fell 2.6% in the first eight months of the year, according to figures from champagne winegrowers' committee CIVC. Domestic sales were down 4.2%.

Gerard Laloi, who heads a group that represents France's bar owners, said beer sales have been falling since January, with bar beer sales down 12% in the first nine months of 2008, compared with the same period a year earlier.

Laloi blamed the decline on a smoking ban which took effect in bars and restaurants on Jan. 1, as well as on the general economic downturn.

Germany's brewers sold just under 11 billion pints (about 1.4 billion ) of beer in the first six months of this year — before the crisis took hold, but as concern grew in the wake of the U.S. subprime meltdown. That was a decline of 1.7% from the first half of 2007, the Federal Statistical Office said.

The flagging economy is not the only factor in the decline. The German statistics agency pointed to this summer's poor weather, the introduction of smoking restrictions and price increases as a result of rising energy costs and higher prices for hops and malt as factors in the drinking decline.

As in other countries, beer consumption in Germany has been falling steadily for more than a decade, a trend that experts have attributed to an increasingly health-conscious public.

In the U.S., beer sales are slowing, but still growing, said Benj Steinman, publisher of trade publication Beer Marketer's Insights. Sales to retailers so far this year are up about half a percent, he said. That's down from the 1.4% growth rate the beer industry saw last year and 2.1% in 2006. But Steinman notes that the beer industry's long-term growth rate is about 1% a year.

"The beer industry overall is performing surprisingly well given what's going on," Steinman said. "It's just resilient. It's not recession-proof but it resisted more than many other industries, seemingly."

Sales of imported beer, though, are down 3%, Steinman said, a sign people are curbing their purchases of pricier brews. Micro-brewed beers, which command higher prices, though often not as much as imports, are up in the mid single digits this year.

The British Beer and Pub Association, whose members brew 98% of Britain's beer and include nearly two-thirds of the country's pubs, said that the problem was being exacerbated by increases in the government's alcohol tax, which brings in around $180 million a year. The government hiked beer duty 9.1% in this year's national budget in March.

"This sales trend is symptomatic of the problems infecting the broader economy," said Hayward. But, he said, government policies "are making a bad situation worse."

The association warned that the falling sales will leave the Treasury facing a 1.2 billion pound ($1.8 billion) tax shortfall, in real terms, over the next three years, compared with their forecasts.

More than 1,400 pubs closed last year as a nationwide smoking ban and rising costs took their toll on beer sales, according to the Campaign for Real Ale, a consumer group promoting traditional pubs.

To take up the slack, pubs have been stepping up the food side of their business. Beer sales at Mitchells & Butlers, Britain's second-largest pub group, now account for just a quarter of all its revenue.

Some lawmakers fear the sliding pub sales will have another effect — spurring pub owners to return to promotions that encourage binge drinking, such as selling cheap drinks until a team scores in a soccer match.

About half of the 57,000 pubs in Britain have ditched a voluntary ban on aggressive happy-hour deals and other promotions after the beer and pub association said it could violate European competition law.