Suds Soaking Up Cash
Over the course of last year’s fourth quarter, the average price for a case of beer rose between 7% and 8%, according to research from Bump Williams Consulting. That’s nearly double the amount beer prices typically increase in a year.
Industry observers maintain the beer industry succeeded at shielding customers from price increases for the better part of 2022, but as cost pressures mounted from manufacturers and wholesalers alike, prices inevitably had to rise. With everything from delivery to production becoming more costly, the consumer was bound to eventually foot the bill.
Buying Less Beer?
Dollar sales for beer reportedly grew 5.2% in Q4, but that was driven by higher prices. Volume of beer sold fell 2.3% over the same time period. As is true of most discretionary spending, when things become more expensive, consumers tend to cut back on purchasing.
That said, there are still plenty who remain loyal to their beverage of choice and industry leaders remain optimistic. Anheuser-Busch (BUD) CEO Brendan Whitworth expressed confidence in the AB InBev subsidiary, stating it has the ability to succeed in a challenging economic environment due to its wide array of products across various price points.
Barley, Yeast, Hops, and Changing Habits
While rising beer prices have somewhat muted sales, consultants say beer drinkers are merely adjusting their purchases, rather than giving up the malted beverage entirely. Some are simply buying smaller packages, or fewer beers. People are also taking fewer trips to the store, potentially in a bid to save on gas.
Single serve beer sales are also up, which speaks to the trading-down trend in terms of package sizes. Industry experts say, if there’s a social occasion that typically serves beer, consumers will be buying ahead of time. So it looks like Dry January will remain a fun marketing hook for another year at least.
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