WTF beer?!!

[valkyrie]

Here's an article I just read in the paper. Thoughts?

Beer's grip slips as tastes shift
Boomers, twentysomethings defect from foamy ranks
By Margaret Webb Pressler
The Washington Post
DenverPost.com

When a huge consumer products company starts slipping in sales or market share, even just a little bit, it can be a sign of a much bigger problem. And that explains why beer executives are on the offensive these days.

Though beer is still the most-quaffed alcoholic beverage in the country by far, it is slowly losing its grip around the marketplace edges: among new drinkers, among aging baby boomers and among other Americans whose tastes are gradually becoming more sophisticated.

More and more, when people kick back with friends and enjoy a drink, they're not choosing beer.

From 1998 through last year, beer's share of all alcohol servings slipped from 59.6 percent to 58.1 percent, according to Adams Beverage Group, a market research company based in Palm Springs, Calif. By contrast, consumption of spirits and wine has been inching up for several years, reaching 28.5 percent and 13.4 percent respectively last year.

The beer industry is madly trying to figure out how to reverse this trend, which industry insiders insist is cyclical but which some analysts warn could represent a more long-term change in who drinks what and when.

"Demographic trends are working against the brewers," said Bonnie Herzog, a beverage industry analyst for Citigroup Investment Research.

Younger consumers, raised on an ever-growing array of soda flavors and juice drinks, are finding the transition to alcohol a little easier with mixed drinks, which can be sweeter than beer and personalized to one's own taste.

Baby boomers, meanwhile, are gradually transitioning from beer to wine and cocktails. And across the board, beer is suffering from a bit of an image problem.

Cost of complacency

The core consumer of a cold brew is widely thought to be either the football-loving couch potato or anyone with a household income below $45,000 a year. But in today's Internet-savvy, consumer-driven culture, those are not exactly the beacons of a populace that increasingly buys well-designed home products at Target and flips longingly through the Pottery Barn catalog.

"The industry was very complacent in the last couple of years," said Robert Lachky, executive vice president of global industry development for Anheuser-Busch Inc. "Frankly, the back door was left open."

But brewers say they get it now. They say they're on it, even though the industry continued to dip through the first half of this year, according to researchers who follow beer sales. Companies are investing heavily in new product development and new marketing - all aimed at getting people to turn to beer for more "drinking occasions."

Industry executives say what they really need to do right now is make beer cool again.

This problem crept up on the beer industry when it wasn't looking. Beer had been so strong for so many years that it was easy for companies to forget that beer drinkers were not necessarily forever.

"If you told me 15 or 20 years ago that spirits would be growing in the 2 to 3 percent range and beer would be declining, I would've laughed," said John Michalik, North American director for London-based beverage consulting firm Canadean Ltd.

The result was that after decades of success selling a cold one to baby boomers, big brewers hardly noticed 10 years ago when boomers' tastes started to change as they approached 50.

"There was a general assumption ... that the baby boomers would continue with the consumption patterns that they established in their youth," said Benj Steinman, editor of Beer Marketer's Insights, an industry trade publication. "Instead, they're doing more like what prior generations did as they got older, and switching their drinking habits to wine and spirits."

Older drinkers have always favored hard liquor and wine, primarily because they're less filling - simply less liquid - for the same effect, Steinman said.

Wine touted as healthy

Helping the wine industry, too, has been a run of press supporting the positive health effects of red wine and moderate alcohol consumption in general.

In and of itself, this trend would not be especially troublesome for beer, but it has happened at the same time that beer has lost its edge among younger drinkers.

The beer companies had always counted on the "echo boom" - the children of the baby boom - to provide the next wave of 21- to 27-year-old buyers. But these young adults turned out to have a much different view of themselves and their choices, from the coffee drinks they prefer to the bottled water they tote around to the alcoholic beverages they imbibe.

Increasingly, these younger drinkers have been turning to a variety of cocktails - appletini, anyone? Those drinks say more about who they are than does a simple bottle of beer.

The drive to customize

"Young adults are a generation of people who can alter pretty much everything, or at least customize everything to their life style. And beer is beer," said Neal Stewart, marketing director for the Pabst Brewing Co., the nation's fourth-biggest beer producer. "There's different flavors and brands, but with a mixed drink, you can customize that a million different ways."

A convergence of cultural and economic forces have also conspired to depress beer sales. After hovering at around 1 percent growth, or a little less, for several years, U.S. shipments of beer dropped 0.5 percent in 2003, rose slightly in 2004, but fell 1.2 percent in the first six months of this year, according to Beer Marketer's Insights.

Beer industry executives say sales have been hurt by a decline in disposable income among lower-income consumers, especially since the rise in gasoline prices and decline in blue-collar employment, long a target market.

"If you look at our key demographic of 21- to 34-year-olds, there are more kids going to college, they have college debt, more young people have credit cards, there are higher gas prices," said Jeff Becker, president of the Beer Institute, an industry trade group.

"That beer at the end of the day has become a luxury."

Along with lack of growth in real incomes beer companies are feeling the effect of consumers "trading up."

"If you look at what's growing in the beer industry, it's import and craft beers. They're higher priced and perceived as luxury products," said Harry Schuhmacher, publisher of the Beer Business Daily newsletter. "And so if you look at the whole alcohol category, people perceive wine and spirits as high-end, so there's some trading up between beer and wine and spirits."
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My thoughts -- YOU GUYS tell me people aren't so stupid that they decide what to drink because of marketing and that they treat drinks as accessories. I could see some girls going out for martinis a few times because they want to be Carrie from SATC, but seriously, for real? That kind of thing really has such a huge effect?

I take issue with the last two paragraphs. I guess I can only speak for myself, but I drink (a lot of) what would be considered "craft beers" -- not because I'm "trading up" or because it's "high end" or "luxury" or whatever -- it's because it TASTES GOOD. The concept of trying to project an image with your choice of beverage is bizarre.

Also, why would tastes becoming "more sophisticated" lead to less beer consumption? Beer is subtle and complex (good beer, at least) but an appletini is just overpowering sweetness and, seriously, gross.

If the tastes of people in general are changing, I can deal with that. I just have a hard time thinking of people being such pansies to marketing. What do you drink? Have your tastes changed? Do you care about the image your drink selection presents?