• by Karl Greenberg , October 7, 2008

When the economy is sinking like lemon seeds in a stein of Hefferweizen, guess which market segment stays afloat? No, not penthouses in the financial district. Try beer. Please. Try two. According to Norwalk, Conn.-based Beverage Information Group, the U.S. beer industry has seen good numbers this year.

The firm says that despite industry consolidation (Coors and Miller wed on July 1 and Belgium-based InBev grabbed Anheuser-Busch, a deal still in the works) and higher feedstock costs, light and import beer segments are likely to grow 2% and 2.1%, respectively, on annual compound growth rate over the next five years.

"Light beers have gained ground since their arrival in the mid-1970s and show no signs of slowing," says Eric Schmidt, manager of information services for the group, in a release. "The category was helped last year by the successful introduction of Miller Chill, selling seven million cases in its first year."

According to the firm's 2008 Beer Handbook, the overall U.S. beer market rose 1.2% last year to 2.9 billion 2.25-gallon cases, while growth of the imported beer category gained 2.8% to 408.3 million cases last year. It's the second consecutive year of consumption gains.

But Schmidt warns that both the distilled spirits and wine are outpacing the U.S. beer industry. "New product offerings have been the driving force behind growth not only in the distilled spirits industry, but also among wines."

Eric Shepard, executive editor of Nanuet, N.Y.-based Beverage Business Insights, says beer has generally been considered recession-proof. "But we are in particularly dicey times, so I wouldn't assume anything." He says that through the first nine months of the year, beer shipments are up half a percent--which represents a slowdown from the prior two years, and also from earlier quarters this year, when sales were up over 1.5%. Shepard says a price increase due on Oct. 21 will likely have a cooling effect. "It will affect 85% of markets; but so far, I'd say beer has mostly escaped a severe hit."

Shepard says the slight decline in sales in the latter quarters this year reflects less on-premise business at bars and restaurants. "That business has been clearly hit," he says, adding that the influence of lighter convenience store and bar/restaurant sales on shipments is likely being mollified by consumers picking up beer in larger packages at grocery stores. "The only evidence we have is supermarket sales were very strong over the summer," he says.

Meanwhile, Shepard says the market for wines and spirits is being bifurcated as consumers are either sticking with high-end products or trading down to lower-price wines. And, he says, in the last quarter this year, it is wines and spirits that will have to brace for fewer sales. "A third of the wine and spirits business is in the last month of the year," he says. "But 80% of beer sales are before the holidays, so it's not a huge part of beer's business."