The recession may be over, but people still can't afford to cry in their beer.
Molson Coors Brewing Co. executives held their annual general meeting Wednesday amid news of an historic slide in U.S. beer consumption that the industry is chalking up to the bad economy. And until employment improves, sales of suds seem likely to stay in the can.
Shipments in the U.S. are down almost 4 per cent this year, with few brands escaping unharmed. The No. 1 brand Bud Light, which claims about 40 per cent of U.S. shipments for Anheuser-Busch InBev SA, is down 4.5 per cent in the four weeks ended May 16, continuing a drop that began last year, while the brewer's flagship Budweiser brand is off 9.7 per cent in the same period. Coors Light and Miller Lite, which together account for about 50 per cent of shipments for Molson Coors, are off 1.6 per cent and 7.4 per cent respectively.
The figures were provided by SymphonyIRI Group, a Chicago-based market research group, and include sales at supermarkets, drugstores, gas and convenience stores, and mass market retailers excluding Wal-Mart.
And while Canadian sales have risen marginally in 2010, the domestic industry is still finding its feet after last year's drop in sales of 2.5 per cent, its largest fall in 17 years.
That's especially startling for an industry famously resistant to recessionary pressures.
While the news has some observers foretelling the end of premium brands, Molson Coors chief executive officer Peter Swinburn called the predictions "greatly exaggerated," and suggested there were two major forces at work: "Unemployment, but within unemployment, the 21 to 35-year-old consumer has been disproportionately hit. That category of people has a 15- to 16-per-cent unemployment rate in the U.S. And beyond that, the disproportionate number of the premium product consumers are in the $20,000 to $45,000 per year range [of personal income] and that so far has been disproportionately hit.
"Our position is we're pretty comfortable those brands will return to health with employment - but that will be slow," Mr. Swinburn said.
The company's strategy has not been to bet on specific categories - below-premium, premium or craft - based on current or expected economic conditions, but to invest in brands across the categories, he added. "It's brands that really succeed, not categories."
Still, the company's primary below-premium offering, Keystone Light, may be the most successful right now, in no small part to the same economic issues that are roiling the premium category: It retails for about 30 per cent less than the industry average.
In Canada, brewers are hopeful that they have turned a corner with the national economy. As the World Cup soccer tournament heats up, Labatt Breweries of Canada will throw a lot of its promotional muscle behind its number one beer, Budweiser, an official tournament sponsor. For the first time this year, it will be doing outdoor advertising for the beer in a variety of foreign languages to bask in the aura of the international event, including Chinese, Korean and Portuguese.
"We're reasonably optimistic," said Richard Musson, Labatt's vice-president of marketing.
The industry says their fate is up in the air - or, more accurately, up in the atmosphere. "Two summers ago, we had very hot weather on Tuesdays and Wednesdays, and rainy weekends," said Bruce Farrer, vice-president of retail at The Beer Store in Ontario. "So much of this business is due to the weather."
David Milstead is a freelance reporter.