"Brews and Blues: Inflation's Toll on Craft Beer Lovers"

With prices rising because of inflation, Americans are finding it hard to manage their household expenses. From housing and food to transportation and entertainment, the average household spending was expected to reach $72,900 by August 2022, which is about $11,500 more than in 2020.

This price increase has also hit the beer industry hard. The cost of beer ingredients, packaging, and shipping has gone up a lot. Craft beer, made by small breweries, has been especially affected.

Craft Brewers and Sales Decline

Big beer companies and some larger craft brands raised their prices, but many small craft brewers tried to avoid raising prices by absorbing the costs themselves. Even with these efforts, craft beer sales went down in 2022, both at bars, restaurants, breweries (on-premise) and in stores (off-premise). This is very different from 2020, when craft beer sales in stores increased by 23% during the COVID-19 pandemic.

Beer Prices and Sales Trends

The relationship between beer prices and sales is complicated. Past studies often shown that higher prices and taxes lead to less alcohol consumption. However, since 2008, beer sales have not decreased as much as prices have increased. This is partly because craft beer drinkers, who usually have higher incomes, are less sensitive to price increases than other beer drinkers. During the pandemic, some people chose to buy more expensive craft beers in smaller amounts, while others bought more cheap beers.

The Pandemic’s Impact

The COVID-19 pandemic forced breweries to change quickly. Many started canning and bottling their beers because taprooms, bars, and restaurants were closed. But there was a shortage of aluminum cans, making this difficult. Small breweries without strong distribution networks had a tough time. Overall, the beer industry’s retail sales dropped from $29.3 billion dollar in 2019 to $22.2 billion dollars  in 2020, and over 568,000 jobs were lost.

Study on Craft Beer Drinkers

This study looked at how craft beer drinkers changed their habits because of rising prices and inflation. It focused on four main questions:

1. Are people drinking less craft beer at bars and restaurants because of higher prices?

2. How much more are people willing to pay for craft beer at bars and restaurants if prices stay high?

3. How much more are people willing to pay for craft beer in stores if prices stay high?

4. How much are people willing to pay for delivery services?

Survey Results

An online survey in Fall 2022 got answers from 350 craft beer drinkers. Most were men (61.1%), aged 26-40 (56.8%), and earned less than $80,000 a year (64.6%). Key findings include:

• Almost half said they drink craft beer away from home less often.

• People showed low willingness to pay higher prices for craft beer at bars, restaurants, and stores. However, people with higher incomes were more willing to pay higher prices.

• Use of delivery services increased during the pandemic but has decreased since. Some people are still willing to use these services, suggesting a chance for market growth.

Implications for Craft Brewers

The study shows that inflation is making it hard for craft beer drinkers, who face rising prices in many areas. Even though people think craft beer drinkers are not very sensitive to price increases, some are drinking less away from home.

Craft brewers have adapted by changing production methods, using local ingredients, and trying different pricing strategies. Selling beer at brewery taprooms is still important because it makes more profit than selling in stores. Brewers should keep innovating and exploring new ways to sell beer, like using delivery services.

Conclusion

The study shows the complex relationship between the economy, consumer behavior, and the craft beer industry. Rising prices and inflation are big challenges, but some consumers are willing to pay a bit more for craft beer. Future research should continue to look at how consumer preferences change and how economic changes affect the craft beer market.

For further details, refer to the full study here.

1. Inflation and Household Expenses: How do you think inflation in Japan might affect household expenses, similar to what is happening in the United States?

2. Impact on Local Breweries: In your opinion, how might rising costs for ingredients and packaging affect small breweries in Japan? Do you think they would absorb the costs or raise prices?

3. Consumer Behavior: How do you think Japanese beer drinkers would react to higher beer prices? Would they switch to cheaper brands, buy less beer, or continue buying their favorite craft beers?

4. Pandemic Effects: During the COVID-19 pandemic, many American breweries started canning and bottling their beer due to the closure of bars and restaurants. Do you think Japanese breweries faced similar challenges, and how did they adapt?

5. Future of Craft Beer: Considering the findings from the study on American craft beer drinkers, what strategies do you think Japanese craft brewers could use to keep their businesses thriving despite rising prices and economic challenges?