"When the Lord closes a door, somewhere he opens a window."
It's a quote from The Sound of Music, where the Mother Superior of Maria's convent is telling her that there are many ways to serve God, so when one path is closed, it doesn't mean you can't continue on your journey. I thought about that on Friday when I was talking to a booze analyst about the imported beer market. It's for a story I'm doing for Cheers, so I won't get into the numbers, but I don't think it's a surprise to anyone that exchange rates are hiking the U.S. price of most imported beers.
Along with the well-publicized rise in the price of hops and malt -- which is pretty much world-wide -- lower values of the dollar vs. the Euro and other currencies mean that beers from Europe, Asia, and yes, Canada, cost more than they did a year ago (wonder if that's affected the price of Blue Moon, which MolsonCoors is currently brewing in Canada?). If you want to buy a fine Belgian ale, a crisp Bavarian lager, or a big bottle of Unibroue, the price curve on your decision will be steeper. From Heineken to Salvator to Rochefort 8, import beers are bound to take a hit in sales, particularly with all the election year scare-talk about a U.S. recession (Congress and Bush are talking about a "stimulus package" before we've even seen any evidence of a recession -- not that either party is pandering or anything).
But if that door to brewed Heaven is closing, surely a window is opening for craft brewers and the Big Three (maybe even Pabst and the remaining regionals). Increased costs in hops and malt may mean price increases -- okay, it does mean price increases, and we're seeing them already -- but the foreign brewers have to add that increase on top of the exchange rate premium. American beer becomes more competitive, more attractive.
We're already seeing that in the majors: mainstream premium beers like Budweiser, Coors Banquet, and Miller High Life are all up, the first major uptick for them in years. People are starting to look at the price of a sixer of import lager, and of a sixer of Bud (and maybe thinking about the latest ads from Miller and A-B, which are hitting themes of solid value, 'regular guy' appeal, and even patriotism), and picking up the American beer.
Don't dismiss that factor in specialty beers. I expect to see more traffic in American-brewed versions of Euro-classics -- assuming American brewers continue to get better at brewing them -- and more experimentation with 'American' styles by both brewers and consumers, maybe backing off the extreme hops or at least moderating them. But I also think we're going to see even more solidification of flagship brands by craft brewers, as people 'hunker down' a bit to ride this out.
Make no mistake: the people who read this blog and the ones over there to the left, the people who read and post on BeerAdvocate, ratebeer, and Real Beer, you there, reading this right now, are probably going to be more likely to keep on spending to get what you want...but not all of you. And remember: craft beer is still under 4% of the total sales, and we the bloggers and readers, the folks who drink 400 different beers in a year, are just a tiny niche in that niche.
Look at the numbers. Most craft brew drinkers are drinking Sam Adams Boston Lager, Sierra Nevada Pale Ale, New Belgium Fat Tire Amber, Harpoon IPA (and Blue Moon Belgian White, if we're going to be honest and look at this in terms of "craft" styles). That's where the sales are that are getting us even close to 4%. I think things are going to shift even more towards those brands, because they'll have the steadiest prices and the most consistent product. Experimentation tends to go down when prices go up. Flagships will do well.
Which is probably a good thing. Those flagship brands will keep breweries alive till the hops and malt thing either sorts out or we get used to it. In the end, I think this is going to be a time of opportunity for American brewers large and small. It's a matter of reading the winds and the currents and deciding how to set your sails to catch the best breeze...while staying off the rocks and shoals.