Recession Proof: Why the Alcohol Industry is Thriving

Alcohol sales have continued to rise throughout the recession, and have grown nearly 10% in the last 12 months, even though average unemployment during that time remained high, exceeding 9.3%.

In 2008, the first year of the recession, alcohol sales increased 9% when the average unemployment rate was 5.8%. In 2009, sales were lower than in the previous year, but still up 1% from before the recession while unemployment rose to 9.3%. And in 2010, as unemployment stretched to 9.6%, sales jumped back up to more than 9%.

Some say that the numbers grew in spite of the recession, while others argue the numbers rose because of the recession. The former would call alcohol a sort of necessity, likening it to healthcare, the only other industry to grow during the recession. The latter subscribe to the “my life sucks, let’s get drunk” mentality.

With sales up, not only are manufacturers seeing increased profits, but retailers, wholesalers, and bars have been buoyed by alcohol sales. But perhaps the only truly surprising news is that, while wine, spirits, and high-end craft beers have all continued to grow in sales, “legacy beers” like Budweiser (NYSE:BUD) and Coors (NYSE:TAP) haven’t been doing as well. Apparently recessioners are becoming a bit more picky about their brew. Coors Light managed to gain 1.1% in 2010, still well below the market average, while sales for Miller High Life, another Molson Coors beer, dropped over 4%. Budweiser sales plummeted 7.3% in 2010, Busch sales were down 6%, Bud Light down 2%, and Natural Light down 3%.

While “legacy beers” came in well below market averages, craft brews did much better, despite their relatively higher price tag. Sierra Nevada Brewing Co. increased sales by 7.8%, Magic Hat Brewing Co. gained 14.8%, and New Belgium Brewing Co. gained a whopping 18.3% in sales in 2010 alone. Those numbers are said to be up because people are becoming interested in more experimental beers with different flavors. Also, people are becoming loyal to locally brewed products as a show of solidarity and support for their communities.

BONUS: Is the Thirst for Craft Beers Changing?