Tue, March 31, 2009
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Beer still recession proof?

2009-03-31 02:13:17 GMT2009-03-31 10:13:17 (Beijing Time)  Reuters

The recession has caused a dip in beer volumes in the U.S., but analysts say beer is regaining market share as consumers shift to lower-cost drinking options.

Soaring unemployment.record home foreclosures.....multi-billion dollar bank bailouts it's enough to drive any one to drink.

Peter Swinburn, chief executive, of brewer Molson Coors describes his business as recession resistant, not recession proof.

SOUNDBITE: PETER SWINBURN, CHIEF EXECUTIVE, MOLSON COORS (ENGLISH) SAYING:

"People are trading down from maybe not champagne but certainly from spirits into beer. And even in beer, again, people are

trading down from the more expensive ones to the lower priced beers."

Prevailing wisdom says when the going gets tough the weary go drinking. Or do they ?

According to the latest data from the Beer Institute, an industry trade group, U.S. domestic shipments were down 1.8 percent the first two months of 2009, compared to the same time a year ago. And that comes on the heels of more than 1 percent annual growth in the past two years.

Those numbers, however, mask beer's resilience compared to other alcoholic beverages, says Ann Gilpin, research analyst, at Morningstar.

SOUNDBITE: ANN GILPIN, ANALYST, MORNINGSTAR (ENGLISH) SAYING:

"Because consumers are more likely to purchase beer at a grocery store than they are when they are going out to a bar or going out to a restaurant. Part of that has to do with the fact that beer is simply easier to consume. With spirits you usually have to mix it with something and consumers are less likely to do that on their own."

And beer companies are not shy about their advantages. Molson Coors for one continues to spend on marketing and advertising, especially when it comes to U.S. joint venture with SAB Milller.

SOUNDBITE: PETER SWINBURN, CHIEF EXECUTIVE, MOLSON COORS (ENGLISH) SAYING:

"The worst thing you can do is to cut investment in your brands when things get really tough. So we look to develop our strategic brands."

And that doesn't rule out further consolidation. But analyst say don't expect any more blockbuster deals like InBev's purchase of Anheuser-Busch last year. The next hot area of growth is not in established Lite beers, but in specialty, craft beers that can command premium pricing, even in a recession.

Conway Gittens, Reuters

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