The Language of Beer: Recession, Spending and Waning Interest in ‘Cheap’ Brews

450038_stock-photo-will-work-for-food-cardboard-signA penny saved is a penny earned.

Except when it comes to craft beer, for which it’s clear people are willing to spend a little extra, as evidenced by craft beer’s 20 percent growth in dollars sales last year or the fact dollar sales have nearly doubled in the last four years.

Passion for craft beer is at an all-time high, but when did this spending trend take off? We’ve got a pretty good idea, but with some help from Yelp Trends, we can have some fun looking into public perception of this change.

Much like our other look at the vernacular of “craft beer” and “microbrew,” a dissection of results from Yelp adds another layer to our understanding of the growth of craft beer.

From our previous use of Yelp and my research with Google Trends last year, we found that 2009 was a pivotal year for interest in craft. In many ways, it seems that year was the start of our modern craft beer boom.

In fact, 2009 was made particularly amazing because of it falls within the official timeline of the Great Recession in the U.S., which is recognized as 2008 through 2009. It was during that time that some “sub-premium” beers – particularly “cheap” beers like Pabst Blue Ribbon – saw a growth in sales.

In 2009 alone, PBR saw an increase of 25 percent in sales during the most recent cost-conscious time in our country.

Which led me to think: how did Yelp reviewers perceive this timeframe and what came out of it? Would they want to find more cheap beer when money was tight?

Let’s start with three major metro cities: New York, Chicago and Los Angeles. I picked these because the cost of living in each city will be much higher than other locations in the country, reinforced by a recent study by the Tax Foundation.

The study showed the real purchasing power of $100 in states and metro areas – essentially, how far would your $100 go when comparing one location to another? Here are the results for these cities and what $100 is actually “worth”:

  • New York – $81.83
  • Chicago – $93.81
  • Los Angeles – $84.60

Taking that into account, we’d assume that beer drinkers would want to be most effective in their spending, but reviews from Yelp reinforce at something we’ve already known – craft beer drinkers don’t necessarily balk at price.

Here are Yelp Trend results searching for “craft beer” and “cheap beer” as they show up in reviews from these three cities:

New York - craft beer vs cheap beerChicago - craft beer vs cheap beerLos Angeles - craft beer vs cheap beerIn each case, notice that “cheap beer” is widely mentioned between 2006 and 2007, but then creeps downward through today. Conversely, 2009 and early 2010 are when we see the uptick in “craft beer” being mentioned more often.

This is important – especially in reference to the Great Recession – because it shows that the demand for craft beer turned out to be inelastic. That is, people had interest and bought craft beer no matter the price because it’s good. Macro beer, on the other hand, has been found to be closer to static in regard to price and interest and does not act as a fitting substitute.

Which is why people have less interest in “cheap beer” and show more love for “craft beer.”

For fun, I also looked at three other cities with Yelp Trends based on my own expectations of people yearning for cost-effective beer.

Here’s Washington, D.C., which was actually well behind our previous three cities, as you don’t actually see “craft beer” being mentioned in a greater volume until 2012:

DC - craft beer and cheap beer
Click to enlarge

That trend line makes sense, as DC’s beer scene is still rather young,

One place where I assumed “cheap beer” would reign supreme was Las Vegas, where people are most likely going for a good time and have plenty of other ways to spend their money in a place once called a “craft beer wasteland” by Beer Advocate:

Las Vegas - craft beer and cheap beer
Click to enlarge

In-step with the Recession, it seems fitting that 2008 and 2009 show many results for “cheap beer,” but I’m actually rather surprised that “craft beer” became more important as early as 2010, when we see some separation between the two terms.

Lastly, here’s San Diego, which I included solely because I didn’t expect “cheap beer” to register at all. But it did:

San Diego - craft beer and cheap beer
Click to enlarge

At least there’s no question about what San Diegans enjoy now.

I realize all this isn’t an exact science by any means, but I am curious to get your feedback – does this trend of “craft beer” and “cheap beer” follow what you’ve seen? Have your spending habits or those of friends and family followed something of a similar pattern?

I’ve got one more post planned with the help of Yelp to focus more on the quirky specifics of some popular beer locations.

Related ‘Language of Beer’ posts:

+Bryan Roth
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac

9 thoughts on “The Language of Beer: Recession, Spending and Waning Interest in ‘Cheap’ Brews

  1. “Have your spending habits or those of friends and family followed something of a similar pattern?”

    Yes. I think it’d be a natural progression anyway, in the lifespan of a beer drinker, assuming availability (and that last part is key to all this). Also, I’m not necessarily going to agree that craft brew is more expensive (although, there are definite instances). “Cheap beer” is typically like half as strong as craft beer, so that must be taken into account. If someone’s drinking 2 “cheap beers” per 1 craft beer, then prices can become much more similar. And, we all know which one is better. 🙂

    1. Friend of the Program Oliver had a great piece dissecting the price of craft beer which is definitely worth checking out.

      As for strength of beer, I did write this piece in regard to Millennials (craft’s biggest audience) and their likelihood to binge. I think between that and some anecdotal experiences show that people choose craft due to taste and preference, not necessarily to strength.
      (although I know there ARE people who do that – I just mean broadly)

      But you’re right – what’s best will always win out in the end and if consumers are searching for something that tastes good, it’s too easy to pick!

      Thanks a bunch for reading and chiming in!

  2. I see taste and strength being intertwined (not mutually exclusive); a “cheap beer” tastes like water because it has no strength.

    Did you know Budweiser Select 55 has 2.5% ABV and Miller Genuine Draft 64 has 2.8% ABV? You seriously might as well be drinking water. There’s nothing going on there.

    Of course, now I’m wondering what would happen if I took a craft beer and literally mixed it with water. I wouldn’t actually do it, but I’d pretty much end up with something similar to “cheap beer” I suppose – watery, tasteless, weak.

  3. Holy negative income elasticity of demand. People’s incomes go down and demand for craft beer goes up!? That’s crazy! 😉

  4. Really informative article post.Thanks Again. Awesome. eaeeaaddafck

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