A beer known for its low cost and association with a niche urban culture is suddenly seeing its prices skyrocket—and hipsters might only have themselves to blame.
According to recent data compiled by Restaurant Sciences LLC, a Newton-based firm that tracks food and beverage sales in the industry, while ultra-premium adult beverages like craft beers have hardly gone up in price at bars and restaurants, sub-premium beers, as they are called, like Pabst Blue Ribbon, have seen a steady increase in price over the past seven months. Most notably, says the company’s president, Chuck Ellis, was the spike in Pabst prices. “You have a popular beer that could sustain a higher price. [Establishments] can change the price tonight and if they get flak they can change it back tomorrow. Because of that, we believe consumers are sustaining [increases] because they are willing to pay for it,” he says. “Pabst is popular with the younger folks out there and well known through the social sphere.”
Restaurant Science’s findings show that the high-volume premium and sub-premium beers popular in America— like Budweiser, Coors Light, Miller Lite, and Pabst Blue Ribbon—have seen a 3.5% to 6.8% price jump in the nation’s eating and drinking establishments from October 2012 thru April 2013. Ellis says beers like Pabst “have seen sizeable double-digit price increases in both restaurants and bars.”
He says as more and more people focus on specialty craft beers, and new breweries continue to crop up, those sales remain steady because there is no room to increase prices based on the competitiveness of the genre. Meanwhile, the sub-premium drinks like Pabst have cornered a market, and because of an increase in demand with little to no competition, they can drive up prices. “On the low end there is not as much competition. The big question now is, how high can the price go before the popularity wanes? And I think the market is experimenting with that,” says Ellis.
Data from Beer Marketer’s Insight backs the Restaurant Science findings, and the assumption that the coveted PBR brand has had some serious price increases. According to statistics, as other sub-premium brews mostly tanked in terms of sales, Pabst stood out as a clear champion. “There’s only one shining light among sub-premiums— Pabst Blue Ribbon. PBR continues to rock. [shares were] up 26.7% in [the 2012] Nielsen food/drug/convenience data. PBR presently has [the] best below-premium image, especially among young adults,” the report says.
Since 2009, sales of Bud Light, Budweiser, Miller Lite, and Miller Genuine Draft have all declined steadily. Pabst Blue Ribbon, meanwhile, saw its sales volume jump by 25.4% in 2009 alone before climbing by 17.6% in 2010 and 13.8% in 2011
Ellis says there is always a limit to how much people will pay before they eventually move on to something else, so establishments should be cautious of the influx. “Unquestionably, it happens to every product out there.”
Below is a graph that shows the price changes over the course of seven months, from October 2012 through April of 2013. As noted by Ellis, the change in ultra-premium drinks like craft beers remained mostly unchanged, while beers like Pabst saw a significant increase in on-premise pricing.
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