All About Beer Magazine - Volume 35, Issue 4
September 1, 2014 By Christopher Shepard

Quick show of hands: Who’s had an alcoholic beverage other than beer some time in the last month? Last week? Me, too. Drinkers tend to switch back and forth between beer, wine and spirits more and more often these days. I had a nip of a delicious small-batch coffee liqueur recently when I didn’t want to crack open a bomber of bourbon barrel stout for myself so late at night. I (like so many these days) have a particular taste for bourbon (inherited, I think), even though the vast majority of my alcohol intake comes in the form of beer. Beer has a dominant share of my stomach, you could say.

Folks in the beer, wine and spirits industries sometimes use measures like “share of stomach” and share of “absolute alcohol” to compare consumption of the three alcoholic beverages (it’s not always useful to compare volumes of each). Based on average alcohol content, sales and population stats, beer had about 51.5 share of per capita consumption of “absolute alcohol” in 2012. That’s compared with spirits’ 32.9 share and just 15.6 for wine.

Decades have passed with very little change in average per capita consumption of alcohol. So slight changes in those share numbers make a huge difference. Just one share-point of per capita absolute alcohol equals somewhere around 4 million barrels of beer, for example. That’s 124 million gallons, nearly 16 billion ounces, so about a billion 16-oz pints. Or all the Sam Adams, Sierra Nevada and New Belgium beer sold in 2013 combined. To give you a sense of how many American drinking habits have changed over the past 20 years: Beer’s share of per capita consumption of absolute alcohol was up around 60 back in 1995, when spirits had less than 29 share and wine less than 12. That’s an eight-point swing in the wrong direction, as far as some beer folks are concerned.

Large beer companies task strategists and marketing teams and innovations execs with finding ways to reverse that shift to spirits. Enter the margarita-inspired Ritas, a Bud Light Lime line extension, and whiskey-inspired Miller Fortune, intended to be served in a rocks glass. Small-scale producers embraced cross-beverage consumption differently. Numerous brewers now distill, wineries brew, barrels pass back and forth, collaborations abound. The Ritas got off to a rip-roaring start, and small brewers are making a killing off barrel-aged or spirit-inspired brands.

Brewers, vintners and distillers have started to come together to compare notes about distribution gripes, marketing best practices and policy know-how. But conversations about taxes don’t often occur publicly. For many years, malt beverages have been “advantaged” in the policy world, particularly when it comes to taxes. Beer excise taxes are almost entirely based on volume, regardless of alcohol content. That’s as spirits are essentially taxed based on alcohol strength. Further, small brewers, like small wineries, enjoy additional tax benefits by paying a lower tax rate on the beer they ship to wholesalers or sell on-site. Small distillers don’t get that same benefit, but they’ve been lobbying Congress to change that.

Large spirits makers have lobbied—at least implicitly—for equalized taxes across alcohol beverages for many years, fought by beer folks all along. That familiar “standard drink” graphic—which equates the alcohol content of a 12 oz beer, a 5 oz glass of wine and 1.5 oz of liquor—acts not only as an educational tool for drinkers, but also a lobbying tool, arguing that “a drink is a drink.” Note that this equalization depends on knowing and using the average alcohol content of each beverage, just like those absolute alcohol stats. The savvy drinker probably recognizes that this isn’t always very reflective of consumption habits. Mixed drinks may often have many more than one “standard drink.” A 5 oz pour may seem remarkably small to wine drinkers. And we’ve all ordered plenty of beers that don’t fit the 12 oz at 4.5% norm.

The “Know Your Drink” campaign recently launched by Beer Institute, the trade association for brewers and beer importers of all sizes, aims directly at identifying the disconnect between standard drink recommendations and “customary” drinking habits. Currently, Know Your Drink remains focused on policy-makers and regulators in Washington, DC, but there could be a consumer-facing component eventually. Launching a campaign meant to distinguish between alcohol beverages seems odd when the market is heading the opposite direction. But the logic is sound, not to mention that fighting an equalization of excise taxes (which could severely affect beer prices, by the way) is a top priority for just about anyone in the beer industry. I also favor any tool that can help drinkers know more about what they’re drinking. But I’m curious about how all the blending and blurring among beer, wine and spirits will affect debates about the policies that keep them separate and—in turn—in the market.


Christopher Shepard
Christopher Shepard is a writer and editor for Beer Marketer’s Insights, spending most of his time walking the craft beat for Craft Brew News.