The dynamics of the beer industry have drastically changed over the centuries; in 1587, for example, American colonists would brew beer using corn. Tighter control over the production process was established following the birth of the U.S. Brewers Academy which was then followed by strict standards and regulations.

IN PICTURES: 5 Money-Saving Shopping Tips


A recent study conducted by Harris Interactive finds that 54% of American adults drink beer, a figure which is slightly higher for males and sports fans. Moreover, 74% of males and 49% of females aged 21-34 drink beer. For those aged over 55, beer consumption is reduced to 62% for men and only 30% for women.

Beer by State
The Beer Institute finds that residents of Montana tend to drink more beer per capita than any other state. In fact, Montana has held top spot in 2008 and 2009, and was ranked the number four per capita consumer from 2003 through 2007. With shipments totaling over one million 31 gallon barrels and a meager population of only 711,000, the average individual drinks 43.7 gallons of beer per year - almost double the amount drank by citizens of New York.

Utah has consistently ranked last for alcohol consumption in the last seven years, back as far as records are available. With a per capita consumption of 19.4 gallons per adult, Utah ranks far behind drinking leaders such as New Hampshire (#2), North Dakota (#3), Nevada (#4) and South Dakota(#5). California is the state with the largest absolute volume of beer consumption and the largest number of breweries.

Seasonality in the Industry
As can be expected the beer industry operates under a cyclical business model with consumers drinking more in the summer and less in the winter months. In 2007, U.S. beer consumption from January through April totaled 68 million barrels, while in the next four months, from May to August, consumption increased by 15% to 79 million barrels. This type of pattern can also be observed when analyzing the number of beverage can shipments; in quarters one and four approximately 45% of total cans are shipped, while quarters two and three make up 55% of the product flow.

Top Beer Brands
Reaping the benefits of the growing American beer demand, some breweries have been able to strategically align themselves to gain a massive market share in the multi-billion dollar industry. Bud light has retained its dominance in the beer industry with a 19.3% market share, practically double that of Heineken, Corona Extra, Bush and Keystone Light combined.

Measured by U.S. shipment data, the past three years have not seen a massive change in competitive landscape of the industry. Although it still holds in second place, Budweiser has steadily declined from having a 10.8% market share to a 9.3% market share. The other major brands have experienced much less volatility. (To learn more, see Beer Mergers: Are The Micro Brewers Doomed?)

Beer Economics
The beer industry is a major component of the North American economy, employing approximately 45,000 workers in brewing facilities in addition to 95,000 and 900,000 employees in the alcohol distribution and the retailing sector respectively. After the employment in industries such as agriculture and construction is considered, approximately two million Americans' professions are dependent on the beer supply chain.

According to research conducted by the Beer Institute, the aggregate 2008 payroll from those involved in the beer business amounted to $62 million. Furthermore, the public sector also benefits from the industry as over $11 billion worth of consumption taxes were collected.

The Bottom Line
America is a major beer producer, lagging only behind China, while greatly surpassing nations such as Germany, Russia and Brazil. This economic sector provides great opportunity for successful businesses and substantial tax revenues for the government. (For more, check out Beeronomics: Factors Affecting Your Pint.)

Catch up on the latest financial news, read Water Cooler Finance: Billion Dollar Summits and Barack Vs. BP.

Related Articles
  1. Stock Analysis

    4 Best Beer Stocks for 2016 (BREW, SAM)

    Learn about the top four beer stocks for 2016 and how to continue capitalizing on the craft beer revolution and merging macro beer.
  2. Economics

    What is a Complement?

    A good or service that’s used in conjunction with another good or service is a complement.
  3. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  4. Stock Analysis

    From Shampoo to Soup, Unilever Has it Covered (UL)

    Open your fridge, your pantry, your bathroom cabinet and you'll find the Unilever logo. Here's how the company got so enormous.
  5. Stock Analysis

    JNJ vs. PG: Which is the Better Bet Right Now?

    These two stocks are long-term powerhouses, but one has the edge over the other right now.
  6. Stock Analysis

    The Top 5 Small Cap Restaurant Stocks for 2016 (BLMN,DENN)

    Learn about the market conditions that could help continue pushing restaurant stocks higher in 2016 and the five small-cap restaurants that are worth a look.
  7. Economics

    Why Commodities Aren't to Blame for Market Malaise

    Commodities are taking the brunt of the blame for poor investment performance. Are they the real villain?
  8. Economics

    Has IKEA Reached 'Peak Curtains?'

    An IKEA executive made a comment that would have rankled investors (were IKEA not privately held). Here's what he (probably) really meant.
  9. Stock Analysis

    Has Chipotle Hit Bottom? (CMG)

    Chipotle has suffered from a public relations nightmare. Can its stock recover?
  10. Stock Analysis

    Should You Steer Clear of GoPro (GPRO)?

    Is the GoPro growth story over or is there still gas in the tank?
RELATED FAQS
  1. Marginal propensity to Consume (MPC) Vs. Save (MPS)

    Historically, because people in the United States have shown a higher propensity to consume, this is likely the more important ... Read Full Answer >>
  2. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
  3. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  4. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  5. How do changes in interest rates affect the spending habits in the economy?

    Changes in interest rates can have different effects on consumer spending habits depending on a number of factors, including ... Read Full Answer >>
  6. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
Hot Definitions
  1. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  2. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  3. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  4. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  5. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  6. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center