Beer Industry Takes a Hit From Increased Taxes

As the pay-roll tax spikes, the beer market takes a plunge

Photo Sasabune Omakase Modified: Flickr/erin/CC 4.0

Beer industry declines as taxes increase flickr/Greencolander

This has not been the best year for many beer companies. According to a study published earlier this week, increased pay roll taxes could be to blame for the decline.

Although 2012 brought about a one percent growth in the beer market as a whole, this trend did not stay very long. By May 2013, sales took a turn for the worse, dropping by 3 percent. Analysts at Bernstein Research commented on the trend, stating that the combination of the “deterioration in the economic well-being of the lower income consumer,” and the “pay-roll tax hike,” have negatively impacted the beer market as a whole.

MillerCoors and Anheuser-Busch InBev were affected the most by the negative sales trend, with a 3.3 percent decline in sales for ABI, and 4 percent for MillerCoors. Both of the companies were below the 2.5 percent average decline in the industry. Fortunately not all cooperations are experiencing this problem. Companies such as Crown Imports and Heineken USA, have seen their sales increase significantly this year.

If the research is correct, beer companies have no need to panic. Analysts expect the dip in sales to “diminish in magnitude” towards the end of the year, as economic conditions of lower income consumers increase.

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