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Monday, February 23, 2009

As Economy Leaves Us Crying Into Our Beer, Local Brewery Laughing Its Way to the Bank

Posted By on Mon, Feb 23, 2009 at 5:29 AM

click to enlarge Your untaxed dollars at play: Schmaltz Brewing is reporting record sales, despite a crap economy
  • Your untaxed dollars at play: Schmaltz Brewing is reporting record sales, despite a crap economy
When the current financial crunch rumbled into the big time late last year, 499 of the Fortune 500 companies' experienced plummeting stock prices. The one that didn't? Campbell's Soup. The notion of future economic armageddon made the notion of long-lasting canned sustenance a hot item; predictably, sales were up on caves and bullets as well.

The moral of the story is, someone is always making money regardless of others' misery. Hey, the family is miserable that grandma died -- but the guy who made the casket isn't. We all may die when a giant meteor hits, but the guy selling  "THE END IS NEAR" placards will do fine in the short run.

Politicians have always been fond of alcohol taxes becaues booze is supposedly recession-proof; consumers will keep buying beer and spirits and paying the extra taxes even as other purchases are cut back. Sadly, that turns out to not always be the case. The most recent financials reveal the nation's major brewers are getting soaked. So it seemed counterintuitive that San Francisco's own Schmaltz Brewing Company (makers of He'brew) would be crowing in a recent press release about 80 percent revenue growth in 2008.

How is that possible? Well, it's all a matter of analyzing markets. Brian Yaeger, a San Francisco beer writer and the author of Red, White, and Brew: An American Beer Odyssey, notes that while big brewers alternated between 1 percent sales declines and 2 percent jumps, craft brewers have experienced steady 12 percent growth for the past five years or so.

"This means more people are turning to craft beer," Yaeger says. "Of course, as I always point out, the macros account for around 80 percent of total American beer sales while craft accounts for 4 percent and 6 percent by revenue -- their beers are more expensive."

So while Schmaltz' revenues grew 80 percent, its estimated 2009 sales are $2 million. To put things in perspective, MolsonCoors knocked back $5.64 billion last year. That's 2,830 times as much -- or, in beer terms, if MolsonCoors' revenues filled up a keg, Schmaltz' would account for around seven-tenths of an ounce.

Of course, the defining argument of craft brewers worldwide is that increased sales do not translate to better beer -- which is why Schmaltz' press release is a bit puzzling. It's great that a local company's sales are up in these economic doldrums -- but why does that make me want to drink their beer?

"It doesn't -- and I say this as a friend of the Schmaltz Brewing Company," Yaeger concurs. "If sales of Bud Light Lime grew, that doesn't mean I want to drink it."

Though, of course, we might be proud if we were from St. Louis.

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About The Author

Joe Eskenazi

Joe Eskenazi

Bio:
Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" is a staff writer and columnist for SF Weekly, which he has written for since 2007. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers... more

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