EagleTribune.com, North Andover, MA

Business

June 2, 2013

Cheap beers will cost more

Demand for 'PBR' pushes prices

Thirsty beachgoers and barbecuers will be paying more for their cheap beer this summer.

Two recent studies found that prices for low-cost beers have been steadily climbing at bars and restaurants across the United States. Prices for popular brands such as Natural Ice, Miller High Life and Busch have jumped 6.8 percent in the past seven months -- and analysts say they could keep climbing.

The biggest jump in America’s cheap beer offerings: hipster favorite Pabst Blue Ribbon. The beer, affectionately known as PBR, vaulted 11.5 percent in price, according to Massachusetts research firm Restaurant Sciences.

“It’s capitalism,” said Eric Shepard, executive editor of Beer Marketer’s Insights. “It’s a hot product. You can sell it for a bit more.”

Drinkers can now expect to pay $2.67 on average for a PBR, up from $2.40 a year ago, according to Restaurant Sciences. The firm’s survey of 2,500 bars, restaurants and nightclubs found that other beers in the same category didn’t go up as high at watering holes.

Cheap beer has shown the biggest price increase, but other categories have also gone up, according to Restaurant Sciences. Prices for premium brews have risen 3.6 percent in the past seven months, while super-premium is up 1 percent and ultra-premium added 1.8 percent, according to Restaurant Sciences.

One of the reasons behind the surge in cheap beer has little to do with popularity.

Many of the nation’s big brewers control both high- and low-end brands. During the recession, beer companies wanted to keep customers drinking higher-priced beers. So they raised the prices of cheaper beers to keep drinkers from switching.

For instance, analysts said that the price gap between Anheuser-Busch’s premium and sub-premium beers had grown for years. The company raised the price of its lower-end Natural Light brand nearly 30 percent since 2011, while its more-popular Budweiser rose just 12.3 percent during the same time period, according to Consumer Edge Research.

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