Economy unleashes 'perfect storm' for boutique beer

Mon Aug 17, 2009 9:21am EDT

* Boutique beer a popular, cheaper drink alternative

* Beer is again U.S.'s most popular alcoholic beverage

* Buy-local movement helping the sale of boutique beer

By Edith Honan

NEW YORK, Aug 17 (Reuters) - Boutique beers are the new cocktail as more money-conscious Americans choose cheaper high quality draft beers made by small local breweries over wine and spirits amid the country's recession, experts say.

A new generation of craft brewers, defined by some as those who produce less than 2 million barrels a year, is attracting new drinkers who would rather pay $6 to $8 for premium draft than a cocktail or glass of wine that costs twice as much.

"You can buy an exceptional beer for half the price of a mediocre glass of wine," said New York beer maker Kelly Taylor at a recent tasting event where he offered his Kelso beer alongside sage-flavored corn bread.

"The bite of the hops and the citrus of the Belgian yeast cuts through the sweetness of the corn bread," he told one skeptical taster.

Across the United States, craft breweries and shops specializing in artisanal and import beers are growing, with merchants betting that tough economic times will turn Americans who once favored wine or liquor towards premium beers.

"Even in this economy, people want to treat themselves to really extraordinary things," said Justin Philips, co-owner of the Beer Table bar in the New York City borough of Brooklyn. "People are recognizing that there is a diverse world of beer. And it tends to be less expensive than other drinks."

The number of boutique breweries in the United States has grown by nearly 5 percent in the past five years to 1,476 breweries, said Paul Gatza, director of the Brewers Association, a non-profit industry group based in Colorado.

Each brewery now makes an average of 5,659 barrels of beer per year, an increase of nearly 35 percent since 2004.

Catherine Saillard, owner of French bistro Ici, said private parties are increasingly requesting locally made craft beers rather than wine and spirits.

"I wouldn't say that (beer) has the same complexity (as wine), but it's not supposed to," said Saillard, who is French. "It's unpretentious. You don't need to know the grape."

A PERFECT STORM

A recent survey by the Gallup organization showed that the number of adult Americans drinking alcohol had remained steady at 64 percent despite the economic downturn. In July, Gallup said beer was still the No. 1 alcoholic drink in the United States.

The gap narrowed in recent years, and wine edged ahead for one year in 2005, but the July poll found 42 percent of people choose beer, 31 percent choose wine and 23 percent choose liquor.

Boutique beers made $6.3 billion in retail sales and grew 5.9 percent by volume in 2008, with regional microbreweries growing at the fastest rate, according to the Brewers Association.

"You have really a perfect economic storm that is driving people towards this beverage," said Shane Welch, the owner of Sixpoint Craft Ales in Brooklyn.

"You have a nationwide movement supporting locally made products. Then you have this sort of do-it-yourself mentality that has been triggered by the recession," said Welch.

Tom Long, the president and chief commercial officer of MillerCoors (TAP.N), the second-largest brewer in the United States, said in June he expected sales of premium light and craft beers to slow, but less rapidly than wine and spirits.

The company's Blue Moon beer is the leading craft-style beer in the U.S. market.

Industry experts say a consumer trend toward local products is helping to spur a boutique beer renaissance.

"I would love it if ... when someone from Seattle comes to New York, they drink Six Point. And then they go back to Seattle, and they support their local brewery," said Welch, who got his start making beer out of his basement in college.

Even home brewing, which was outlawed until 1978, appears to be picking up, said Benjamin Stutz, a former chef who has launched New York's only home-brew shop with his wife.

"People are more knowledgeable about how food is made and where it comes from," said Stutz. "People are starting to move away from convenience and they want to have some control over what they eat and drink." (Editing by Michelle Nichols and Vicki Allen)