Beer sales take a knock from payroll tax hike

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U.S. beer sales declined in the first half of 2013 fueled by the payroll tax hike and a jump in unemployment among young men, according to research published on Tuesday.

The beer market posted 1 percent growth in 2012, in-line with pre-recession averages, driving hopes that the worst was over for the industry.

But beer sales dropped 3 percent in the three months to May 2013 and are down 2.6 percent in the year to date, Bernstein Research analysts said in a note.

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"We believe that there has been a deterioration in the economic well-being of the lower income consumer, with the pay-roll tax hike having taken its toll and a marked up-tick in unemployment among young men," Bernstein said.

The firm said that it expects the trend to continue into the third quarter of this year, but "diminishing in magnitude" as improving economic conditions filter down to lower income consumers.

Belgium brewer ABI and U.S.-based MillerCoors were two of the worst hit beer companies. ABI drink sales declined 3.3 percent in the three months to July, below the 2.5 percent industry average recorded by Nielsen grocery data. The growth of its Black Crown brand was offset heavily by tough year-on-year sales of Bud Light Platinum and weakness across the rest of its drink range.

Sales of MillersCoors brands plunged 4 percent, according to the 3-monthly Nielsen data, fuelled by a decline in Miller Lite and Coors Light beer sales, which offset the growth of the Blue Moon and Leinenkugel's brands.

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Heineken USA bucked the industry trend, with sales volumes soaring 8 percent in the three months to July, driven by the brand's Mexican portfolio.

Crown Imports, the company that imports beers from the Constellation Brands portfolio such as Corona, posted 6 per cent sales volume growth in the three months to July. Modelo Especial beer sales were up 21 percent and Corona Extra continued on its growth path, with a 5 percent boost in sales.