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Archive for the ‘potent potables’ Category

As I come increasingly nearer my return to the United States, any opportunity to enjoy a tasty libation is accompanied by a concern:

How—oh how—will I be able to gauge accurately my consumption and the honesty of the server without the measure of volume marked conveniently on the side of the glass?

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Prioritäten

This evening I made a quick rush to the grocery store for some last-minute victuals before the Sunday layover. I grabbed some bread, cheese, cold cuts, two bottles of the local Rostock brew, and then headed to the register only to discover I had left my wallet at home and could only purchase the one or two things my pocket change afforded me.

The bread, cheese, and cold cuts were quickly discarded.

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Today’s A-Hed in the WSJ tells the story of twenty-six Trappist monks at St. Sixtus Abbey in Belgium who have found themselves cursed by the trappings of success. Since 1839, the bald-headed brewers have been selling Westvleteren beer in order to cover the basic expenses of the monastic lifestyle. Problem is, the beers they brew are so good, with one being perhaps the best in the world, that beer drinkers the world over are willing to pay top-dollar for the heavenly concoction–far more, in fact, than would be required to fund the simple life of the Trappists.

To the good Christian monks, who eschew profits as immoral and irrelevant and who do not want increased production to take time away from their spiritual duties, the solution has been to keep production at the same level for over sixty years, to devote no money to advertising or even to label the bottles, to limit the number of cases that any one person can buy (two per month), and to charge about$1.50 per bottle, which is probably less than 1/10th of the market-clearing price. The results have been predictable: there is far too little supply to satisfy demand, and online gray markets have emerged in order to satisfy thirsting consumers the world over.

Now, in my opinion, the gray markets are simply doing what the monks should be doing themselves–that is, charging a price that rations the scarce beer to those who value it most. But because the monks don’t do this themselves (instead trying to ration the beer rather awkwardly with purchase limits), it’s only natural that arbiters elsewhere would. To me, this seems a decent reconciliation: the beer flows to the most demanding mouths, and the monks needn’t taint their piety with profits. The monks, however, are indignant at the emergence of the gray markets and browse the internet daily in order to ask the online vendors to desist.

Religion and commerce have long been uneasy bedfellows because of the distrust surrounding profit. St. Thomas Aquinas, for example, wrote in Summa Theologica that it was immoral to charge more for a product than the costs of producing it plus a reasonable fee. The implication has always been and continues to be that if one earns a large profit, one must somehow be gouging the consumer. Unless coerced, however, no consumer will ever pay more for something than he thinks it is worth. Thus, profits can only result from a creation of value, and the larger the profit, the more value that has been created. Profits are nothing to be ashamed of–they’re a mark of a need or desire well met.

The Trappists monks would no doubt agree with the old aphorism that “virtue is its own reward.” The economist’s immediate retort would be, “Au contraire, my friend–reward is its own virtue.”

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Bar Chart

So, who drinks the most beer? Well, in absolute terms the answer is perhaps a no-brainer: China, with its 1.3 billion residents, consumed over 300 million hectoliters (=30 billion liters) of the sudsy stuff in 2005. The US came second with 230 million hectoliters, and Germany came third with (only) about 90 million hectoliters.

What is more illuminating, however, is what the country rankings were for beer consumption per capita. Taking the data above and comparing them with CIA World Factbook population estimates for the top three countries, one finds that the rankings change to:

  1. Germany (≈112 liters per person)
  2. US (≈78 liters per person)
  3. China: (≈23 liters per person)

To Germany I say, “Bottoms up!”

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Trouble Brewing

THE boss of SABMiller, Graham Mackay, recently suggested that the big rush of consolidation in the brewing industry was over. Like the bar talk encouraged by his company’s products the pronouncement was precise, certain—and wrong. On Tuesday October 9th London-based SABMiller, one of the world’s bigger brewers and America’s second largest, and Molson Coors, America’s third-biggest beermaker, announced that they would get together in a joint venture in America.

The rest of the brief article can be found here. For sake of symmetry, my thoughts will be brief as well:

  • The American beer market demonstrates that even markets dominated by one or two producers can still be intensively competitive and function remarkably well.
  • The beer market also demonstrates how small producers (e.g micro-breweries) can successfully compete against multi-national behemoths with no government subsidies or steep tariffs on imported brews (not that these are nonexistent, mind you).
  • Similar to that, the malaise in the overall beer market belies the strong growth in premium brands. Prosperous Gen-Xers desirous of signaling refinement recoil at the notion of ordering a mass-marketed brew like Coors, but have no problem ordering another Coors brew by the name of Blue Moon, mainly because its marketing as a “highly-drinkable, hand-crafted” brew flatters their vanity (As does serving each wiezenbierglas adorned with an orange slice perched on the rim–I’ve long been amazed that merely serving a beer with a slice of citrus can influence people quite strongly as to the perceived quality or pedigree of the beer.). Bottom line is, invest in something like Molson Coors for its premium portfolio, or go for something like Boston Brewing Company with its ever-more popular Sam Adams brews.

Always a good decision.

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