Bottoms up: economy turns beer market upside down.

As Jeff Coleman described it, the pouring of the beer--at least the pouring of Paulaner's Hefe-Weizen wheat beer--has a ceremonial look. Coleman calls it "presentation."

"You put the glass bottom-up over the top of the bottle," said Coleman, president of Paulaner North America. "Then you slowly turn the bottle upside down, and pull the bottle straight up out of the glass. When you have the bottle all the way out, you shake the glass in a circular motion. Then you shake the neck of the bottle into the neck of the glass."

What in the world for? Well, in a wheat beer there is some sedimentation, Coleman explained. "It's actually protein. And swirling while pouring it creates contrasting colors of gold that run down the inside of the glass. That protein haze gives colors of white to an otherwise blond beer."

It's theater. And in a world where everything is, in one way or another, about sales, this performance is selling two ideas--that this beer is special, and the person who's ordering and drinking it is pretty special, too. It's one way of staying ahead of a game that grows more competitive as the market grows dicier.

Beer statistics are at first glance rosy or, as Jeff Coleman might put it, golden. The U.S. Beer Institute claims that beer is still the alcoholic beverage of choice for Americans. Twenty-three percent prefer beer to 17.3 percent for wine and only 14.3 percent for mixed drinks. The Institute also claims that U.S. beer consumption increased to approximately 198.8 million barrels in 2001, up from 197.6 million in 2000.

But turn the numbers sideways and the message is a bit different. All those millions of barrels represent barely a one percent increase in beer sales. Given the rate of population growth in the U.S., that's actually a step backwards. Further, they give a distorted picture because they include numbers for imports and specialty beers, which are thriving. Subtract them and it appears that the sales for U.S. brands are flat. Or worse, that the sales are going down. Brewers can add to their woes by contemplating the fact that there are fewer men in their twenties--the prime age for beer drinking--than there were 30 years ago.

But all these numbers exist apart from their distressing context: the horror of 9/11, and the economic recession that is or is not as bad as most people think but refuses to go away. Surprisingly, then, the beer men consulted for this article are united in their refusal to sing the blues.

"Our brands and our company have been little impacted," said Mike Hurt, Modello products manager for Gambrinus. The company distributes Moosehead Canadian Lager and Pete's Wicked Ale out of its San Antonio headquarters, but Hurt was talking about the beers in his charge. These are the brands of Mexico's Grupo Modelo brewery, which include the top-selling imported beer in the U.S.--Corona Extra. The others are Corona Light, Negra Modelo, Modelo Especial, and Pacifico.

"Our flagship brands are all enjoying significant double-digit growth in spite of the price increase we took in the spring," Hurt said. "If you look at the beer industry in general, there have been a lot of entries in the high-priced realm. All those new `ice-oriented' brands, and what the trade calls `malternatives': malt-based products like Bacardi Silver, Smirnoff Ice, and Skye Blue. To me, they taste like Fresca with alcohol. They've come in at extremely high price points, way beyond what a Heineken or a Corona charges. And they're all doing very well."

Hurt explains this by quoting the old saying that "beer, sports, and guns are recession-proof," adding that during bad times in the past, a lot of people switched to lower-priced brands. "We haven't seen that happen this time." And he adds a sociological twist: "I think consumers are accustomed to small luxuries," he said. "And I don't think the economy has gotten to the point where small luxuries have found their way out of peoples' pocketbooks.

"Imported beers, and specialty brands of beer, have always been small luxuries. Like coffee--stop in Starbuck's and notice the people still paying $4 for a latte. People may be cutting back on $150 dinners at Morton's or The Palm, but plenty of them are still spending for beer and coffee."

Tom Pirko is president of Bevmark LLC, a consulting firm in Santa Barbara, CA. He sees this material in slightly darker hues.

"The beer business has been flat for a long time," he said. "Consumers--especially young consumers--are bored. They want different, new, exciting, sometimes crazy products." This explains the "malternatives," he said, and the overwhelming media blitz that accompanied them. He persists in regarding these sweet-tasting confections as a fad that will not last.

Pirko sees the success of high-priced beer in these leaner times as "commonsensical. When business is very bad, frequently there are pockets which are very good. But it's risky. How many people simply want to find a way to relieve their anxiety by switching to a higher-priced product, by paying $6 for a six-pack instead of $4.50?"

Jeff Coleman's Paulaner North America is the importer for Hacker-Pschorr, Fuller's from England, and the Thai label Singha, as well as Paulaner. He observed that the horrific events of 9/11 "affected us briefly, and some of that was caused by our distributors' expressing their concern for the future by reducing inventory." But by January they were back in full production, he said, and now he echoed the "What, me worry?" theme.

"In our category--the specialty end of the beer business--we're enjoying more success than we have had in a long time," he said. "I think people have cut back their spending, and our specialty niche is where people can splurge a little and it's not that much more expensive.

"We're niche marketers," he said. "We're a bit higher priced than most and a lot more difficult to find. We avoid the sports bars; we're more into specialty clubs--yacht clubs, country clubs, fine-dining, white-tablecloth restaurants. Lots of restaurateurs have reduced the size of portions to reduce prices. They can make up that lost margin with the extra profit in specialty beers."

If Coleman foresees a trend, it's "very steady growth for our niche," he said happily. "One category to watch is weiss beer, or wheat beer. It's the fastest-growing beer in Germany now, and some of the major brewers worldwide are starting to test it. It's a lighter taste, somewhere between a lager beer and a `malternative.' As with them, the appeal is to young adults. As it should be: surveys say that a 25-year old averages 65 gallons of beer a year. A 55-year old averages only 15 gallons a year."

Anyone wishing to learn of the damage these harsh times have done to the club industry should talk to someone besides Brian Helms, the food and beverage director of the Missouri Athletic Club in St. Louis.

"There's been a slowing in the economy, of course," Helms said. "But it really hasn't affected the drinking crowd. The bar business is up easily 10 percent over last year, and probably over half of that is beer.

"Anheuser-Busch is the leader--especially their Bud Light--partly because they're here in St. Louis. Still, we have the specialty brands too, from St. Pauli Girl to Heineken, and they're all up.

"I notice that people are not drinking more," he said, "but they are drinking more beer. It's less expensive than wine or liquor. And it's more social. Perhaps we're doing so well because members want to economize. Why should they spend money in an expensive restaurant when they're already paying club dues? So they come to the club."

Trend spotters may thus latch onto the mightiest trend of all: the end of flat sales, zero growth, and the what-do-we-do-now despair of the American beer industry. Joe Corcoran, vice president of national on-premise sales for Anheuser-Busch, likes to point out that A-B's sales volume increased 2.5 percent in the second quarter of 2002, a tad above the one percent predicted by industry analysts.

And interestingly, the industry may be getting a fresh supply of its favorite audience: men in their twenties. Spokespersons for the Beer Institute in Washington, D.C. speak of "The baby boom echo," the Children of the heftiest population bulge in history. This mini-bulge is just moving solidly into beer-drinking age.

The challenge will be getting--and keeping--their attention, said Tom Pirko of Bevmark. "They're accustomed to surfing the Net, watching a hundred different channels on TV, and playing lickety-split video games. They're prey to fashions that change by the day, not the season. There's a terrific impetus for change. Can the beer business keep up with that? It's got to get moving."

Meanwhile, in the gentler world of the private clubs, Paulaner's Jeff Coleman suggests maintaining profit margins "by looking upon beer the same way they look upon their menus and their wine list: as something that draws people in. Often the managers treat beer as an afterthought, and think only, `What's the most popular?' So they get the Budweiser and the Busch, and that's it."

Today the same distributor who's selling the wine "is the same one selling the beer," Coleman said. "The distributor often will print the wine list as a service; they ought to include the beer as well. A couple of beers there at $5 a glass, and they'll make that extra margin."

And, of course, educate the wait staff about what's available. And how to pour it. Put the glass over the top of the bottle ...