Yuengling's Success Story

AdAge has a headline that reads: D.G. Yuengling & Son Becomes America's Largest Brewer. Of course, once you get into the meat of the article you see that it's technically true because all the major beer conglomerates have now all been acquired by even bigger foreign conglomerates, not because of some ridiculous growth trend in Central Pennsylvania.

(from stevegarfield on Flickr)

Still, I was struck by this quote:
Yuengling's growth -- which was fueled by a huge launch in Ohio last year -- is remarkable considering that the overall beer industry remains in a funk. Total beer shipments fell by 1.4%, according to Beer Marketer's Insights, continuing a multi-year slump.
I don't find Yuengling's growth especially remarkable at all, and unless you're only judging the company from it's income statement and balance sheet, I think many people who enjoy anything other than light beer feel similarly.

Yuengling has a unique market position. When you go into a bar, it's often lumped into the "domestics" category, along with Bud Light, Miller Light, Coors Light, etc. So when a bar runs a happy hour special, like $2 domestic bottles, you essentially have your choice of Yuengling or light beer; and plenty of people feel that Yuengling is a superior quality beer.

Craft beer snobs may still be the minority of beer consumers, but there are enough of them to matter, and their numbers are growing. For all the talk about how the beer market has been shrinking in recent years, the numbers clearly show that it's at the expense of the conglomerates, not the small craft brewers.

Yuengling is a great compromise beer in this respect. People who wouldn't be caught dead holding a Coors Light might be perfectly willing to have a Yuengling if it's part of a happy hour special or it's what their friends have in the fridge.

I think the ratings over at Beer Advocate cement my case. As of today, Yuengling comes in at 79 out of 100. In school, that would be a high C - not a score worth hanging on the fridge, but not an unacceptable failure either. Bud Light, Coors Light and Miller Light score 49, 51 and 56 respectively - all of which would earn a big fat F.

As long as Yuengling can continue to hang around in the "domestics" category, I think it will continue to do well. If it ever gets bumped anywhere near the "craft" category and starts getting priced as such, I think that momentum will grind to a halt.

On Income and Wealth

True or False: a household whose income is $160,000 is "wealthy" or "rich"?

I asked this simple question on Twitter earlier in the month and it sparked a small debate. Some people said true, others said false, a few said the issue is way too complicated for 140-characters, which is probably right.

(from badlyricpolice on Flickr)

$160,000 is what I'd estimate was the household income of my former 4-person group house in Arlington. We lived comfortably enough, always had money for the rent and the bills with a little left over at the end of the month, but I don't think any of us ever necessarily felt financially rich.

With all the Occupy rhetoric about the 1% and what it means to be wealthy, a lot of nuance has been lost. On paper, a person like me would seem to be doing pretty well, if the only data point you look at is my household income. But that ignores the fact that my cost-of-living is very high, that I have (student) debts, that only a fraction of my household income actually belongs to me, and that only a certain amount of my income is actually discretionary.

But let's back up to this question of household income. Consider four different types of households:
  • Single person
  • Married couple, no kids
  • Married couple, two kids
  • Group house with four adults
This is by no means the complete list of household structures, but for simplicity and the sake of argument, let's go with it.

Consider the person living alone. Let's say she makes $160,000 and rents a nice downtown loft apartment and pays $4,000 per month for it. That's a ton of money, but at the end of the year, her leftover income (before taxes) is $112,000 - not bad.

Now let's consider the 4-person group house. Each person earns about $40,000 so they also have a household income of $160,000. They rent a decent house with 4-bedrooms, but not nearly as luxurious as the loft. They also pay $4,000 a month for it. At the end of the year, each person in this household will have (before taxes) $28,000 leftover. It's still a decent amount of money, but it's hardly what the single person household has at her disposal.

This data can easily be manipulated. For example, I could say that 17% of households in DC earn more than $150,000. Which sounds astounding, especially when only 8% of households nationally earn this much. I could manipulate a headline that says something like "DC has twice as many rich people as the national average".

So is the city of Washington really that much wealthier than the national average? Or is it a data point that exists because of circumstance... Does the high cost of living tend to push wages higher, but not so high that all adults can afford to live alone, which subsequently pushes up some household income numbers? Does being a city with such a high degree of college degree holders mean that it's also a city where a lot of people have a lot of student debt? Or maybe there are some people in the city who are actually just filthy rich?

The answer is probably all of the above. And using household income as a proxy from wealth is far from crystal clear.