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In recession, breweries bullish on beer

While corporations like AIG and Citibank nosedive during the economic recession, some Triangle business owners are toasting to good fortune.

"The beer business is good, man," said Andy Miller, co-owner of Triangle Brewing Company.

The two-year-old Durham brewery is still enjoying a growth spurt in its adolescence. Triangle has had some trouble adding new accounts with bars this year, Miller said, but has not lost any ground.

"Our last six months have shown about a 10 percent growth," he noted. "Not ideal for us, but we're still growing. That's always a good sign."

Some, however, might not have expected growth in this sector. Tracy Falba, visiting assistant professor of economics, cited a 1996 study, "Are Recessions Good For Your Health?" by Chistopher Ruhm, which suggests that people buy less of products like alcohol and tobacco during economic downturns.

Falba added, however, that beer sales may actually benefit from a recession.

"A nice, locally brewed beer might appeal to someone who might have otherwise chosen wine, compared to getting a Miller Lite," she said.

Robert Poitras said he has seen the same trend that Falba points to. He is owner and operator of Carolina Brewery, a restaurant and brewery with locations in Chapel Hill and Pittsboro.

The recession, Poitras said, may aid local businesses because people value having a good company in their "backyard," and so hope to keep their money local.

Like Triangle Brewing Company, Carolina Brewery is continuing to see a rise in the number of clients, despite a decline in business at restaurants.

"Overall, beer sales have been pretty good--we've added accounts in the last month," Poitras said. "However, the volume per account has decreased from what it was six months or a year ago. A lot of restaurants aren't as busy as they used to be."

Falba noted Durham and Chapel Hill have fared much better than the rest of the nation in the recession, so Triangle breweries may be more profitable than those elsewhere.

"In conversations I've had with other breweries, they're not seeing a drastic change," Miller said. "Two of the 'big boy' distributors in the area that I've talked to in the last two months have actually set records in the last quarter of last year. The beer business is rolling pretty solid."

Both owners said they have experienced a significant increase in the price of hops, with Poitras noting a "five-fold" surge last summer and fall. But lately things have been more hopeful.

"We're coming down from a huge price increase, which is welcome news," Poitras said. "Our prices were going through the roof at the same time this recession was happening-it was like the perfect storm."

Despite this cost surge, Miller and Poitras said they have managed to keep their beer prices stable in order to weather the recessionary climate.

Miller said Triangle Brewing Company has kept its prices steady at levels set in the last quarter of 2008. Carolina Brewery has kept wholesale prices unchanged, Poitras said, but had to raise bar-side prices by $0.25.

Still, Miller has high hopes for the future, despite negative economic forecasts--. He said the company aims to double production within the next six months, and "absolutely" plans to open a bottling facility within a year.

"Ironically, with us as a new brewery, we don't foresee [the recession] being a huge deterrent," he said. The brewery has not yet spoken with any banks about getting a loan to build the facility, but Miller said he is not too concerned.

"I can honestly say, I don't think the downturn's going to affect us too much with [the loan]," he said.

Poitras said he is "cautiously optimistic" about the future of Carolina Brewery. Students at Triangle-area schools and the impending summer heat will hopefully, he said, increase beer sales in the next six months. For March, though, there is one main force behind Triangle beer sales.

"Beer sales will really depend on how our Triangle-area basketball teams perform during March Madness," he added. "It does have an impact on our business, and can definitely help the beer industry."

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