My “Not gouging beer prices while blaming inflation" shirt has people asking a lot of questions already answered by my shirt
Plus: 🎶 Cold beer on a Friday night (for-profit cable news hell edition), "Drinking in the Despairverse" + more!
Please support this independent journalism about drinking in America with a paid subscription to Fingers:
I depend on readers to underwrite the labor that goes into producing this newsletter. Thanks for reading!—Dave.
Last week economist Lindsay Owens went viral on Twitter for highlighting a quotation from Constellation Brands’ Q4 earnings call (which took place back in January):
The idea that a corporate executive (Constellation CFO Garth Hankinson, in this case) would tell a Wall Street analyst that their firm intended make as much money as possible by raising prices where they can isn’t surprising in a vacuum. That’s sort of the whole idea of publicly traded companies, after all! Owens’ tweet struck a nerve because it shows how corporations—in the beverage-alcohol business, and just generally—are intentionally driving up prices to capture more profit at a time when the mainstream media and politicians from both major parties are hammering the general public with a narrative of pandemic-induced cost-push inflation. Responding to an analyst’s follow-up question, Hankinson said as much: “[W]e continue to think that inflation is going to be a big factor for us next year, and we still intend to take a significant amount of pricing.”
This is what economists call pricing power, and it’s a result of allowing firms to grow so large that they’re able to effectively dictate what they charge for their products without fear of getting undercut by meaningful competition.1 “You hear a lot about inflation falling from the sky… but the truth is prices are set by firms,” Owens told Jon Stewart (he’s back now I guess?) in a post-virality appearance on his podcast, The Problem. “What we had been seeing that was starting to disturb us was reporting not just of an increase in profits” which could be explained away by higher demand, “but an increase in profit margins.”
To wit: despite all that pesky inflation, corporate profit margins hit their highest levels in 70 years in 2021. Constellation’s own adjusted gross profit margin grew as well. Hankinson’s “Not jacking up beer prices and blaming inflation" T-shirt has people asking a lot of questions already answered by his shirt, yadda yadda.
Constellation isn’t alone, of course: anti-monopoly economist and author Matt Stoller calculated in December that as much as 60% of “inflation” price increases are actually just padding corporate profit margins, and recently followed up with a Twitter thread citing more examples. And just last week, Heineken’s CFO told Fortune Magazine that the Dutch macrobrewer intended to raise its prices by “courageous” amounts—despite clocking 12% net growth in 2021, improving its operating profit margin, and projecting 17% growth through 2023.
And why not? When drinkers believe that it’s inflation, rather than corporate pricing power, driving up the price of their pilsner, they’re a lot less likely to get red-assed about it—something Heineken figured out last year. Though the firm already took “a lot of pricing already in the second half” of 2021, CFO Harold van den Broek told analysts and investors last week, “the volumes have been resilient.” Gotta make up for that additional $231 million impairment charge on Lagunitas somewhere, I guess!
📬 Good post alert
Tired: Bible thumping
🎶 Cold beer on a Friday night (for-profit cable news hell edition)
By now you’ve probably seen this extremely bizarre and disturbing news clip from CNN’s live coverage of the Russian invasion of Ukraine, but just in case you haven’t:
Very sickening stuff! Obviously Applebee’s bought this spot well in advance as part of a much larger ad package, making the appearance of its Zac Brown-abetted paean to a night out in middle America an unfortunate coincidence rather than a bit of bloodthirsty opportunism. The restaurant chain basically said as much in a statement about the placement to Forbes’ staff writer Marty Swant, and added that it was “disappointed in the actions of the network.”
Which… sure, fine, but it’s not like for-profit 24-hour cable news has ever been good for society! It’s “basically just a stream of pictures and noises that keep old people company” as Ryan Broderick of Garbage Day put it, one that frames life-or-death politics as a spectator sport and manufactures consent for all sorts of vile projections of state and corporate power! Applebee’s will be fine and this little “scandal” is stupid. But you know what else is stupid? Buying ads from a network that warmongered the Iraq invasion like an NFL pregame show, then complaining that that very network split-screened your lager ‘n wings commercial with the biggest bout of imperialist bloodshed since the end of the Cold War. You could simply… not do that.
🎧 “Drinking in the Despairverse” with Low Culture Boil
Earlier this week I went on the (very great!) Low Culture Boil podcast to chat with author Rax King about Miller Lite’s “metaverse bar” marketing stunt and the broader prospect of developing digitized, non-corporatized third places to approximate the culture and community of real-life bars for virtual participants. As I argued the other day, leaving this task entirely up to for-profit firms guarantees we’ll wind up with the shittiest/most extractive version imaginable of whatever the metaverse might someday become.
Rax and I unpacked that idea at length, and debated the viability of, like, meta-puking and banging rails of meta-coke in the bathroom of a virtual dive bar. It was a great conversation@ It’s currently unlocked on the LCB Patreon, so check it out now, and if you’d like to support their work, consider subscribing (I do!) Plus, stay tuned for my wide-ranging interview with Rax on The Fingers Podcast in a few weeks.
On Wednesday I published an interview with Courtney Iseman, drinks journalist and publisher of the craft beer newsletter Hugging the Bar. We talked about drinking history generally (a passion of hers) and specifically how different civilizations around the world/throughout the ages formed rituals and even proto-drinking games in their ancient quests to stay loaded.
Everyone in the Fingers Fam got a preview of our conversation, but only paying Friends of Fingers were able to access the whole condensed transcript and full-length podcast episode. If you like Fingers and want to support independent journalism, consider purchasing a subscription! You’ll get access to these sorts of subscriber exclusives, and help me sustain and grow this boozeletter.
Annual subscriptions work out to less than $7/month. Thanks for your support!
🧾 The Settle-Up
Don’t miss out, follow Fingers on Instagram today. It’s free, and your feed will thank you. (Not really, that would be weird. But you know what I mean.)
For more on this, Senator Elizabeth Warren’s exchange with Fed chair Jerome Powell from last month is worth watching:
Not that it’ll really make a difference lol but at least it kinda distills the whole inflation/price-gouge conversation into something comprehensible. For what it’s worth, Owens previously worked as Warren’s economic advisor.