Downturn Bites This Time for Beer, Tobacco

In past recessions smokers and beer drinkers kept puffing and quaffing. This time it could be different. The downturn and associated austerity measures may actually be accelerating a long term decline in both habits in the developed world, raising pressure on the two industries to innovate. Tobacco sales in developed countries are affected by price, and price is mainly driven by taxes, something austerity-minded governments are busy raising. "They will look at tobacco as an easy way to tax, much as they would look at the alcohol industry," said RBS analyst Robbie Aitken. "The scale of the downturn this time makes it different." Beer sales in Europe and North America rose in the recession of 2001 and 2002 for both Heineken (HINKY) and Interbrew, the predecessor of Anheuser-Busch InBev

, prompting AB InBev's finance chief Felipe Dutra to remind investors of beer's status as "cheap entertainment" in a 2008 presentation.

.