What We Need to Know About the Guinness Shortage

Instead of the cookies and milk that Santa can nibble in the United States, Irish children leave a pint of Guinness. But there is one problem.

U.K. pubs report a Guinness shortage.

The Guinness Shortage

Although Guinness was first brewed in Dublin during the late 1900s, it has become a rather modern brew. Cultivating a distinct craft-like personality, Guinness arrives at pubs in kegs with a slew of pouring conditions. In addition, its recognizable color and the viral “Split the G” challenge have made a difference. (See link below please.)

Whatever the reasons, the NY Times said Guinness has become a “Gen Z darling” with a 21 percent pop in sales.

Supply and Demand

As a result, they’ve wound up with a shortage.

On the supply side, wholesalers and distributors are limiting pubs’ orders. One establishment that asked for 12 got 6.

As a determinant of supply, these future expectations are shifting our supply curve to the left. I am not sure if price went up as the graph indicates. But we do know that the arrows display the quantity of demand that might not be met because of less supply:

Meanwhile, exacerbating the crisis, we have inelastic demand (my vertical curve) because there is no substitute for Guinness. (Some disagree.) With its surging popularity, the holiday season, and rumors of shortages, the utility demand determinant increases demand. Again, I am not sure about price but, shown on the graph, it is likely that we have more unhappy people on the demand side:

Our Bottom Line: Thinking at the Margin

In addition to supply and demand, economists like to say that we are always thinking at the margin. The margin is where we move from what we have to something extra.  A profit margin involves how much extra a business earns. A margin of error describes how much (extra) room we have for a mistake. And for Guinness, the extra is why a pub owner ran to nearby establishments to locate another keg. For Diageo, Guinness’s parent, at their margin we have a new brewery project and the expansion of an old one.

Still at the margin, I wonder if Santa will wonder where his Guinness went.

My sources and more: Articles describing the Guinness shortage were in FT and the NY Times. And finally, do have a look at splitting the G. And please note that two of today’s sentences were in a past econlife post.