The news just doesn’t get better for Harley-Davidson (NYSE: HOG) and its peers in the “big bike” business. US motorcycle sales shrank by 14.1% in the third quarter from the year before, extending the grueling decline to 15 consecutive quarters. Remember, that is a 14.1% decline from the already deeply depressed sales figures of 2009.

According to the Financial Times, “Sales are now less than half the level at the peak of the market in 2006… Highway bike sales totalled 383,000 last year, down from 660,000 in 2008 and 724,000 in 2007.” (see US motorcycle sector extends decline)

How bad is it? Some of Harley’s Japanese competitors did not produce 2010 models.

I’ve written quite a bit about Harley-Davidson over the years (see prior posts). I can’t help but almost feel sorry for the company. You cannot say that Harley’s woes are due to bad management. Harley’s management team generally gets high marks. No, Harley-Davidson’s problem is bad demographics.


Harley’s big bikes are a product purchased almost exclusively by white males in their mid-to-late 40s. Harry Dent calls these touring bikes the ultimate manifestation of the male mid-life crisis (see chart), and I can think of no better description.

All of this was well and good 10 years ago when the Baby Boomers first began to enter this demographic sweet spot. Harley never had it better. The largest generation in history had just become their best customer.

Unfortunately, those days are gone. The Boomer male has passed this stage and has likely shaved off the goatee and closeted the leather jacket. Good luck selling the bike used, though. Used bike prices prices have plummeted in recent years.

Try as Harley might to reach out to other demographic consumer groups–younger and non-Caucasian men and women, for example–Harley’s future has already been written. Sales of the company’s iconic bikes should continue to disappoint investors for the foreseeable future, barring the occasional surprise.

Say It’s Not So

Across the Atlantic, changing demographics are wreaking havoc on another iconic industry–German beer.

Normally it’s not considered politically correct to play on national stereotypes, but the Germans themselves have cultivated a macho image as a nation that knows how to swill its beer. Visiting a proper Bavarian biergarten and ordering an obscenely large stein of beer from a barmaid with biceps big enough to beat most bikers at arm wrestling is practically a right of passage for visitors to the country. (I myself was chastised in my youth by a stern such barmaid after letting a few drops drip onto the table: “Dee beer is for drinking, not for dee spilling.”)

So, it might come as a surprise that German beer consumption is in a long-term secular decline. According to the Economist, German beer drinking has declined from 142 liters per person per year in 1991 to “only” 110 liters in 2009 (See Oktobergloom). That’s still a lot of beer, mind you. Enough to put most Americans accustomed to watery Bud Light in the hospital, in fact. Still, that is a decline of more than a fifth.

As you might guess, demographics are the driving force behind this change. As the Economist explains, “An ageing, shrinking population is drinking less… Even among the traditionally hard-boozing middle-aged, health concerns have curbed drinking.”

So there you have it. Harley hogs and German beer–both unfortunate victims of changing global demographics.

Related post: “Dutch to Consider Closing Coffee Shops

Charles Lewis Sizemore, CFA

This post originally appeared in the HS Dent Blog

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