Lebanon's Brewing Crisis

When Lebanese banks imposed harsh withdrawal restrictions on U.S. dollar deposits in Lebanese banks in 2019, Lebanese depositors faced a stark choice. They could withdraw their savings in Lebanese pounds—losing up to 90 percent of the value in the process—or they could leave their deposits in a tottering banking system. But some Lebanese chose a third option—investing their trapped deposits (commonly referred to as “lollars”) in the Lebanese alcohol industry.

Lebanon’s beer and wine industry has experienced meteoric growth over the past ten years, even as Lebanon’s economy has otherwise tumbled. Lebanon exports nearly 50 percent the wine it produces every year. Beer is another bright spot: exports have increased 300 percent over the past five years. Some Lebanese investors have been hoping that investing “lollars” in alcohol production would allow them to expand exports, helping them reap new “fresh dollars” in future years.

Yet, Lebanese brewers and winemakers import nearly all the raw materials required for production—from yeast and sugar to corks and bottles. As the Lebanese currency plummets, those inputs have grown harder to acquire. The supply chain requires at least some access to “fresh dollars” for imported components, and fresh dollars are only obtainable through exports. Producers say they are trapped.

The alcohol industry has so far weathered the economic crisis, but a new export ban may threaten to shatter the market all together. As the entire Middle East struggles with food shortages amidst the conflict in Ukraine, Lebanon’s ministry of industry banned the export of any foodstuffs made from grain—including all forms of alcohol. Suppliers protested that the ban was pointless, since Lebanon actually has a surplus of alcoholic beverages. The government walked back the ban to include only certain types of beer and wine, but the decision had already scared off many of the firms to which Lebanese producers were hoping to export their wares.

A crisis is brewing, and alcohol may not be able to provide a pathway out of it.

This article is part of the series Mezze: Assorted Stories from the Middle East.

Will McChesney

Intern, Middle East Program