People still love to drink beer. A recent survey says so. The National Beer Wholesalers Association (NBWA) just announced the results of its latest Gallup Consumption Habits poll showing that most Americans enjoy beer vs. other booze. The poll found that 37 percent of U.S. adults drink beer most frequently, compared to 31 percent for liquor and 29 percent for wine. Hey, we’ll take that. If you don’t know, NBWA represents 3,000 independent American beer distributors. From the press release:
“This data confirms what we already knew to be true: When hardworking Americans wish to enjoy alcohol, they most often choose beer — the drink of moderation and good times spent with family and friends,” said Craig Purser, NBWA President and CEO. “Our nation’s well-regulated independent distribution system ensures that consumers can safely access a nearly limitless variety of products from brewers of all sizes, making it easy for legal-age drinkers to find the perfect beer for them.”
The NBWA goes on to report that its Beer Serves America study shows that the U.S. beer industry contributes more than $400 billion to America’s GDP + 2.4 million jobs. NBWA offers a wide variety of resources to help distributors, brewers and even media jokers like me, including cool data nuggets like these. In fact, a variety of trade organizations and data analysts have been in a similar giving mood lately, sharing a variety of useful market trends and insights as summer winds down. For instance, as you probably have already noticed, beer is getting more expensive.
A recent report from CGA by NIQ, citing the company’s BeverageTrak data service, shows all subsegments of the beer category experienced an uplift in median price vs 2022 for on-premise — with Below Premium seeing the greatest increase (up +$0.86) and Hard Seltzer and Domestic Premium having the smallest change (up +$0.15 and +$0.13 respectively). This has led to an interesting anomaly.
While the rank of each Beer category remained largely unchanged in 2023, Below Premium overtook Domestic Premium with a slightly higher median price ($5.16 vs $5.13 respectively).
CGA by NIQ’s Pricing Analytics service, which is powered by BeverageTrak, can examine the price and velocity of beer brands and products across all markets and channels, informing beer makers and suppliers where and at what price range their products are under or over performing compared to competitors. That’s kind of cool. This report also noted three other interesting nugs:
- Most beer subsegments continue to perform best at the low-price band, while Imported Beer and Cider performed better in the mid-price band. Highlighting how consumers who are more inclined to drink imported Beer and Cider are more willing to pay extra.
- Below Premium experienced the greatest uplift in low price band and saw velocity up +135% vs 2022, showing how consumers are less influenced by quality, and more by price when it comes to beer.
- Import is the only category performing best in the high price band, seeing an increase of +3% vs last year, again reinforcing how the Imported Beer consumer is much more willing to pay extra.
Never to be outdone when it comes to sharing great beer insights — specifically craft data — the Brewers Association (BA) recently released the results from its midyear survey, shedding light on the state of the craft beer industry. The trade organization represents small and independent American craft brewers by its definition. The survey showed us what many in the industry have been feeling — a low single-digit decline of -2 percent in the market. There are a lot of factors at play here: distribution is super competitive, those rising costs mentioned above, evolving consumer preferences like the attraction of ready-to-drink cocktails (especially tequila based), supply chain disruptions and stiff competition from both local and national beer makers. Distribution, specifically, has been a big factor. According to the press release:
In breaking down the distribution channels, according to Circana scan data, independent craft packaged sales were down -3% year-over-year (YoY) but have improved since the first quarter of 2023 when they were down -9%. Distributors and retailers have been reducing their focus on distributed craft and searching for growth in other pockets, but there are signs that the worst reductions may be in the past.
We have noted this trend via the NBWA’s Beer Purchasers’ Index or BPI. The BPI is a forward-looking indicator measuring expected demand from beer distributors — one month forward. A reading greater than 50 indicates the segment is expanding, while a reading below 50 indicates the segment is contracting. In the first part of 2023, the craft segment struggled mightily to get the attention of distributors with the craft BPI reading in March hitting 28 (maybe the lowest I’ve ever seen it). Hopefully, we don’t see demand get that low again. In July, the craft BPI was up to 39 (not great! but better) — perhaps suggesting the segment had bottomed out and may see higher levels of ordering in the future.
As distribution is down, the BA noted that on-premise and at-the-brewery sales were healthier than distributed craft sales, noting a small decline in kegs via Alcohol and Tobacco Tax and Trade Bureau (TTB) data — a trend that’s been happening for a few years now. The BA also noted that the active craft brewery number increased from 9,119 in June 2022 to 9,336 as of June 2023, with the total brewery number up from 9,242 to 9,456.
From the report:
Overall, craft brewers continue to face economic headwinds on both business and consumer fronts. From a business perspective, borrowing costs continue to rise, and while input cost increases have stabilized, they remain elevated over previous levels. Meanwhile, mounting evidence shows inflation eroding consumers’ buying capacity and diminishing their savings, and the impending restart of student loan payments this fall could impact consumer purchasing power during the back half of the year.
“Optimism is on the horizon as the midyear survey shows hope for better trends in the future,” reflected Bart Watson, chief economist at the Brewers Association. “Collectively, craft still needs new ideas and new strategies to move beyond our current normal, which is a slow-growth environment. Craft demand isn’t going anywhere, and there is plenty of opportunity for growth within new channels, occasions, and customers.”
That’s a nice note to end this outlook. We are definitely feeling more optimistic, and we’re going to work with craft breweries to figure out new ideas and new channels to sell more beer. Stay tuned.
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