Beer Good, Sales Bad!

Beer Good, Sales Bad!

            Please don’t allow the title to confuse you, we are BIG advocates for beer and their other malt-kindred and in fact I used to home-brew throughout my college and graduate school years.  As my taste in beers have changed over the years I must assume I’m not alone as we have experienced a rise in micro-brewery openings and the new Renaissance of craft beer even in the smallest of burgs.  The issue our title suggests is the challenge to the mega-brewery brands and how we have arrived at this point in time.

            A review of some recent headlines regarding the internationally accepted combination of barley, hops, water and yeast is in order to better understand the current beer landscape.  The Economist (June 13, 2017) reports that worldwide alcoholic beverage consumption fell in 2016 by 1.4% widely caused by the decline in beer consumption at 1.8% globally.  Effects include, Millennials are moving toward wine, when consumers can afford a ‘better’ beverage they move on from beer and the worldwide recession has affected consumption in developing economies.

            Meanwhile “back at the ranch” the traditional kick-off to the summer banner days of beer consumption, otherwise known as Memorial Day weekend, saw a drop off in beer sales.  Domestic beer sales dropped 3% in dollars and 4.6% in volume (Beer Business Daily-June 23, 2017).  Imports and domestic super-premium beers sales were up 3% in volume and 6.2% in dollars.  As if to “pile-on” super-premium table wine ($11 - $15 range) was up 8% in dollars with whiskey right behind it at 6% in dollars.  To round out the news Nielsen (June 27, 2017) reported that beer imports outperformed domestic U.S. beers such as ABinBev US brands at a sales decline of 4.5% and MillerCoors at sales slide of 3.2% YTD for the holiday period.

            WOW, that’s a lot to absorb even for my pea-brain; however, the news all supports what many industry observers have been calling out for some time (even this guy, 7/9/14) the fundamental change in the beer category that has been coming for years as American consumers move past “mega-beer-mass-marketing” and have become more discriminating in their tastes. The “Mega-Brewers” have even been snapping up craft beer brands to forestall the inevitable shrinkage of their market share to the point where the craft brewing industry is pushing back.  The U.S. Brewers Association has created labeling to indicate the beer you purchase was brewed by a micro-brewery, most likely a locally-owned and operated business supporting their community (The Drinks Business, 6/17).

            To their credit the mass-market breweries applied a combination of research, development, purchasing, marketing and engineering to exponentially grow the beer and malt beverage industry much to the benefit of their owners and stakeholders and consequently to the detriment of the independent brewers of their day.  The information may suggest when the only focus is on the bottom line and not the people driving sales “consumers” then it’s possible the “Soul” of the beer business gets lost in the mix.  Innovation in the American consumer market has always come from the sweat equity that independent business (brewers in this case) have brought to their product offerings.  When your latest “innovation” is a new bottle design OR a retro-style bottle perhaps what’s happening in the craft-beer segment is the real leading edge of the category.