More Choices Negatively Affect Domestic Brands Multiple sources
More Choices Negatively Affect Domestic Brands Multiple sources report a somewhat stagnant 2018 beer market, primarily because consumers have more alcoholic-beverage choices and have increased their consumption of wine and spirits, which is continuing to fragment the market. According to Beverage Industry Group, total 2018 sales were -1.1%, or the fifth consecutive years of decreased sales. IRI said volume sales decreased 0.3%, but dollar sales increased 1.8%, with domestic premiums -4.2%, but super-premiums +15.2%. A bright spot for the industry is IRI data showing a
3.7% increase in volume sales during the first four weeks of 2019, compared to January 2018, with offpremise dollar sales at multi-outlet and convenience stores increasing 6.4%. A Tall, Cold One Still Attracts Most Americans According to Gallups July 2018 survey, beer was still adults top alcoholic-beverage choice, at 42%, a 2percentage point increase from 2017; with wine, 34%, an 8-point increase; and liquor/spirits, 19%, a 7-point decrease from 2017. Unsurprisingly, men preferred beer at a much larger percentage than women, or 59% and 24%, respectively, and adults with a college education increased 3 points from the 20012010 period to the 20142018 period.
Adults with an annual household income of $75K+ increased from 37% to 39% for the same periods, while those with a household income of $30K to $74,999 income remained the same at 44% and those at less than $30K decreased from 44% to 41%. A World of Favorites Imports continue to be an outstanding category in the market, as it gained an additional 1.1 share point during 2018 and now accounts for 20% of the total market. Industry analysts expect 2019 to be another excellent year.
Mexican imports have driven growth in the segment and represent almost 67% of the total US import beer market, with 5 brands in the top 10 for 2018. The Corona brand family generated the most 2018 dollar sales, at $2.37 billion, but #2 Modelo had the largest increase from 2017, or +17.9%. Pacifico was the only other brand family with a significant 2018 sales increase, or +8.4%. Style Is the Primary Craft-Beer Influence New craft-beer styles is the dominant trend in the segment, having increased sales almost 40% during
2018. Sour beers, hazy IPAs, lagers and the use of coffee ingredients are the styles with the greatest interest among younger consumers. According to an October 2018 Mintel report, better selection of styles and style were the top two factors influencing beer choice. The report indicated consumers considered style so important, because they are more knowledgeable about beers. Despite an expansion into new craft-beer styles, IPA still had the largest share of the segment, at 31.5%, and sales increased 12.5% during 2018. Flavored Malts and Hard Ciders
Top All Categories Flavored malt beverages recorded the largest increase for 2018, at 10.7%, with consumers attracted to lightly flavored and low-calorie beverages. Hard seltzers in the flavored-malt segment now account for 2% of all beer sales. Hard ciders had a remarkable turnaround, with dollar sales improving from -3.1% for 2017 to +10.1% for 2018, and volume sales from -6.1% to +7.4%. The Smirnoff brand family was #1 in 2018 dollar sales, at $341.3 million, but Twisted Tea experienced the largest increase among long-term, flavored malt beverage brands, at +21.8%. Angry Orchard
generated the most 2018 dollar sales in the hard-cider segment. Multi-Channel Performance Nielsen reports hard seltzers was the top 2018 offpremise segment (for the 52 weeks ending 12/1/18) improving 165.7% in dollar sales from 2017, while the cider segment had its first increase during the past 3 years, at +0.7%. In the on-premise channel (bars, restaurants, etc.), total volume sales of beer decreased 1.8% during the 52 weeks ending 10/6/18, with domestic premiums decreasing the most, at 5.9%, and pale lagers -2.3%.
According to the Trax/Nielsen report, The Changing Face of Beer Retailing in the U.S., AB Inbev had the largest facing share of shelf in the retail channel, at 31.4%, with Miller Coors second, at 21%, and Constellation Brands third, at 5.3%. Advertising Strategies With continuing fragmentation of the beer market, local beverage outlets must emphasize their vast selection to remain competitive and feature new craft-beer styles, flavored malts and hard ciders to attract more foot traffic and increase domestic premium brands sales. Based on the Gallup data in the Profiler, local beverage
outlets may want to position imports, craft beers and other segments as upscale beverage choices to attract more adults with household incomes of $75,000+. Bars could enhance the sale of new craft, import and hard-cider brands by re-labeling the establishments dartboard with the name of those brands. Each new patron takes one throw and receives a free sample of the brand name they hit. New Media Strategies With more craft-beer drinkers considering themselves knowledgeable about beer, ask customers to post short videos sharing their knowledge. Offer a discount or
prize to the video that receives the most views. With the percentage of adults who are 50 and older and increasing their preference for beer more than younger adults, ask older adults to post decades-old photos of them enjoying their favorite beer with friends. Local beverage stores can post a social media survey, asking customers/visitors if they think cannabis sales will negatively affect beer sales and whether they would likely buy less beer when cannabis is legal in the state. Randomly award a participant with a prize.
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