July 2, 2010
Lester Jones, chief economist for the Beer Institute, presented some year-through-May data at the Beer Institute annual meeting on June 29. With the U.S. beer industry down over 2% in 2009, there was hope for this year that volumes would improve as the economy picked up. Well, not yet for the major domestics. Overall U.S. beer sales are off 3.1% from January 1 through May 31, with domestic beers down 3.9% and imports up 2.6%. Imports, however, came out of the gate like gangbusters with a strong January and February followed by slower sales since.
Overall, the states from Pennsylvania and north and east through New England is where beer sales are holding up or growing. The rest of the country is down in volumes. The scariest number is Texas, off as much as 7% this year. Harry Schuhmacher of Beer Business Daily noted today that Hurricane Alex could dampen July 4th weekend beer sales for part of Texas, so relief will have to come later. Lester noted that the second half of 2010 has low 2009 comparable sales that could lead to some improvement over the second half of the year, with a target of 2010 volumes at -1.6%.
One reason for optimism is that draught beer volume sales are up 1.6% so far, and the on-premise beer sales decline is slowing, -3.6%. The other side of that coin is that off-premise sales are weakening to -3.0%. Lester surveyed some in the industry to do some forecasting, which show expectations of growth of 0.5% for 2011 and 0.9% for 2012. I do not share as much optimism for overall U.S. beer sales. My personal view is the pieces I think are missing from forecasts is the cultural "why" should beer sales increase at a point where the Amewrican beer drinker is turning to megabrands less often and the entering an era where deficits and the national debt will begin to take over more news and political discussion.
What does all this mean for craft brewers? It means an opportunity to gain market share, as the barrel growth for craft brewers will be compared to barrel losses elsewhere. Market share gains means more people will be trying craft-brewed beer and finding beers they love. The shift is happening and accelerating. The question remains how fast will it happen going forward.
Craft brewers are the bright spot for the industry again this year. We are about to launch our mid-year, one-question sales sampling here at the association to get a mid-year growth estimate. The anecdotes from people I talk to in the craft community this year show that most craft brewer sales growth is even accelerating faster than the solid 2009 growth rate of 7.2% by sales volume.
The Independence Day weekend is a huge opportunity for craft brewers since it is a time when people get together and many beer drinkers will have a chance to try exciting established and new beers from small and independent craft brewers. Opinions on beer will have changed in many minds across this country on July 2-6 through the enjoyment and reflection of good times with friends and great beers. Have a great Independence Day all.