BMTC18: Closing Address: Christopher Shepard | Craft Brew News

Christopher Shepard will share industry insights and trends pertaining to craft beer in the U.S. As the senior editor of Craft Brew News, a publication by Beer INSIGHTS, Mr. Shepard is on the cutting edge of tracking craft beer’s growth.

Transcript

1. Deep Roots Weather Storms “the relationship business” US Beer, Craft: 2018 Thursday, March 8, 2018 •Burlington, VT Christopher Shepard Senior Editor Craft Brew News Beer Marketer’s INSIGHTS @CraftInsights @BeerInsights Wind Map / Fernanda Viegas & Martin Wattenberg [hint.fm]
2. What can beer marketing tell us about the beer market? Beer Marketer’s INSIGHTS March 8, 2017 SUPER BOWL LII Biggest (beer) marketing event of the year NBC: 0:30 = $5.05M 1 brewer, 4 brands, 6 ads, 4 mins WSJ: AB spent >$533M since 1995, #1 buyer
3. • Bud Light, #1 US beer brand -6.2%, 2.2M bbls in 2017 Peak Year: 2008, 41.65M bbls -8.6M bbls, 20% 2008-2017 • “Dilly Dilly” intro’d late summer 2017 • “Step one…getting the brand back into the conversation in a fun way. …sales will follow.” -Bud Light veep Andy Goeler • Nielsen All Outlet Off-Premise CEs Bud Light: • -5.7% YTD thru 8/19/2017 • -6.7% for 4 wks • -5.9% YTD thru (2/17/2018) Coors Light, -4.9%; Miller Lite, -2.6% Dilly Dilly! Beer Marketer’s INSIGHTS March 8, 2017 0 10 20 30 40 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Shipments (Mil Bbls) Top 3 Premium Lights Shipments, 2007-2017 Bud Light Coors Light Miller Lite
4. Top 10 Brands Trend (% chg) Bud Light -5.7 Coors Light -4.1 Budweiser -6.8 Miller Lite -2.8 Corona Extra +3.6 Mich Ultra Light +21.3 Modelo Especial +17.4 Natural Light -1.5 Busch Light +1.2 Busch -2.1 It’s tough at the top, even in craft: Top 10s by Volume, 2017 Top 10 Suppliers Trend (% chg) Anheuser Busch -2.8 MillerCoors -2.9 Constellation +8.8 Heineken USA -3.3 Pabst -3.7 Boston Beer -5.1 Yuengling -1.6 Diageo BC USA +5.1 NAB -4.3 Mike’s Hard +15.1 Top 10 Craft Players Trend (% chg) Boston Beer* -13.0 Sierra Nevada -7.0 Lagunitas +6.8 New Belgium -0.3 Craft Brew Alliance -3.2 Goose Island -0.8 Spoetzl (Shiner) -3.1 Founders +34.1 Bell’s +10.2 Firestone Walker +14.5 Beer Marketer’s INSIGHTS March 8, 2017
5. Beer Marketer’s INSIGHTS March 8, 2017 Beer Marketer’s INSIGHTS March 8, 2017
6. High-end segments +11.2 share to over 40% in 5 yrs • High-end segments source volume from mainstream as consumers trade up to brands with more perceived value • 2017 Winners: Constellation +1.65M bbls, 9% Mike’s +265K bbls, 15% Mich Ultra +21%, now #6 Modelo Especial +17%, now #7 Stella Artois +11% (#14) • Launches: Corona Premier; Mich Ultra Gold • Change? Busch Light, Keystone Light, Hamm’s …enter Two Hats Beer Marketer’s INSIGHTS March 8, 2017 0 10 20 30 40 50 60 70 80 90 100 2013 2014 2015 2016 2017 Mil Bbls Beer Segment Shipments, by Pricing Imports Craft Superpremium FMB/Malternatives Cider Premium Subpremium Malt Liquor
7. Beer Marketer’s INSIGHTS March 8, 2017 Craft more aggressively targeting mainstream volume +50% +30% IRI multi-outlet + convenience, YTD thru 12/31/17; Beer INSIGHTS Seminar, NYC, 11/6/17 “We can’t sustain it unless some of us… ‘bust through the ceiling’…” “You’ve got to look at price.” - Mike Stevens Founders CEO/co-founder “We have to seek that mainstream beer drinker as our next chapter.” “never going to win…pricing game.” - David Walker Firestone Walker co-founder
8. Beer Marketer’s INSIGHTS March 8, 2017 Beer Marketer’s INSIGHTS March 8, 2017
9. • The smallest US brewers see similar opportunities and also succeed: helping beer drinkers balance consumption with active lifestyles, for example • Yoga classes & running groups; local charities and business groups; tour groups & destination marketing • Built organically & require personal touch • Create strong bonds that can make all the difference • Brewers <100K bbls/yr: 12.1 mil bbls in 2017, +11% +7 mil bbls, 140% since 2012 +9.6 mil bbls, almost 400% in 10 yrs from 27.1 share of craft in 2009 to 48.3 last yr • Local bizzes face local problems: landlords, zoning boards, neighbors, banks... Small brewers build bizzes by building networks Beer Marketer’s INSIGHTS March 8, 2017
10. Overbuilt & Underfunded: Recent Craft Headlines Smuttynose Forced to Be Sold At Auction (Craft Brew News - vol 9, no 6; Jan 18, 2018) New Belgium Laid Off 28 … Due to Missed Long-Term Growth Target Green Flash … Sales Soft, Too Much Capacity and Debt High; … Lays Off 15% Summit Lays Off 10%+ of 100-Strong Workforce, Expecting 10% Decline… (CBN - vol 9, nos 19a, 18, 5; vol 8, no 108) Remember Speakeasy, Magnolia Remember Stone: Laid off 5%, Oct 2016 +6% in 2016 +12% in 2017 Beer Marketer’s INSIGHTS March 8, 2017
11. Beer Marketer’s INSIGHTS March 8, 2017 Beer Marketer’s INSIGHTS March 8, 2017
12. Places & Experiences Fuel Alc Bev Growth Beer Marketer’s INSIGHTS March 8, 2017 Sierra Nevada New Glarus Portland Beer SDBeer Denver Brewery Guide Nashville Brew at the Zoo MN State Fair
13. • 2016, TTB: “tax determined premises use” at 1.961 mil bbls +54%, 700K bbls • Almost half of craft growth that year • US shipments +0.3%, 535K bbls that year • 2017, thru Nov +25%; Dec #???? Revisions? Reporting change? • BA: estimates +300-400K bbls due to differences in reporting, biz practices; survey sez: brewery visits lead to off-premise growth • Lack of clarity in non-3-tier volume (plus $$$$) has led to pushback Local is in. Taprooms are more in. But within the industry, it’s not quite that simple. Beer Marketer’s INSIGHTS March 8, 2017
14. Beer Marketer’s INSIGHTS March 8, 2017 Beer Marketer’s INSIGHTS March 8, 2017 Coming for 2019… Goose IPA? AB wants it to be #1 IPA in US • $$ +29.1% YTD thru 12/31/17 (IRI MULC) +19% for 12 wks, +6% for 4 wks • >80% of growth in convenience stores • Elysian Space Dust, fastest growing brand in IRI Craft, more than tripled in 2017
15. 0 5 10 15 20 25 0 5 10 15 20 25 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Trend (% chg) Shipments (mil bbls) Craft Shipments & Trends, 2007-2017 Craft Shipments Trend Craft downshifts out of “the go-go” years: +16.5 mil bbls in 10 years; >3/4 of that 2010-2015 • Craft volume nearly tripled in 10 years • 6 years of double-digit growth, +12.9 mil bbls • 2016: Downshift, +6.9% • 2017: +4.6%, 1.1 mil bbls Beer Marketer’s INSIGHTS March 8, 2017
16. New winds blow as total beer volume soft, spirits gain • US Shipments -1.1% in 2017 -1.4% since 2006 • Domestic taxpaids -1.8% -7.2%, 13.4M bbls since 2008 Share of Absolute Alcohol Consumption, YOY Chg 1980 1996 2006 2016 Beer 50.3 59.3 55.3 49.6 Wine 12.3 12.8 14.7 15.8 Spirits 37.4 27.9 29.9 34.6 Beer Marketer’s INSIGHTS March 8, 2017 A Perfect Storm? • Gen Z: “less interested” in drinking • Recreational cannabis: “Share of buzz” & wallet -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 140 150 160 170 180 190 200 210 220 230 Trend (% Chg) Bbls (Mil) US Shipments, 2007-2017 Taxpaid Domestic NA Cider Import Tax-free Trend
17. THANKS! Christopher Shepard Senior Editor Craft Brew News Beer Marketer’s INSIGHTS christopher@beerinsights.com @BeerInsights @CraftInsights Deep Roots Weather Storms