State alc bev regulators got rare perspective from industry economists at opening session of annual Natl Conference of State Liquor Admins on “state of the industry.”  Any negative trends within beer, wine and spirits mostly in background as words like “dynamic,” “premiumization” and “pro-consumer” tossed around by Beer Inst economist Michael Uhrich, Distilled Spirits Council economist David Ozgo, Wine Inst’s Steve Gross (more of a govt affairs guy) and consultant-economist John Dunham, who coordinated work on recent “Beer Serves America” report (see May 23 Express).  Indeed, Michael all but ignored mainstream beer’s recent woes and overall trend.  He focused instead on growth of above-premium segments, dollar growth and increase in number of breweries.  He even pointed to some “moderation in the declines” of mainstream/economy segments.  Steve claimed there’s “room for everyone to grow in wine,” and tho every coupla yrs there seems to be declaration of “end of the wine boom,” biz continues to grow.  Spirits, of course, enjoying “steady growth,” David pointed out, with multiple healthy segments, from bourbon to tequila.  John called biz “dynamic” and “pro-consumer,” offering “tremendous growth” in SKUs and product types.

Michael and Steve said their respective bizzes in “transition,” with Michael pointing to challenges faced by some regional craft players now in a “pinch” between big brewer craft brands and smaller, local players.  He sees oppy for more partnering of regional players with strengths in different geographies.  Transition in wine more about new varietals coming in, more experimentation, more willingness to try wines from different places and packaging innovation (cans/boxes).  Lotsa talk about “craft,” natch.  None of these observers willing to opine that craft has “peaked,” tho they see more competitive mkt and consolidation coming. John tersely dealt with definitional difficulty, declaring craft not “an economic, business or legal term,” but a “marketing” term.  “If it works, great.”

Coupla Clouds and Concerns On Horizon; Weak Pricing, Productivity Down, Many Not Makin’ Money  State of the industry not all rosy, of course. John noted some negatives.  Pricing has been “weak” across the board, with increases mostly coming from trading up/mix, not front line increases.  Lotsa new producers “not making money,” he also pointed out.  And productivity down in the industry as number of new, small players has exploded.  As result, “we’ll see a shakeout” among producers, he believes, tho it remains a “great time to be a consumer.”  At same time, each industry has different concerns.  In wine, there’s possibility of not enuf workers to pick the grapes and vintners face challenge of securing sources for best fruit.  Then there’s pot challenge: prime grape-growing areas yield $350K to $500K/acre.  Standard pot commands $1 mil/acre.  That could “provide some tension,” Steve acknowledged.  Alc bev regulation “outdated,” John declared, which will lead to another kind of “shakeout” on both national and state levels, driven in great part by direct to consumer sales which are “breaking down the 3-tier system.” How that change is managed is “big challenge.” John used term “deregulation” several times, but David and Steve preferred “modernization” and “maturation,” respectively, to describe 3-tier evolution.  In beer, Michael pointed to increasing demand by consumers for more info about ingredients, calories, ABV and more and used that concern to plug Beer Inst’s “voluntary disclosure initiative.”