Beer Marketer's Insights
While craft beer continues to struggle in off-prem scan data, on-premise appears to be a very different story, according to Fintech sales-to-retailers data presented by NBWA veep of analytics Lester Jones and Fintech veep of distrib strategy Eric Kiser. In fact, craft beer is the #1 share gainer in beer STRs on premise, up 0.9 share to 17.8% of beer STR $$ YTD thru Jul 10. That was top share gain among beer segments by more than 2X in Fintech data. Next biggest were below premium lights, up 0.4 pts to 2.6 share, and Beyond Beer (FMB/seltzer) and NA beer each up 0.3 share to 5.2 and 0.9 respectively. One big aspect of craft's growth seems to be keg recovery, at least by $$ sales to retailers. Kegs jumped up 5.5 pts to 50.5% share of beer's package sales mix on premise YTD. While Modelo Especial and Mich Ultra drove the biggest gains, several craft brands were among top keg gainers too.
Since WA-based Georgetown Brewing's fateful decision to ditch its draft-only model and begin canning products in 2016, sales skyrocketed while keeping its footprint almost entirely within WA. Less than a decade later, Georgetown's lead brand Bodhizafa IPA became a top-30 craft brand in natl scan data. Bodhizafa IPA surpassed Goose IPA and Sierra Nevada Big Little Thing IPA to become #29 best-selling craft brand yr-to-date thru Jul 14 in Circana multi-outlet + convenience data. Its sales grew 14% to $11.4 mil YTD including up nearly 16% for latest 4 wks. Only AB's Wicked Weed Pernicious IPA (+19%) and Goose Island Tropical Beer Hug double IPA (+16%) grew faster for 4 wks.
Coming off a particularly challenging 4th of July period, craft's declines steepened in tracked Circana scans for latest 4 wks thru Jul 14. Total beer $$ also dipped slightly for the period, -0.8% with volume -2.5%. But craft $$ dropped 4.8% as volume fell 6.4%. So it shed 0.4 share of $$ and 0.3 share of vol over key summer time slot.
Boston Beer execs continue to talk up perceived oppys on premise primarily thru craft and cider as part of co's broader plans to return to growth. During the "ride up and the ride down" on hard seltzer, "we probably could have given more attention to the rest of our portfolio," CEO Michael Spillane acknowledged on co's Q2 earnings call, vowing to be more "balanced" across core brands going forward. "We in particular took our eye off draft, along with our wholesalers," added Jim Koch. "So we are reorienting our sales force," and "making changes" in their "priorities" for an on-premise push. "Expect to see more draft lines and more on-premise business" for Sam Adams and Angry Orchard in particular, Jim added. Craft beer and hard cider collectively still make up around 20% of its volume, "competing in categories that are not growing," he acknowledged. But "we think we missed some growth there over the last five years" and "we believe we can outgrow the category over on that side of the business" going forward. Gotta note, Sam Adams is the #10 keg brand with 2.2 share of keg sales YTD thru Jul 10, according to Fintech STR data (see below). Angry Orchard is #23 keg brand overall holding share at 0.7.
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The oldest brewery in America hit a rough patch in Q2 2024, tho DGY shipments still up 2% in first half and it's developing action plan aiming to get back to sustained growth. Now in its 195th year, DG Yuengling is virtually only regional brewery from 70s and 80s (pre-craft) that's even still around. Improbably, DG Yuengling survived and even thrived for most of last few decades as an independent entity. But co now also has developed internal conflicts so numerous and complex that consultant Bump Williams likened situation to Tolstoy's War and Peace.
Constellation's beer biz picked up right where it left off in its fiscal Q1 Mar-May, plowing ahead with beer revenues up 8%, shipments +7.6% and depletions +6.4%, co reported early this mo. It outperformed analyst expectations as well as the industry at large, again the top share gainer in bev alc and among the best in broader CPG, ceo Bill Newlands emphasized on earnings call. After finishing fiscal '24 with beer operating income over $3 bil and revenues of $8+ bil, FQ1 revs reached nearly $2.3 bil. Oper income hit $923 mil, up 16% as margins expanded to 40.6%. For 6 mos thru May 2024, STZ shipments grew 8.8% with revs up 9.4% and oper inc +14.2%, boosted by easy FQ4 comps.
After shipping ahead of depletions and posting slight volume and rev growth in Q1, Boston Beer sales took a sizable backward step in Q2. Shipments slipped 6%, 148K bbls for the qtr with depletions and revs down 4%, co reported yesterday. Puts Boston shipments down 3.4% to 3.75 mil bbls for the 1st half, losing share of industry shipments, but now trailing its 6-mo depletions trend (-2%). Net revs dipped just 0.8% to $1.005 bil for the half with over 2% price increase. Despite topline declines, both gross margin and oper margin expanded significantly in 1st half, with gross margin +2.6 pts to 45% and oper margin +2.3 pts to 8.6%, amid benefits from efficiency initiatives and fewer charges.
Imports Overtake Premium Segment in YTD Scans; Supplier Share Shifts; Mich Ultra #2 Brand
Just past the halfway mark in 2024, beer volume continued to slip, while $$ dipped a little bit. Case sales slid 2.4% yr-to-date thru Jul 14 in Circana multi-outlet + convenience data, with $$ down 0.5%. After outselling domestic premiums by $$ for several mos, imports became the #1 beer segment YTD, +4.9% to 24.7 share. Domestic premiums declined 6.1% to 24.6 share. But sub-premium beers held flat, picking up slight share. FMBs grew 8.9%, +0.9 share to 10.5, more than making up for hard seltzer's 10% decline and 0.75-pt share loss. Craft lost about 0.3 share YTD on a 3.3% $$ drop. Non-alcs maintained strong 30% gain-pace, even accelerating into summer, picking up 0.24 share to 1.02. The budding segment grew faster and hit 2.5 share in Circana-tracked foodstores YTD to 7/14.
Clarification
: Ray LaRue started as Monster Brewing prexy on Mon. Tony Short is staying on for a period to help with transition.