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Beer Outlook 2013

Posted on  | February 26, 2013   Bookmark and Share
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Beer’s free fall is over. Last year’s retail sales—projected to hit $100 billion for the first time in U.S. history—reversed three straight years of volume declines,  according to data compiled by the Beer Institute. Driven by increasing sales of hundreds of craft and artisanal brews in all 50 states, 2012 volume rebounded from depressed levels, notwithstanding stable sales, or slight declines, for mainstream brands including Bud, Miller and Coors, which together still account for more than a 75% share of U.S. beer volume.

Meanwhile, craft beers were up in strong double-digits in 2012 and are on track to account for a record 8% share of the total U.S. beer market, according to Charlie Papazian, founder and president of the Brewers Association. The strength of the craft/micro movement was also manifested last year in start-ups: the number of “active brewers” in the U.S. hit 2,751 as 250 more new breweries opened in 2012. The Brewers Association predicts that crafts, micro and  artisanal brands could more than double their present share of the U.S. beer market by 2017.

Big brewers are well aware of the craft-ification sweeping Beer Nation, and it’s not such a bad thing. “I think [the craft beer revival has] woken up a lot of folks who have not considered beer and is bringing them into the category,” Tom Long, chief executive at MillerCoors, told the Wall Street Journal recently. Indeed, perhaps even more significant than the debut of scores of new micro labels in 2012 was the carefully cultivated introduction of new expressions and packages by established brands.

Canned Heat

The craft beer boom is certainly borne out by the experiences of retailers across the nation. “People are trading up to micros and craft beers,” says Jason Galpin, beer buyer at Liquor Depot in New Britain, CT. Noting the improving economic picture locally, Galpin adds, “Bud is strong, Coors Light is always a big seller, so are Heineken and Corona, but we now have 250 SKUs of micros
and crafts.”

The latest trend, Galpin notes, is the arrival of artisanal brews packaged in aluminum cans. “Customers love the convenience, especially during summer and for picnics.” (Cans, first developed in 1935, now account for for about 52% of all beer sold in the U.S.) Galpin also cited the growing popularity of large bottle format bottles, which he dubs “bombers.” These are 22-ounce bottles of brands like Lagunitas, Sam Adams and Sierra Nevada as well as a full range of Belgium imports, which retail from $5 to $12.

At B-21, a full service wine, liquor and beer retailer in Tarpon Springs, FL, near Tampa, “Craft beers are what customers are coming in and looking for,” says Justin Hammer, vice president and co-owner. To stimulate trial and sales, Hammer says the store conducts beer tastings every Saturday. The store recently expanded its artisanal beer section to 500 different brews.

Seasonality & Local Sell Well

Tapping into holidays, annual events and mark-your-calendar sporting events is a proven way to promote beer sales. According to Lori Oliver, bar manager at the Applebee’s in Kingston, NY, 50-cent wings paired with a tall $2.99 beer was a winner during football season. More recently, the restaurant group featured a popular 2-for-1 promotional program, which, interestingly, included Magic Hat, micro-brewed in Vermont.

For artisanal-minded beer drinkers, seasonality is not about sports, but rather limited-time offerings that literally mark the season—stronger, richer winter ales and lighter, crisper summer brews are just two examples. For its part, Heineken USA has been promoting a quartet of Newcastle brews stateside since 2011: Newcastle Summer Ale, a golden beer offering “a subtle citrus hop aroma;” Newcastle Werewolf, a fall ale, “blood red” in color; Newcastle Winter IPA (“full-bodied and hoppy”); and Newcastle Founder’s Ale, a “full-bodied ale with a sweet and dry finish.”

In Saratoga Springs, NY, where horse racing takes center stage every summer, Niall Roche, owner of The Irish Times pub and restaurant, naturally features a variety of classic Irish brews and dishes for racing fans. But, knowing that a large proportion of visitors over the summer arrive in Saratoga Springs specifically to soak up the local scene, in addition to Guinness, Harp’s and Smithwick’s on draught, the pub also features a rotation of upstate New York crafts, including Davidson Brothers IPA and Saratoga Oatmeal Stout.

Bob Kreston, owner of Kreston Liquor Mart in Wilmington, DE, says, “Throughout the holidays last year, we did frequent in-store tastings, price promotions, and we especially featured local beers.” He reports that while “Bud, Miller and Coors held their own, our selection of seasonal beers, especially during the football season, performed strongly, including Dog Fish from Delaware, Sam Adams, Fordham and Dominion, the latter two also from Delaware.” He adds, “Craft beers now account for 25% of our beer sales, and they’re attracting wine buyers too, who love to experiment.”

And Dave Kunkel, manager and beer buyer at Gold Eagle Liquors in Libertyville, IL, just outside Chicago, says don’t forget the summer: that’s when his Corona sales are strong. His impression is that younger legal-age drinkers gravitate to craft beers, while, all other things being equal, older drinkers favor light beers, including Coors Light, Bud Light and Heineken Light.


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