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2014 U.S. Beer Market Forecast

Posted on  | March 21, 2014   Bookmark and Share
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For American beer lovers, the coming year looks to be positively sunny, with more astounding styles flowing from taps, bottles, barrels and cans than ever. For suppliers, however, it looks like marketers and resellers are in for strong tradewinds—in multiple directions.

The U.S. craft beer category—now comprised of almost 3,000 artisanal brewers in all 50 states—is so hot that it surprises no one that some crafties are now receiving takeover offers from overseas as well as at home.

On the final day of 2013, Belgian brewer’s Duvel Moortgat USA division, which already owns Cooperstown, NY-based Brewery Ommegang, announced it had partnered with (read acquired) Boulevard Brewing Co. of Kansas City, MO. Noting the combined geographic reach of Boulevard and Duvel now totals 44 states, John Wetmore, marketing director for Duvel Moortgat USA, says, not surprisingly, “Strategically, we were looking for opportunities to own a bigger platform in the U.S. beer market.”

In fact the Duvel-Ommegang-Boulevard combo is poised to leverage not one but two vibrant growth sectors of the U.S. beer market. The Chicago-based market research firm IRI notes that imported beers grew modestly in 2013, achieving a solid 15%  share of the U.S. beer market, while in the same period craft beers grew in double digits, gaining a record 7.5% share last year.

Boulevard founder John McDonald predicts: “I think you’ll see more deals happening in the coming year or two, whether it means partnering with a European brewery or merging with other U.S. entities.” Duvel’s Wetmore promises increased marketing and promotional activity both on- and off-premise.

Move Over, Mug?!

The nation’s top brewers continue to be dogged by consumers migrating to spirits and wine. One creative response? proposing an alternative to the classic beer mug.

In February, in a dramatic bid to counter consumers adopting spirits as their preferred tipple, MillerCoors launched a “cocktail-styled” beer called Miller Fortune. The new entry—brewed to be literally savored like a smooth bourbon—is packaged in a sleek, black bottle. According to Jonathan Stern, director of media relations, Miller Fortune is specifically formulated to be served in a cocktail glass, either straight up or on the rocks. “The beer industry as a whole has lost seven share points to spirits [five] and wine [two] in the last 10 years,” notes Stern. “Miller Fortune was created to fight against these losses and take back legal-drinking age spirit drinkers/occasions.” The 6.9% ABV beer features a rich golden color, brewed with caramel malt and cascade hops to achieve layers of flavor and deliver the complexity and depth that appeals to spirit drinkers.  

Cocktail lovers are clearly in the crosshairs at AB InBev as well. The St. Louis-based brewer is pushing ahead with its line of fruit-flavored extensions to Bud Light, first launched in March 2013. Bud Light Lime Lime-A-Rita and Straw-Ber-Rita continue to achieve sales gains, according to Pat McGauley, VP of innovation, AB InBev. “We see a huge opportunity to experiment with the Ritas,” adds McGauley. So far, so good: the line has expanded to include a seasonal (winter) Bud Light Lime Cran-Brrr-Rita, plus Mang-O-Rita and Raz-Ber-Rita.

Packaging is another arrow in the big brewers’ quiver. With pint’s worth of irony, to ignite interest among Millennials, MillerCoors revived the original can for low-calorie Miller Lite in late 2013. The intent, says brewery rep Stern, is “to show Millennial consumers that Miller Lite is the original light beer.” The package has been so well received that the retro package plan has been extended through September.

Crowning Achievement

Certainly from the perspective of MillerCoors and AB InBev, something needs to be done; IRI noted 2013 declines among Bud Light, Bud and Miller Lite. Among full-calorie entries, only Corona Extra showed a gain in 2013, rising 2.6%. This is an especially welcome development for its new owner, Crown Imports of Chicago, the beer division of Constellation Brands.

Indeed, one of the bigger beer-trade stories of 2013 was the June announcement that Constellation Brands had secured 100% control of the nation’s number-one import Corona portfolio, together with a state-of-the-art brewery in Mexico, for Crown Imports. This deal was part of a larger global exchange of beer assets under which AB InBev signed a $20.1 billion takeover of Mexico’s Grupo Modelo; but AB InBev had to divest itself of its U.S. Corona assets to Constellation for it to win approval of its Grupo Modelo acquisition by the U.S. Justice Department.

As Wall Street analysts noted last June, it was a “transformative” event for Crown, and its parent, Constellation Brands. Singling out a key benefit of this deal, Bill Hackett, president of the beer division, says, “We not only have control of Corona, we also control the entire Mexican beer portfolio for U.S. distribution.” That includes Corona Extra, Corona Light, Modelo Especial, Negra Modelo, Pacifico and Victoria. Hackett adds: “Perhaps more importantly, we not only own the brands, but also the world’s most state-of-the-art brewery in Piedras Negras, Mexico, which we are in the process of expanding. Over time, this will allow us to double our production capacity.”

More Ferment to Come

In 2014 merchants will continue to see the nation’s leading brewers responding aggressively to craft brews. AB InBev, MillerCoors, Constellation’s Crown Imports and Heineken USA, among others, have been busy launching and promoting their respective craft(y) entries, including Budweiser Black Crown, Goose Island from AB InBev, Blue Moon from MillerCoors, and Strongbow Cider from Heineken USA, among others.

And more activity is sure to come. This February, for example, AB InBev announced it had acquired another well-respected craft brewing enterprise: Blue Point Brewing Company of Patchogue, NY. Looking ahead into 2014, gauging how successfully, or not, the nation’s top beer marketers simultaneously go after spirits consumers and craft-beer lovers will certainly represent some of the most compelling stories to follow in the year ahead.

Strength on Strength

Of course, one of the keys to bigger-brewer marketing is bigger budgets, not only for product development but also promotion. This week, Heineken—whose advertising is always among the most sophisticated in the industry—unveiled its latest global TV campaign, “The Odyssey.” The ad follows the main character’s adventures aboard a cruise ship as he uses his wit, charm and skills to impress his fellow passengers. From going low in a limbo contest, to diving expertly into a swimming pool, to dancing the perfect conga, the shipbound men get to perform varied skills, proving that every man has the ability to become legendary.

The spot features 20 men found through an open casting call where they demonstrated a skill that makes them legendary in their own right. As with previous Heineken campaigns, the TV creative will be supported online. Both a 60-second and 30-second version of the television spot will run on a variety of broadcast and digital platforms in the U.S., with a longer form version on the Heineken YouTube Channel.

As part of the Odyssey campaign, Heineken has also launched the “Take the Stage” promotion; adult consumers can enter a sweepstakes for the chance to showcase their legendary side on one of three celebrated Heineken stages: the set of the next James Bond film, DJing at the Heineken House or center court at the 2014 US Open. The program features retail and on-premise merchandising materials, coupons and rebate offers, where legal.

Isn’t That Special…

Another craft-inspired trend to watch: beers that speak to specific consumers, places, occasions and ideas. Just as craft beers have embraced quirky names and, on a broader scale, seasonal beers have paved the way for recognition of limited editions, we can expect more small-batch “concept” beers to crop up in 2014.

To wit, this month Goose Island is unveiling a complement to its flagship Chicago-only, draft-only 312 Urban Wheat Ale; proudly sporting the city’s area code, 312 Urban Pale Ale is Goose Island’s first year-round, national offering in the pale ale category. Meanwhile, to honor the 350th Anniversary of New Jersey, Flying Fish Brewing Company in April will release a commemorative NJ350 Anniversary Ale. Created after months of “listening to suggestions from New Jersey residents on styles and flavors,” according to press materials, NJ350 is appearing only in 750ml bottles and on draft. It is brewed with blackstrap molasses and an array of traditional English malts and barley, then finished with American hops and registering at 7.5% ABV.


Comments

  1. Afternoon Brief, March 21 : WIN Advisor
    March 21st, 2014 @ 6:12 pm

    [...] 2014 U.S. Beer Market Forecast [...]

 
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