Beer Sales Back On Top

After Long Downturn, Beer Sales Are Back

Helped by Craft Brews, Shipments in the U.S. Are Up so Far in 2012, Breaking a Three-Year Decline

Shipments of Americans’ long-standing go-to alcoholic drink are rising for the first time since 2008 in another sign that consumers—particularly young men—are slowly but surely emerging from the recession.

Much of the rebound is being driven by small-batch “craft” brewers, reflecting shifting tastes and forcing dominant players Anheuser-Busch InBev NV (ABI.BR) and MillerCoors LLC (TAP) to increasingly borrow from upstarts’ playbooks. Big brewers also are rolling out alternative malt beverages after liquor companies swiped drinkers.

Beer shipments in the U.S. rose 1.9% to 141.4 million barrels in the first eight months of 2012 after falling three straight years, according to the Beer Institute, an industry group. Beer sales had fallen 1.5% in 2011.

Beer has struggled in recent years partly because its key customers, blue-collar males in their 20s, were battered by an economic downturn that hammered industries such as construction.

“If they’re hit, we’re hit disproportionately,” said David Almeida, vice president of sales at AB InBev’s U.S. unit, which has nearly a 50% market share, much of it on the back of its Budweiser and Bud Light brands.

Job numbers are still much worse than before the downturn, but improving. The unemployment rate for males 20 to 24 years old stood at 15.2% in August. The rate for men 25 to 34 fell to 8.3% in August, from 11.7% in 2009, according to the Bureau of Labor Statistics.

To see the correlation, look at beer sales in North Dakota, where an energy-sector boom is fueling lots of blue-collar jobs. The state’s overall unemployment rate is 3%, the lowest in the country. Beer shipments in North Dakota are up 18% through August.

Americans are branching out from traditional American lager to sample ales, porters and wheat beers from fast-growing small brewers.

The number of breweries in the U.S. topped 2,000 earlier this year for the first time since the late 19th century and another 1,300 are in planning stages, according to the Brewers Association, which represents craft brewers.

Craft beer sales rose 12% in volume terms to 6 million barrels in the first half of 2012, according to the Brewers Association, which represents craft brewers. The association estimated craft beer represented 6% of U.S. beer market by volume and 9% in dollar terms last year.

Lagunitas Brewing Co. more than doubled its brewery’s capacity in Petaluma, Calif. to 600,000 barrels after completing a $19 million expansion this spring.

Its sales are up about 40% this year and the company is spending another $25 million to convert a 300,000 square foot steel fabrication plant in Chicago into a second brewery scheduled to open next year. Its top seller is a hop-heavy India pale ale, a category often called IPA.

“There’s a shift in the palate,” said Tony Magee, founder and part owner of Lagunitas, which began brewing in 1993. IPAs, for instance, are heavier and more bitter.

Even the White House is getting into the act after President Barack Obama bought a home-brewing kit last year. Staffers have made honey brown ale, honey porter and honey blonde, sourced from a beehive on the property. It is believed to be the first time alcohol has been brewed or distilled inside the White House.

The move to craft-style beers could limit consumption even though it lifts profits in the $100 billion beer industry. In addition to charging higher prices, many specialty brews have a heavier taste and higher alcohol content than mainstream beers, making them less likely to be guzzled in rapid-fire.

MillerCoors is posting healthy growth in its biggest-selling brand, Coors Light. But it also has broadened distribution of small brands such as Henry Weinhard’s, a Northwest brewer it owns, to tap growing thirst for IPAs and other niche beers. It recently rolled out Redd’s, an apple-flavored ale, and Coco Breve, a malt beverage containing coconut water, in some markets.

“I think it’s woken up a lot of folks who have not considered beer and is bringing them into the category,” said Tom Long, chief executive at MillerCoors, which controls about a quarter of the U.S. market and still derives the bulk of its sales from Miller and Coors lagers.

Shipments of AB InBev’s Bud Light, the country’s top-selling beer brand, are rising for the first time in four years, lifted by the launch of Bud Light Platinum and Bud Light Lime-A-Rita to compete against liquor. Platinum is sweeter and has higher alcohol content than regular Bud Light. Lime-A-Rita tastes more like a margarita than a beer.

Big brewers are increasingly working the craft-beer craze. Anheuser-Busch’s Goose Island (acquired last year) and Shock Top are both posting double-digit growth.

At MillerCoors, Blue Moon and Leinenkugel’s are also posting double-digit growth.

Courtesy of Mike Esterl | The Wall Street Journal

Google study proves the importance of mobile-friendly sites

A reminder from Google on its Mobile Ads Blog: Two thirds of consumers report they’re more likely to buy from a mobile-friendly site, and a little less than two thirds (61%) say they’ll abandon a mobile site if they don’t see what they want right away.

Those findings are from a Google survey conducted by Sterling Research and SmithGeiger in July of just over 1,000 US smartphone Internet users. Fully 96% of consumers reported they’ve encountered sites that were clearly not designed for mobile devices. (Think of a newspaper site that simply makes itself tiny to fit a tablet screen. Painful.) 50% of people said that even if they like a business, they will use them less often if the website isn’t mobile-friendly. Conversely, of those who have visited a mobile-friendly site, 74% say they’re more likely to return.

“The fastest path to mobile customers is through a mobile-friendly site,” concludes Google. “If your site offers a great mobile experience, users are more likely to make a purchase.”

DudaMobile in February reported that nearly 20% of visits to small business sites led to an immediate call to the business (e.g. with click-to-call), with some local businesses skewing much higher (e.g., pizzerias at 32%, car services at 27.8%). But businesses have to earn that call with a mobile-friendly site that puts that phone number above the fold and in eyeshot.

Google concludes from the new study that non-mobile friendly sites actually damage a company’s reputation: 36% of respondents said they felt like they’ve wasted their time by visiting those sites, and 52% of users said that a bad mobile experience made them less likely to engage with a company. Almost half felt that a site that works poorly on a smartphone indicates a company that does not care about their business. The upshot seems to be that mobile business is a business’s to win or lose. Consumers expect it. Nay, demand it.

The Brewery Bubble

The U.S. now boasts 2,126 breweries—an increase of 350 additional breweries since June 2011. The BA also tracks breweries in planning as an indicator of potential new entrants into the craft category, and lists 1,252 breweries in planning today compared to 725 a year ago. Additionally, the count of craft brewers was at 2,075 as of June 30, 2012 showing that 97 percent of U.S. brewers are craft brewers.

With the latest Brewery Association numbers comes renewed worry that we may be seeing a bubble in brewing.  First, to be a little pedantic about it, in economics a good working definition of a bubble in when prices become detached to the fundamental value of the good in question.  Of course, careful economic students will think about how prices are set in marketplaces and represent the market value of a good – which leads to the first existential question in economics: can bubbles exist.  But leavoing that aside, I understand the usage here: are there now too many breweries than can be sustained long term in the market? [This is a bubble in the sense that the price folks are willing to pay to start a brewery may be too high given the present discounted value of the expected stream of revenues]

Brewery Growth over the Years
Brewery Growth over the Years

In general the market for craft beer is showing stong growth:

Dollar sales were up 14 percent in the first half of 2012, while volume of craft brewed beer sold jumped 12 percent during that same time period.

So the fact that the number of craft breweries is expanding makes sense. However, the overall market for beer is shrinking – something the big brewers are grappling with by getting into more and more flavored malt beverages to try and compete with cocktails and the like.  In other words, the craft beer niche is expanding at the same time the overall beer market is shrinking.  What to make of this?  I actually think it is not contradictory at all.  Whereas before most drinkers would find themselves behind a Bud, new drinkers are looking for more – more flavor, more variety, etc.  Both spirits and craft beer offer this.

Which is all to say that I think craft beer is in a good place and maybe we should think of craft beer in the same way we think about spirits and not lump it in with the macro lager industry.

Which is not to say that there will not be some bloodletting in the craft beer industry.  I imagine that at the rate of new openings we are currently seeing there are probably a number of breweries with inadequate experience, poorly thought out business plans or poos locations.  But brewery closings in these cases are a sign of industry health – creative destruction as economists call it – not a sign of an ailing industry.

Supported article notes: beeronomics.blogspot.com and the Craft Brewers Association

Attract and Retain More Beer Fans

One of the greatest tools in event marketing is creating a 2-way communication portal that activates your visitor at the time of experience.  Remember these beer events bring hundreds of visitors and typically include a dozen or more beer vendors. The challenge becomes retention. How do you keep your product fresh and top of mind.

By adding QR hot spots you’ll never lose the attention of a beer enthusiast visiting your tent or tasting room – especially during the busiest times when it’s difficult to interact with everyone. We design a mobile interface that aligns with the objectives and goals of your brand or product push – providing important, relative, current information that delivers to their mobile devices instantly. Further more we help you construct a capture-criteria to gain specific insights. This can include quick evaluations, competitive interests, brand survey, needs assessment, enrollment or simply a quick way they can be reached for a follow up.

Leaders of Micro-Marketing Tactics | Tip #12 | Tasting Room Kits

Enhance the visitor experience with our Tasting Room Kits. Provide valuable insights about your product line up that is easily fed to your visitor’s mobile device. Include your top craft brews, beer profiles, locations and pubs that carry your product line – and offer a reward or discount when they answer a few quick questions about your brew.

[button link=”http://craftbrew.cirqlemedia.com/take-one-down-pass-it-around/” type=”small” color=”orange”] Download our free marketing guide, “Macro-Success for Micro-Brands”[/button]

Brewing A Brand | Attracting Your Audience

THE MOST SUCCESSFUL CRAFT BREWERIES IN THE COUNTRY HAVE BEEN ABLE TO BRIDGE THEIR PRODUCTS WITH CONSUMERS AND BUILD A CULTURE ALONG THE WAY. BEYOND FLAVOR, PRICE AND ACCESS – LOYALTY IS THE TRUE SECRET INGREDIENT BEHIND EVERY BRAND OR LABEL. WITHOUT IT, EVERYTHING ELSE IS MEANINGLESS.

HIT YOUR TARGET
• Defining Objectives
• Understanding Culture
• Consumer Importance
• Knowing the Customer

Brewing A Brand | Customer Retention is the Lifeline to Success

THE MOST IMPORTANT INGREDIENT IN LONG-TERM SUCCESS IS NOT FOUND INSIDE THE BOTTLE, BUT IN THE HANDS OF THOSE WHO DRINK IT. THE UNIQUENESS IN WHO YOU ARE IS JUST AS IMPORTANT AS WHO YOU MARKET IT TO. FOR BRAND-POSITIONING, DON’T ADVERTISE TO EVERYONE…MARKET TO SOMEONE.

MAKE FRIENDS FOR LIFE
• Advocacy/Endorsement
• Testimonials
• Lateral Growth Options
• Shared Knowledge