Craft Brews Buoy Beer
Shipments in U.S. are up, ending three-year decline
ST. LOUIS -- Shipments of beer in the United States are rising for the first time since 2008 in another sign that consumers--particularly young men--are slowly but surely emerging from the recession, reported The Wall Street Journal.
Much of the rebound is being driven by small-batch craft' brewers, reflecting shifting tastes and forcing dominant players Anheuser-Busch InBev NV and MillerCoors LLC to increasingly borrow from upstarts' playbooks, said the report. Big brewers also are rolling out alternative malt beverages after liquor companies swiped drinkers, it added.
Beer shipments in the United States rose 1.9% to 141.4 million barrels in the first eight months of 2012 after falling three straight years, according to the report, citing the Beer Institute. Beer sales had fallen 1.5% in 2011. Americans are drinking more beer even though brewers increased prices through the recession, unlike wine and liquor companies.
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, the report said.
"If they're hit, we're hit disproportionately,'' David Almeida, vice president of sales at AB InBev's U.S. unit, told the newspaper. It 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 report, citing the Bureau of Labor Statistics.
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 United States 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 Journal, citing 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. The association estimated craft beer represented 6% of U.S. beer market by volume and 9% in dollar terms last year.
The move to craft-style beers could limit consumption even though it lifts profits in the $100 billion beer industry, the report said. 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."
"People will go out and pound Coronas or Miller Lites, but they'll sip craft beer,'' Mike Mazzoni, a longtime beer-industry consultant, told the paper.
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,'' Tom Long, CEO at MillerCoors, told the Journal. It 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, said the report.
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.