ATLANTA -- The majority of the U.S. beer industry is being hit by a combination of high unemployment, the stumbles of huge light beer brands and a spell of marketing that critics have described as lackluster, reported The Atlanta Journal-Constitution.
Beer shipments fell 2% last year, which stands as the worst decline since the excise tax doubled in 1991. Sales fell about 3% in the first five months of this year, according to the report, citing the Beer Institute.
The first quarter of the year was "horrible," Eric Shepard of Beer Marketer's Insightstold the newspaper. "It was a fairly deep hole to dig out of."
One bright spot was the growth of craft beers such as those from Sweetwater Brewing Co., Terrapin Beer Co. and other small brewers, the report said. Craft beer sales grew 7.2% by volume and 10.3% in dollars last year, bolstered by more shelf space in grocery stores and the popularity of their seasonal styles.
"What we're hearing on the anecdotal side is things are at least as good for the craft guys as they were last year, and better in some cases," Paul Gatza, director of the Brewers Association, told the paper. "What still works are things that immerse a brewery in the community: sponsoring local events and hiring people."
Meanwhile, big brewers such as Anheuser-Busch InBev and MillerCoors blame high unemployment among young adult men, the dominant beer-drinking demographic, for driving down sales, said the report.
"The unemployment rate especially among younger consumers, which is higher, definitely had an impact on the industry," Dave Peacock, president of Anheuser-Busch Inc., the brewer's U.S. division, told the Journal-Constitution. The beer industry, Peacock said, is recession-resistant, "but it's not recession-proof."
Big brewers arguably brought some of the sales declines on themselves by raising prices as consumers looked to save money, said the report. That contrasts with prices for wine and spirits, which are flat or down.
"Overall, pricing has been kind of in line with what has happened in the past," Peacock said. "What's changed is the economy. The question is, when will we see improvement in the economy?"
Executives at Anheuser-Busch InBev, the world's largest brewer, did not seem very concerned about lost market share when they met with analysts recently, Harry Schuhmacher of Beer Business Daily, told the paper. "Their profits are looking good."
But the decline of the light beer category could be serious trouble, added the report, since American drinkers consume the liquid by the hundreds of millions of cases every year. Three of the top four beer brands sold in the United States are light beers, and those brandsBud Light, Miller Lite and Coors Lightaccount for more than a third of the industry's sales.
Some industry insiders say light beers are dogged by young adult drinkers' reluctance to drink their "father's beer," a dynamic exacerbated by consumers migrating to cheaper beers. Bud Light's case sales are down 4.6% this year, while Miller Lite has fallen 6.4% and Coors Light is flat, according to the report, citing market research firm SymphonyIRI Group. The data covers sales up to June 13 at supermarkets, drugstores, gas stations, convenience stores and mass market retailers; they exclude Wal-Mart, club stores and liquor stores.
The marketing of light beers has "just been terrible," Schuhmacher said. "I think that's another contributing factor to the malaise."
Peacock disputes that, arguing that the light beer category is healthy, with vibrant rivalries between brands. He said Anheuser-Busch InBev's deal to make Bud Light the official beer of the NFL next year shows the company's dedication to supporting America's largest beer brand. "We recognize the long-term importance of Bud Light," he said.
Executives at Anheuser-Busch InBev point to the company's success in shedding Stella Artois' lowbrow image in the U.K. as proof they can turn Bud Light around. Similarly, their counterparts at MillerCoors say they can revive Miller Lite, the fourth-largest U.S. beer brand.
"Brands do come back," said Schuhmacher, who cited Corona's recovery from a deep slump in the 1980s. "There is an ebb and flow."
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