Economic State of the U.S. Beer Industry
Economic State of the U.S. Beer Industry April 7, 2017
Today’s Speaker
Michael Uhrich Chief Economist, Beer Institute
2
National Beer Day
3
Before We Dig In
• This deck and a recording of today’s webinar will be sent out to all of today’s attendees and will be made available to all Beer Institute members. • As questions come up, please send them to [email protected].
4
Today’s Topics • U.S. Macroeconomic Performance • 2016 Beer Category Performance • Total Category and Segment Performance • Export Performance • Retail Channel Performance • Beer Style Performance • Package Performance • Beer and the Presidential Election • Preliminary Beer Shipment Forecast for 2017 • Summary 5
U.S. Macroeconomic Performance
6
U.S. Economic Performance
2.5%
Inflation 2.0%
2.0% 1.5%
2.2%
7.0%
6.2%
6.0%
Unemployment Rate 5.3%
5.0%
1.5%
4.9%
4.7%
4.5%
2016
2017
2018
4.0% 1.1%
3.0%
1.0%
2.0% 0.5%
0.3%
1.0%
0.0%
0.0% 2014
2015
2016
2017
2018
2014
2015
Sources: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Wells Fargo, Beer Institute. Inflation measured as year-over-year percentage change in the PCE Deflator.
7
U.S. Economic Performance
3.5% 3.0% 2.5%
4.5%
Real GDP Growth 2.4%
4.0%
2.6%
2.5%
3.5%
3.5%
2.3%
2.5%
1.6%
3.0%
2.8%
3.0%
2.1%
2.0%
3.5%
Real Disposable Income Growth
2.0%
1.5%
1.5%
1.0%
1.0% 0.5%
0.5%
0.0%
0.0%
2014
2015
2016
2017
2018
Sources: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Wells Fargo, Beer Institute.
2014
2015
2016
2017
2018
8
2016 Beer Category Performance
9
Share by Alcohol Category 2016 Share of Alcohol Servings by Category
Wine 15.2%
Beer is America’s Favorite Category of Beverage Alcohol!
Beer 50.6%
Sources: Wine Institute, Distilled Spirits Council of the United States, Beer Institute
Hard Liquor 34.2%
10
1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Share by Alcohol Category 80%
70%
40%
10%
Share of Alcohol Servings by Category
Beer
60% 50.5%
Hard Liquor
20%
Wine
Sources: Wine Institute, Distilled Spirits Council of the United States, Beer Institute
50.6%
50%
39.4% 34.2%
30%
15.2%
10.1%
0%
11
1972 vs. 2016 Number of Active Brewery Permits
1972
Number of Beer Distributors
77
2016 Sources: Beer Institute Brewers Almanac
Import Share of Beer Volume
5,628
4,000+
2,361
Price Ratio Six Pack : Loaf of Bread
0.7%
7.0
16.1%
4.5
12
Performance by Alcohol Category
Percentage Change in Volume
Change in Share of Alcohol Servings
3.0% 2.4%
2.5% 2.0%
2.0%
1.5% 1.0% 0.3%
0.5% 0.0%
Wine
Hard Liquor
Sources: Wine Institute, Distilled Spirits Council of the United States, Beer Institute
Beer
0.5% 0.4% 0.3% 0.2% 0.1% 0.0% -0.1% -0.2% -0.3% -0.4% -0.5% -0.6%
0.4% 0.1%
-0.5%
Wine
Hard Liquor
Beer
13
Segment Performance Percentage Change in Volume by Segment
Change in Share by Segment 1.5%
15% 10%
8.9% 5.8%
10.6% 1.0%
6.2% 6.8% 3.4%
5%
1.5%
1.0% 0.8%
0.5%
0%
0.04%
-5%
-3.0% -3.2%
-3.1%
0.0%
-1.9%
-10%
-0.2%
-0.5%
-15%
-0.7%
-1.0%
-20% Craft
Import
FMB
2015
Economy Mainstream
2016
-17.6% Cider
-0.9%
-1.5% Craft
Import
FMB
Economy Mainstream
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Brewers Association, Beer Marketers Insights. Values may not sum due to rounding. “Craft” includes national craft brands. “Mainstream” includes the traditional “Premium” and “Domestic Super Premium” segments
Cider
14
Growth in Beer Imports Change in Import Volume by Place of Origin 34.0
0.26 0.30
33.5
Percent Change in Importer Beer Volume 0.01
Millions of Barrels
6.9%
6.2%
33.0
6.8%
2.67
32.5
33.4 32.0 31.5 31.0
-0.6% 2013
31.2 2015
Mexico
Sources: U.S. Department of Commerce
Europe
Canada
All Others
2014
2015
2016
2016
15
Beer Exports Share of U.S. Exported Beer Volume by Country 100.0% 100%
81.7% 83.1% 76.1% 78.0% 79.9% 74.0% 70.1%
80%
Percent Change in Exported Beer Volume
60.4% 60% 40% 20%
12.5%
47.5% 29.3% 18.2%
13.0% 9.6%
16.9%
5.5% 4.2%
3.7%
4.0% 2.0% 2.0% 1.9% 1.8% 1.4%
0%
2013 Share of Exports
2014
2015
2016
Cumulative Share
Sources: Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce. Values may not sum due to rounding.
16
Beer Exports 4.0%
Beer Exports as Share of U.S. Beer Production
3.5%
3.3%
3.0%
2.8%
3.4%
2.9%
2.6% 2.5% 2.0%
2.3% 2.0% 1.9% 1.9% 1.8%
2.0% 2.1% 2.0%
2.1%
• Despite the deceleration in export growth in 2016, exports continue to grow share of U.S. beer production.
1.5% 1.0% 0.5% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau
17
Beer Style Performance Share of Off-Premise Vol by Style Share Change by Style
1% 2% 2%
FMB
0.4%
0.35%
0.3% 4%
0.2% 0.1%
0.07% 0.03%0.02%0.01% 0.01%0.01%0.01%0.01%0.01%
0.0% -0.1%
Pale Lager 84%
-0.2% -0.3%
Source: IRI, 52 Weeks Ending 3-19-17, “Pale Lager” includes “Pilsner”, “Light Beer”, and “Other Pale Lager”
-0.01%-0.01%-0.01%-0.02%-0.02%-0.02%-0.02%-0.03% -0.04%-0.07% -0.09% -0.19%
18
Retail Performance: Dollar Sales $140 $120
U.S. Consumer Spending on Beer $112.6
+2.2%
$115.1
+1.9%
$117.2
$ Billions
$100 $80
$51.3
+1.3%
$53.0
+1.5%
$54.2
$60 $40 $61.3
+3.3%
$62.1
+2.3%
$63.0
$20 $0 2014
2015 On-Premise
• U.S. consumer spending on beer increased by an estimated 1.9% in 2016, a slight deceleration in spending growth vs. 2015. • On-premise spending grew at 1.5% and accounted for 44% of the growth. • Off-premise spending grew by 2.3% and accounted for 56% of the growth.
2016
Off-Premise
Source: Beer Institute, Nielsen, U.S. Bureau of Labor Statistics
19
Retail Performance: Dollar Sales 1.00
Income Elasticity of Beer Demand
0.90 0.80
• In recent years the income elasticity of beer demand has averaged 0.65.
0.70 0.60
0.50 0.40 0.30
0.63
0.67
• If this relationship holds in 2017 and household incomes grow by 2.3% as predicted, then beer category spending would increase by only 1.6%.
0.20 0.10 0.00 2014 Source: Beer Institute, Nielsen, U.S. Bureau of Economic Analysis
2015 20
Retail Performance: Volume Share Change in Share of Volume by Channel
On-Premise Channels
Total On-Premise
-0.13%
Bar/Tavern
-0.14%
• On-premise continued to lose share in 2016, driven by bars and taverns.
Restaurant
0.00%
Recreation Other On-Premise
0.02%
Total Off-Premise
Off-Premise Channels
0.13%
Grocery
0.25%
Convenience Liquor
-0.05% -0.18%
Other Off-Premise -0.30%
Source: Beer Institute. Values may not sum due to rounding
• Off-premise channels continued to gain share on net, but performance among them was mixed.
-0.02%
0.11% -0.20%
-0.10%
0.00%
0.10%
0.20%
• The strongest channel is 2016 was grocery, while the softest was liquor stores.
0.30%
21
Performance by Container Type Package Mix by Container Type Share Change by Container Type 0.5%
1.0% 0.5%
Metal Cans Glass Bottles Plastic Draft
0.8%
10.4%
0.0%
33.2%
55.8%
-0.1%
0.0%
Plastic
Draft
-0.5% -0.8%
-1.0% Metal Cans
Glass Bottles
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
22
Performance by Container Size – Cans Beer Category Share Change by Metal Can Size
Share of Metal Can Volume 0.6%
2%
0.5%
0.5%
17%
0.4%
12oz. 16oz. 24-26oz. Other Cans
0.3%
19%
62%
0.2%
0.2%
0.2%
0.1% 0.0%
0.0% 12oz.
16oz.
24-26oz.
Other Cans
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
23
Performance by Container Size – Bottles Beer Category Share Change by Glass Bottle Size
Share of Glass Bottle Volume 3%
0.1%
4% 3%
0.0% 0.0% 0.0%
-0.1%
11-12oz.
-0.2%
22-26oz.
-0.3%
32-40oz.
-0.4%
Other Glass
90%
-0.1%
-0.5% -0.6%
-0.6%
-0.7% 11-12oz.
22-26oz.
32-40oz.
Other
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
24
Performance by Container Size – Draft Beer Category Share Change by Keg Size
Share of Draft Volume 0.10%
2% 4% Half Barrel 50L (Euro Keg)
0.1%
7%
0.05%
7%
Other Draft
0.0%
0.00%
Quarter Barrel Sixth Barrel
0.1%
-0.05% -0.1%
80% -0.10% -0.1% -0.15% Half Barrel
50L (Euro Keg) Quarter Barrel
Sixth Barrel
Other Draft
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
25
Beer Performance and the Presidential Election
26
Why Talk about the Presidential Election?
• The election gives us a high-resolution snapshot of American culture. • If we can show a relationship between the election results and beer performance, that relationship can help us to predict beer’s future performance.
27
Beer Performance vs. Election Results
Percent Change in Beer Volume
Beer Category Performance by Share of Presidential Votes
• The beer category performed significantly better in conservativeleaning counties in 2016.
WLS R2 = 0.35
Republican Share of Two-Party Votes Sources: Beer Institute, newyorktimes.com
28
Change in Above Premium Share
AP Share Change vs. Election Results
• Above premium segments like crafts and imports performed significantly better in more liberal counties.
WLS R2 = 0.79
Democrat Share of Two-Party Votes Sources: Beer Institute, newyorktimes.com
29
Preliminary 2017 Beer Shipment Forecast
30
Preliminary Beer Shipment Forecast Total U.S. Beer Shipments (Millions of Barrels) High +0.0%
206.8 206.6
206.4 Central Tendency -0.25%
206.2 206.0
Low -0.5%
205.8 205.6 205.4 205.2 2014
2015
2016
2017 31
Conclusion
32
Summary • Beer grew volume in 2016 and remained America’s #1 choice in beverage alcohol, but there is still a lot of work to be done vs. wine and hard liquor. • Trends slowed down in 2016, and that wasn’t all bad. Above premium growth slowed, but so did declines in the mainstream segment. • Our category’s intense focus on minority styles like IPA don’t demonstrate beer’s strengths or convince wine or liquor drinkers to choose beer in more occasions and settings. 33
Summary
• Consumer spending on beer grew by almost 2% last year, but didn’t keep pace with household incomes. Muted income growth this year will present a challenge. • Bars and liquor stores continued to lose share in 2016, affecting mix among the different package types.
34
Summary • Conservatives and liberals alike can use the results of the presidential election to better understand how beer will fare in their markets this year. • Barring some unforeseen structural changes, I’m predicting that beer volume will be flat to down in 2017, but we will revisit the forecast after the summer selling season.
35
Summary
• This deck and a recording of this webinar will be made available to all Beer Institute members. • The Brewers Almanac has been updated with data through 2016 and is also now available to Beer Institute members as well.
36
Any Questions?
• Please share any questions by email:
[email protected]
37
Upcoming Events at the Beer Institute
• Reception for BI Members and BA Board of Directors • The Beer Institute’s Office in DC • Tuesday, April 11 at 5pm
• The Beer Institute Annual Meeting • Gaslamp Hyatt, San Diego, CA • July 17-18 38
Follow-Ups
Michael Uhrich Chief Economist, Beer Institute [email protected] 202-737-BEER @EconBeer
39
Today’s Speaker
Michael Uhrich Chief Economist, Beer Institute
2
National Beer Day
3
Before We Dig In
• This deck and a recording of today’s webinar will be sent out to all of today’s attendees and will be made available to all Beer Institute members. • As questions come up, please send them to [email protected].
4
Today’s Topics • U.S. Macroeconomic Performance • 2016 Beer Category Performance • Total Category and Segment Performance • Export Performance • Retail Channel Performance • Beer Style Performance • Package Performance • Beer and the Presidential Election • Preliminary Beer Shipment Forecast for 2017 • Summary 5
U.S. Macroeconomic Performance
6
U.S. Economic Performance
2.5%
Inflation 2.0%
2.0% 1.5%
2.2%
7.0%
6.2%
6.0%
Unemployment Rate 5.3%
5.0%
1.5%
4.9%
4.7%
4.5%
2016
2017
2018
4.0% 1.1%
3.0%
1.0%
2.0% 0.5%
0.3%
1.0%
0.0%
0.0% 2014
2015
2016
2017
2018
2014
2015
Sources: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Wells Fargo, Beer Institute. Inflation measured as year-over-year percentage change in the PCE Deflator.
7
U.S. Economic Performance
3.5% 3.0% 2.5%
4.5%
Real GDP Growth 2.4%
4.0%
2.6%
2.5%
3.5%
3.5%
2.3%
2.5%
1.6%
3.0%
2.8%
3.0%
2.1%
2.0%
3.5%
Real Disposable Income Growth
2.0%
1.5%
1.5%
1.0%
1.0% 0.5%
0.5%
0.0%
0.0%
2014
2015
2016
2017
2018
Sources: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Wells Fargo, Beer Institute.
2014
2015
2016
2017
2018
8
2016 Beer Category Performance
9
Share by Alcohol Category 2016 Share of Alcohol Servings by Category
Wine 15.2%
Beer is America’s Favorite Category of Beverage Alcohol!
Beer 50.6%
Sources: Wine Institute, Distilled Spirits Council of the United States, Beer Institute
Hard Liquor 34.2%
10
1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Share by Alcohol Category 80%
70%
40%
10%
Share of Alcohol Servings by Category
Beer
60% 50.5%
Hard Liquor
20%
Wine
Sources: Wine Institute, Distilled Spirits Council of the United States, Beer Institute
50.6%
50%
39.4% 34.2%
30%
15.2%
10.1%
0%
11
1972 vs. 2016 Number of Active Brewery Permits
1972
Number of Beer Distributors
77
2016 Sources: Beer Institute Brewers Almanac
Import Share of Beer Volume
5,628
4,000+
2,361
Price Ratio Six Pack : Loaf of Bread
0.7%
7.0
16.1%
4.5
12
Performance by Alcohol Category
Percentage Change in Volume
Change in Share of Alcohol Servings
3.0% 2.4%
2.5% 2.0%
2.0%
1.5% 1.0% 0.3%
0.5% 0.0%
Wine
Hard Liquor
Sources: Wine Institute, Distilled Spirits Council of the United States, Beer Institute
Beer
0.5% 0.4% 0.3% 0.2% 0.1% 0.0% -0.1% -0.2% -0.3% -0.4% -0.5% -0.6%
0.4% 0.1%
-0.5%
Wine
Hard Liquor
Beer
13
Segment Performance Percentage Change in Volume by Segment
Change in Share by Segment 1.5%
15% 10%
8.9% 5.8%
10.6% 1.0%
6.2% 6.8% 3.4%
5%
1.5%
1.0% 0.8%
0.5%
0%
0.04%
-5%
-3.0% -3.2%
-3.1%
0.0%
-1.9%
-10%
-0.2%
-0.5%
-15%
-0.7%
-1.0%
-20% Craft
Import
FMB
2015
Economy Mainstream
2016
-17.6% Cider
-0.9%
-1.5% Craft
Import
FMB
Economy Mainstream
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Brewers Association, Beer Marketers Insights. Values may not sum due to rounding. “Craft” includes national craft brands. “Mainstream” includes the traditional “Premium” and “Domestic Super Premium” segments
Cider
14
Growth in Beer Imports Change in Import Volume by Place of Origin 34.0
0.26 0.30
33.5
Percent Change in Importer Beer Volume 0.01
Millions of Barrels
6.9%
6.2%
33.0
6.8%
2.67
32.5
33.4 32.0 31.5 31.0
-0.6% 2013
31.2 2015
Mexico
Sources: U.S. Department of Commerce
Europe
Canada
All Others
2014
2015
2016
2016
15
Beer Exports Share of U.S. Exported Beer Volume by Country 100.0% 100%
81.7% 83.1% 76.1% 78.0% 79.9% 74.0% 70.1%
80%
Percent Change in Exported Beer Volume
60.4% 60% 40% 20%
12.5%
47.5% 29.3% 18.2%
13.0% 9.6%
16.9%
5.5% 4.2%
3.7%
4.0% 2.0% 2.0% 1.9% 1.8% 1.4%
0%
2013 Share of Exports
2014
2015
2016
Cumulative Share
Sources: Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce. Values may not sum due to rounding.
16
Beer Exports 4.0%
Beer Exports as Share of U.S. Beer Production
3.5%
3.3%
3.0%
2.8%
3.4%
2.9%
2.6% 2.5% 2.0%
2.3% 2.0% 1.9% 1.9% 1.8%
2.0% 2.1% 2.0%
2.1%
• Despite the deceleration in export growth in 2016, exports continue to grow share of U.S. beer production.
1.5% 1.0% 0.5% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau
17
Beer Style Performance Share of Off-Premise Vol by Style Share Change by Style
1% 2% 2%
FMB
0.4%
0.35%
0.3% 4%
0.2% 0.1%
0.07% 0.03%0.02%0.01% 0.01%0.01%0.01%0.01%0.01%
0.0% -0.1%
Pale Lager 84%
-0.2% -0.3%
Source: IRI, 52 Weeks Ending 3-19-17, “Pale Lager” includes “Pilsner”, “Light Beer”, and “Other Pale Lager”
-0.01%-0.01%-0.01%-0.02%-0.02%-0.02%-0.02%-0.03% -0.04%-0.07% -0.09% -0.19%
18
Retail Performance: Dollar Sales $140 $120
U.S. Consumer Spending on Beer $112.6
+2.2%
$115.1
+1.9%
$117.2
$ Billions
$100 $80
$51.3
+1.3%
$53.0
+1.5%
$54.2
$60 $40 $61.3
+3.3%
$62.1
+2.3%
$63.0
$20 $0 2014
2015 On-Premise
• U.S. consumer spending on beer increased by an estimated 1.9% in 2016, a slight deceleration in spending growth vs. 2015. • On-premise spending grew at 1.5% and accounted for 44% of the growth. • Off-premise spending grew by 2.3% and accounted for 56% of the growth.
2016
Off-Premise
Source: Beer Institute, Nielsen, U.S. Bureau of Labor Statistics
19
Retail Performance: Dollar Sales 1.00
Income Elasticity of Beer Demand
0.90 0.80
• In recent years the income elasticity of beer demand has averaged 0.65.
0.70 0.60
0.50 0.40 0.30
0.63
0.67
• If this relationship holds in 2017 and household incomes grow by 2.3% as predicted, then beer category spending would increase by only 1.6%.
0.20 0.10 0.00 2014 Source: Beer Institute, Nielsen, U.S. Bureau of Economic Analysis
2015 20
Retail Performance: Volume Share Change in Share of Volume by Channel
On-Premise Channels
Total On-Premise
-0.13%
Bar/Tavern
-0.14%
• On-premise continued to lose share in 2016, driven by bars and taverns.
Restaurant
0.00%
Recreation Other On-Premise
0.02%
Total Off-Premise
Off-Premise Channels
0.13%
Grocery
0.25%
Convenience Liquor
-0.05% -0.18%
Other Off-Premise -0.30%
Source: Beer Institute. Values may not sum due to rounding
• Off-premise channels continued to gain share on net, but performance among them was mixed.
-0.02%
0.11% -0.20%
-0.10%
0.00%
0.10%
0.20%
• The strongest channel is 2016 was grocery, while the softest was liquor stores.
0.30%
21
Performance by Container Type Package Mix by Container Type Share Change by Container Type 0.5%
1.0% 0.5%
Metal Cans Glass Bottles Plastic Draft
0.8%
10.4%
0.0%
33.2%
55.8%
-0.1%
0.0%
Plastic
Draft
-0.5% -0.8%
-1.0% Metal Cans
Glass Bottles
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
22
Performance by Container Size – Cans Beer Category Share Change by Metal Can Size
Share of Metal Can Volume 0.6%
2%
0.5%
0.5%
17%
0.4%
12oz. 16oz. 24-26oz. Other Cans
0.3%
19%
62%
0.2%
0.2%
0.2%
0.1% 0.0%
0.0% 12oz.
16oz.
24-26oz.
Other Cans
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
23
Performance by Container Size – Bottles Beer Category Share Change by Glass Bottle Size
Share of Glass Bottle Volume 3%
0.1%
4% 3%
0.0% 0.0% 0.0%
-0.1%
11-12oz.
-0.2%
22-26oz.
-0.3%
32-40oz.
-0.4%
Other Glass
90%
-0.1%
-0.5% -0.6%
-0.6%
-0.7% 11-12oz.
22-26oz.
32-40oz.
Other
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
24
Performance by Container Size – Draft Beer Category Share Change by Keg Size
Share of Draft Volume 0.10%
2% 4% Half Barrel 50L (Euro Keg)
0.1%
7%
0.05%
7%
Other Draft
0.0%
0.00%
Quarter Barrel Sixth Barrel
0.1%
-0.05% -0.1%
80% -0.10% -0.1% -0.15% Half Barrel
50L (Euro Keg) Quarter Barrel
Sixth Barrel
Other Draft
Sources: Beer Institute, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of Commerce, Glass Packaging Institute, Can Manufacturers Institute. Values may not sum due to rounding.
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Beer Performance and the Presidential Election
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Why Talk about the Presidential Election?
• The election gives us a high-resolution snapshot of American culture. • If we can show a relationship between the election results and beer performance, that relationship can help us to predict beer’s future performance.
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Beer Performance vs. Election Results
Percent Change in Beer Volume
Beer Category Performance by Share of Presidential Votes
• The beer category performed significantly better in conservativeleaning counties in 2016.
WLS R2 = 0.35
Republican Share of Two-Party Votes Sources: Beer Institute, newyorktimes.com
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Change in Above Premium Share
AP Share Change vs. Election Results
• Above premium segments like crafts and imports performed significantly better in more liberal counties.
WLS R2 = 0.79
Democrat Share of Two-Party Votes Sources: Beer Institute, newyorktimes.com
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Preliminary 2017 Beer Shipment Forecast
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Preliminary Beer Shipment Forecast Total U.S. Beer Shipments (Millions of Barrels) High +0.0%
206.8 206.6
206.4 Central Tendency -0.25%
206.2 206.0
Low -0.5%
205.8 205.6 205.4 205.2 2014
2015
2016
2017 31
Conclusion
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Summary • Beer grew volume in 2016 and remained America’s #1 choice in beverage alcohol, but there is still a lot of work to be done vs. wine and hard liquor. • Trends slowed down in 2016, and that wasn’t all bad. Above premium growth slowed, but so did declines in the mainstream segment. • Our category’s intense focus on minority styles like IPA don’t demonstrate beer’s strengths or convince wine or liquor drinkers to choose beer in more occasions and settings. 33
Summary
• Consumer spending on beer grew by almost 2% last year, but didn’t keep pace with household incomes. Muted income growth this year will present a challenge. • Bars and liquor stores continued to lose share in 2016, affecting mix among the different package types.
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Summary • Conservatives and liberals alike can use the results of the presidential election to better understand how beer will fare in their markets this year. • Barring some unforeseen structural changes, I’m predicting that beer volume will be flat to down in 2017, but we will revisit the forecast after the summer selling season.
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Summary
• This deck and a recording of this webinar will be made available to all Beer Institute members. • The Brewers Almanac has been updated with data through 2016 and is also now available to Beer Institute members as well.
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Any Questions?
• Please share any questions by email:
[email protected]
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Upcoming Events at the Beer Institute
• Reception for BI Members and BA Board of Directors • The Beer Institute’s Office in DC • Tuesday, April 11 at 5pm
• The Beer Institute Annual Meeting • Gaslamp Hyatt, San Diego, CA • July 17-18 38
Follow-Ups
Michael Uhrich Chief Economist, Beer Institute [email protected] 202-737-BEER @EconBeer
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