Beer shows new life

The Lempert Report
March 22, 2013

The beer category, awash in new flavors, is its most optimistic since the recession began. 

The beer category, awash in new flavors, is its most optimistic since the recession began. ?In 2012, both ends of the market—the innovative craft/microbrews and upscale domestic super-premiums largely for Millennials, as well as the traditional regular and light segments which dwarf the rest—grew in dollar sales and case volume, according to Nielsen data. Retailers are beginning to offer broader flavor palates to help lift their specialty image and satisfy more drinking occasions, with meals or apart.  Harris Teeter, for instance, offers 680 beer varieties, including 35 in kegs, and advises on food pairings at its new 201central stores in Charlotte, NC.  ?Hy-Vee launched its own Baraboo private-label craft beer line, using Stevens Point Brewing in Wisconsin, the fifth oldest continuously operated brewery in the United States.  The line includes Red Granite Lager, Lumberjack IPA and Woodpecker Wheat Ale. In the 52 weeks ended January 5, 2013, says Nielsen, dollar sales for total beer, cider and flavored malt beverages was up by 5.3% to $32.58 billion across all outlets (food, drug, mass excluding Walmart, plus liquor, convenience, and Army and Air Force Exchange Services).   This occurred on a 2.0% climb in case volume vs. the year-earlier period. By appealing to the upper and lower ends of the beer market, retailers can engage both: craft beer drinkers, who respond to in-store marketing and buy impulsively without a specific drinking occasion in mind; and traditional domestic beer drinkers who consume 78% of their purchases on the same day. The Nielsen all-outlet figures for the latest 52 weeks show the craft-microbrew segment up 18.3% to $2.81 billion, on a 15.5% case volume increase. Domestic super-premiums dollar sales jumped by 29.4% to $2.13 billion in this latest period, on a 25.8% case volume climb. A big question now is whether the U.S. Department of Justice will allow Anheuser-Busch InBev SA to complete its acquisition of the rest of Grupo Modelo, the maker of Corona.  This decision could affect long-term pricing in the category, since Corona didn’t always go along with price increases set by AB InBev and MillerCoors.