Craft beers such as New Belgium Brewing's Fat Tire were 2007's big winners. The category picked up double-digit dollar and volume sales.
The beer industry has reason to say “cheers” this year, as sales are on their way up again after several years of struggle. Beer consumption in the United States grew 1.4 percent in 2007, according to the Beer Institute in Washington, D.C. Domestic volumes improved a total of 1.5 percent for the year, with the domestic craft segment up 12 percent. Import volumes increased 1.4 percent.
In addition, beer is gaining back some of its share of the total alcohol beverage market, reports Information Resources Inc., Chicago. In 2007, beer servings were down only 0.5 percent, relative to wine and spirits. The beer industry had been losing nearly 1 percent share of alcohol beverage servings per year since 2003. Likewise, beer’s dollar share of market declined a slight 0.6 percent compared with 1.6 percent in 2006 and 1.8 percent in 2005.
“Beer has stopped the bleeding and softened its decline,” says Bump Williams, head of the wine, beer and spirits practice at IRI. “2007 was definitely a turnaround year for beer.”
Bucking the premium trend of the past few years, several of 2007’s top-selling brands were sub-premium offerings. Whether due to a shaky U.S. economy or more attention from brand owners, that represents a marked change from the past several years when only high-priced brands such as craft beers and imports were growing.
“I’m still seeing signs of trading up as the top five performing beer brands were all high end,” Williams says. “On the other hand, at the end of 2007, we witnessed signs of life in the sub-premium beer category.”
Coors Brewing Co.’s Keystone Light is one example of a sub-premium product on a growth tear. The brand pulled increases of more than 11 percent in food, drug and mass merchandise outlets, and more than 21 percent in convenience stores, according to IRI sales tracking data. Similarly, Busch Light grew more than 10 percent in convenience stores last year, and about 4 percent in food, drug and mass merchandise outlets. Bud Ice increased more than 22 percent through convenience stores.
But premium products still fared well in 2007, and craft beers were the biggest winners. The craft category as a whole picked up an additional 12 percent in volume and 16 percent in dollar sales last year, according to the Brewers Association, Boulder, Colo.
“Craft beers are the darlings of the beer business,” Williams says. He points out that 14 of the top 15 craft products increased sales through measured food, drug and mass merchandise outlets in 2007. More than half grew by double digits. On the convenience side, results were slightly more varied, but even there only three of the Top 20 brands had negative sales results.
This year might be challenging for craft beers, Williams says, indicating that price increases on nearly every raw material, from aluminum to hops, and especially fuel costs, may hit small brewers particularly hard. But he says, “I still expect the craft segment to grow in the high single digits to low double digits in 2008.”
Results for imports were a bit more mixed in 2007, with big gains for some brands and losses for others. The leader in the category, Grupo Modelo’s Corona Extra, saw a 1.3 percent dip in measured food, drug and mass merchandise sales, and a 3.3 increase in convenience store sales, according to IRI. No. 2 Heineken experienced the reverse trend, with a nearly 5 percent increase in food, drug and mass merchandise sales, and a 0.4 percent drop in convenience stores.
Heineken Premium Light continued to gain popularity in its sophomore year, with a 32 percent gain in food, drug and mass sales, and a little more than 8 percent increase in c-stores. InBev’s Stella Artois picked up more than 43 percent in food, drug and mass merchandise outlets last year, despite the potential for disruption that was caused by a switch to the Anheuser-Busch wholesaler system.