Beer Business – Are Sales Coming Back?

Buffalo Trace Newsletter reprinted a WSJ article with the headline, After Long Downturn, Beer Sales Are Back.

Are they? Well, yes and no.

Beer shipments in the US rose nearly 2% to over 141 million barrels in the first eight months of 2012 after falling three straight years. In fact, sales fell 1.5% in 2011.

But, it’s not the shut-up-and-drink-or-guzzle-it brands. The growth is coming from craft beers whose sales have grown 12% in volume in the first half of this year. Craft beers represent 6% of the beer market in volume and 9% in dollars.

A word about craft beers – the Brewers Association, which represents craft brewers, defines them as small and independent. Their members represent over 1,400 US breweries. Not only are they growing in number but also are changing American beer tastes with interest in Ales, India Pale Ales, seasonal beers and other specialty brews. Check the Beverage Dynamics list of beer growth brands, the rate of growth for certain brands is most impressive. My own favorite, Sierra Nevada Torpedo, grew from 890,000 (2.25 gallon cases) to 2.4 million from 2010 to 2011.

The big boys (AB, MillerCoors) have woken up, smelled the beer, and jumped on the beer wagon. In fact, it’s their craft-type entries that seem to be carrying their growth while the traditional mainstay beers languish.

The pundits say that it’s the improving economy that’s behind the returning pluses for beer. But, craft beers sell at an upcharge and have been doing well throughout the recession.

I think there are fundamental shifts taking place in the beer market. First, more and more consumers are discovering and experimenting with new styles of beer regardless of whether it’s from a craft brewery or not. Second, the mainstream brewers are starting to get their act together and are addressing spirits-style product development and marketing. Third, as a result, traditional Joe Sixpack brands will continue to lose share

So, the answer is – yes, beer is back to growth but it ain’t your father’s beer anymore.