Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.
Issue link: http://read.dmtmag.com/i/705687
Category Trends 20 Beverage Dynamics • July/August 2016 www.beveragedynamics.com CRAFT BEER: BOOM OR BUBBLE? How much more can craft beer grow? In 2014, this burgeoning category reached an 11% volume share of the overall beer industry. The Brewers Association (which claims to represent 70% of brewing industry) believes that craft can grab a 20% volume share by 2020. Is that achievable? "I think that's a bit ambitious, actually," Velez says. "I imagine [craft beer] is going to continue to grow, but the pace should be slowing." The main concern is market saturation. The number of brew- eries in America grew 19% last year to 3,464. How many more can open and remain profitable? To craft's defense, consumer appeal remains strong. Consum- ers like the "local feeling" of buying from nearby breweries. In 2015, regional breweries accounted for 77.8% of the craft beer industry's production volume Drinkers also enjoy the great variety of styles and flavors. The IPA craze that swept through America brought many new peo- ple into the category. From there they have explored through the numerous other styles — from porter to sour, from gose to Belgian, through experimental hops and beyond. This desire for extensive experimentation has helped sustain the category and its many new breweries and beers. Of drinkers who purchased at least one beer per week, 22% bought more than 10 brands last year. Of craft drinkers in general, 33% more are willing to experiment across brands than those who prefer non-craft beer. But at what point have consumers tried enough? Or is craft beer now so deeply rooted in American culture that we are still just scratching the surface of its potential? The losers in that scenario would be the mainstream beer companies: Anheuser-Busch, MillerCoors and the like. They, in turn, have recently responded by investing in craft them- selves. Big Beer has built out their own brands while buying up popular mid-level microbreweries like Elysium, Breckenridge and Four Peaks. Will this blurring of lines between macro and micro help pre- vent a craft beer bubble? Much remains to be seen. WINE HOLDS STRONG Wine sales rose 2% last year, up from a disappointing 0.7% in 2014. That 2014 figure came after gains of 2.1%, 1.9%, 3.1% and 2.1%, from 2013-2010. Why the dip? The likely answer is that, as all Millennials reach legal drinking age, there are fewer purely wine drinkers. More consumers now experiment across categories, rather than remain dedicated to one. This change in consumer behavior has allowed beer and spirits sales to grow at a greater clip in recent years. Which is not to forecast imminent decline for this category. Wine still has a bright future thanks to its loyal fans. These con- sumers increasingly skew younger and female, according to data presented earlier this year at the 11th Annual Wine Market Council Research Conference. Millennials consumed 36% of all wine purchased last year, amounting to 159.6 million cases. This tops any other genera- tion. Baby Boomers accounted for 114.1 million cases, Gen X 74.5 million, and over-69 consumers 31.6 million nine liter cases. Millennials also drink 3.1 glasses of wine per occasion — com- pared to just 2.4 for Gen X and 1.9 for Baby Boomers. And what wine people drink now tends towards premium. The top 20 U.S. premium-plus brands had a growth of 4% to 64.7 million nine liter cases last year. The average cost of table wines purchased in 2015 rose to $9.33, according to Wine Mar- CRAFT BEER WHISKEY WINE IMPORTED BEER VODKA WHISKEY CRAFT BEER CRAFT SPIRITS TEQUILA HARD SODA IF YOU COULD EXPAND SHELF SPACE FOR ONE CATEGORY, WHICH WOULD IT BE? WHAT WILL BE THE BIGGEST GROWTH TREND IN 2016? Source: Beverage Dynamics 2016 State of the Industry Survey