What… you thought that this thing was going to go on forever?
That the fact that there are currently more than 5300 breweries in America and more brands than ever before fighting for attention, wouldn’t be consequential?
Here’s where the drinks business is now, at least according to Nielson, a leading market research that tends to get these things right.
Beer sales which have been flat for the last couple years are slowing and the research firm’s most recent data wasn’t all that encouraging.
According to Nielsen, the volume of beer sold at stores for the three months going into June 17th were 1% lower than for the same period last year and that’s not great.
The Economist sees this slowdown as the result of two conjoining forces, one old and the other relatively new.
As we’ve seen over the last two decades, wine and spirits continue to grow more quickly than beer. Men and women (25-54) are turning to a wider range of drinks, a trend that shows little signs of abating.
The newer problem, and one that we find even more concerning, is that after years of seemingly unstoppable growth, craft beer sales are undeniably slowing. Yes, craft beer sales and volumes are still looking upward, just not as much.
Craft beer volumes grew half as much in 2016 as they did the year before. And for the last three months going into June 17th, craft beer volumes and sales both slowed to 0.7% and 1.5%, respectively.
Bottom line America’s craft beer biz is flattening and if you think this is no big deal, you’re kidding yourself.
So has American craft beer finally reached a saturation point?
We think it might have, especially for those breweries dependent on a wide distribution model and tethered to increasingly overwhelmed wholesalers. There’s only so much shelf space and tap lines and only so many craft beer consumers…eventually these factors have to catch up with one another.
There’s also the problem of craft beer consumers progressively forgoing brand allegiances and intoxicated with the latest ‘new shiny thing.’
It’s harder than ever for brewers and their distributors to establish lasting brands – names with the legs that sell for a prolonged period. New beers are increasingly fighting for limited shelf space and a new brand needs to deliver almost immediately at retail or it’s over.
And yes, Big Beer’s strategy of acquiring craft beer properties and marketing them under their massive umbrella play a part in this slowdown we’re seeing.
Global beer companies like AB InBev have impressive scale and almost unlimited economic resources. They’ve the power to offer pricing and incentives that smaller brewers looking to establish themselves are simply are incapable of. And it’s no surprise that their brands are increasingly dominating retail shelves and tap-lines…
Hey, we don’t mean to be a buzzkill but if Nielson’s data is indicative of where craft beer is heading there’s reason to be concerned.
Because, as we’ve noted before, ‘anything that can’t go on forever’…won’t.