How to grow beer sales in a challenging market

17 July, 2020

In America, the beer category has lost volume to wine and spirit in recent years. There are several reasons for this.

Let’s start with pricing. Beer prices have increased more than wine and spirits recently. Research from the Bureau of Labour Statistics Consumer Price Index (2009-2017) indicates that off-premise spirits increased by 1.7%, wine decreased 2.5% but beer prices were up 12.9% in the same time period, for an annual growth rate of 1.5%. 

On a positive note, beers’ value is stronger than its volume. There are two options for reversing this volume trend – either close the widening price gap with wine and spirits or help beer drinkers see more value in the beer they are buying. 

The latter route is favoured by craft brewers who continue to elevate the perception of beer in the eyes of the beer drinker to help keep volumes strong even if prices continue their historical trend.

A second challenge for beer is demographics. The U.S. population is aging and typically people drink less beer as they age and may shift their consumption into wine. Beer would benefit from using more sophisticated, up-market cues to help keep its share high as beer drinkers age.    

Millenials are also an issue, because they are drinking everything. Their mix of beer/wine/spirits is more balanced than previous generations and they are more likely to drink across categories than ever before. However, a long-term opportunity is beginning to emerge suggesting that craft beer may ‘hold’ its demographic as craft beer drinkers age.

Brewers need to innovate and think about how their beers fit into different occasions beyond ‘refreshment’ such as fine dining and gifting to keep up with shifting consumer preferences. New packaging and new innovations have led to wine and spirits eating into traditional beer occasions, like sporting events or barbecues.

Brewers may need to look at the success of other beverage alcohol categories to innovate with products that blur category lines eg. aging beer on grape must or barrel-aging.

Thirdly, beer continues to struggle with one particular demographic - women. The reasons for this are complex, but many tie into historical advertising and resulting perceptions.

A survey by Scarborough (part of Nielsen) indicates that the United States' craft beer drinking population continues to grow from 6.6% in 2013 to 8.4% in the 2018-2019 survey, which equals almost six million new drinkers.

That’s roughly in line with the growth in U.S. craft beer production during that time period, approximately 40%. The data shows a better gender balance with craft beer moving from 69.2% male and 30.8% female in 2013 to 65.9% male and 34.1% female in 2019. 

Due to a bigger base percentage for men, the change suggests 3.3 million new male craft drinkers against 2.5 million new female drinkers so the incremental percentages are 57% male and 43% female.

There is still much room for improvement. Without the historical legacy of gendered marketing, craft breweries have a clear opportunity to build their brands in a more balanced fashion and grow their customer base accordingly.

And finally, the trend towards lifestyle brands and ‘wellness’ has the potential to grow in importance. This shift can be seen in many ways, for example, the rise of dry months and a growing number of people who are ‘sober-curious’ with corresponding non-alcoholic products. 

In America a growing percentage of the population consumes cannabis and views it as a ‘healthier’ alternative to alcohol. What’s more, the next generation is potentially less interested in alcohol and is drinking at a lower percentage than the roughly two thirds of Americans who have consumed alcohol over time.

Brewers are prohibited from making health claims about beer but they may be able to utilise strategies that suggest moderate beer consumption fits into a healthy lifestyle. Nearly one fifth of craft drinkers who said they were drinking more craft than a year ago gave ‘looking for natural ingredients’ as a reason for their increased consumption. 

In a survey conducted by Nielsen on ‘mindful drinking’, low calorie, low carb and organic were the top choices amongst craft beer drinkers versus a few years ago. 

Brewers could learn more from this trend by incorporating ingredients that consumers are looking for, such as antioxidants, fruit, herbs with specific health properties etc.

The combination of Covid-19, market competition, changing demographics and growing interest in ‘wellness’ creates a series of challenges, but also opportunities, for the craft brewing industry.  

Many low calorie, ‘lifestyle’ brands are available in UK/Europe such as new Firestone Walker FlyJack, a 96 calorie, 4% ABV, 5g of carb drinkable hazy IPA brewed for people who don’t want to sacrifice flavour for few calories, Sierra Nevada California IPA, a 4.2% ABV light beer hopped with Simcoe, Crystal and Chinook, Oskar Blues One-Y IPA, 4% ABV, a hazy IPA with citrussy flavours of orange peel, tangerine and lemon zest balanced with bread-like malt presented as a 100-calorie wonder, and Ska Aggrolite, a 4.2%ABV IPA that’s light-bodied with slight citrus and pine notes from the use of Cascade, Mandarina Bavaria, and El Dorado hops. This beer contains only 99 calories and 4g of carbohydrates per can. 

The Brewers Association publishes a wealth of resources to help brewers, importers, distributors, wholesalers and retailers understand and enjoy craft beer, downloadable free of charge from in a variety of languages. 

Bob Pease is the chief executive and president of the Brewers Association, the not-for-profit association for small and independent American craft brewers. Image copyright: Brewers Association.

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