Beer History, Politics, Economics, Demographics, and so much more - - PowerPoint PPT Presentation

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Beer History, Politics, Economics, Demographics, and so much more - - PowerPoint PPT Presentation

Sep 13, 2022 131 likes •516 views

Beer History, Politics, Economics, Demographics, and so much more Lester Jones Chief Economist National Beer Wholesalers Association Ljones@nbwa.org @joneslester Beers Long and Great History Archaeologists discovered a

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Beer

History, Politics, Economics, Demographics, and so much more…

Lester Jones Chief Economist National Beer Wholesalers Association Ljones@nbwa.org @joneslester

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Beer’s Long and Great History

  • Archaeologists discovered a

four-thousand-year old Mesopotamian clay tablet. One

  • f the oldest objects with writing
  • n it. Turns out, the ancient

Mesopotamians were recording a recipe for beer.

  • Theorize that when people

learned to ferment grain into beer more than 10,000 years ago, it became one of his most important sources of nutrition. Beer gave people protein that unfermented grain couldn't

  • supply. Provided safe hydration.
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Why did colonist land at Plymouth Rock?

  • "We could not now take time for further

search or consideration, our victuals being much spent, especially our beer, and it being now the 19th of December" (Mourt's Relation, 1622, commonly attributed to colonists William Bradford and Edward Winslow).

  • First Brewery established on Island of

Manhattan in 1623

  • George Washington was an

accomplished brew-master himself. The father of our country maintained a private brewery at Mount Vernon. And his handwritten recipe for beer-is still

  • n display at the New York Public

Library.

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Beer Taxation

On Aug. 1, 1862, the Lincoln administration enacted a recently passed tax of $1 per 31‐gallon barrel on “all beer, lager beer, ale, porter and other similar fermented liquors, by whatever name such liquors may be called.”

1 beer barrel = 31 gallons 1 beer barrel = 13.78 cases 1 beer barrel = 331/12 oz serves 1 beer barrel = 248/16 oz serves Do not confuse with Petroleum Industry 42 gallon barrel. AKA Blue Barrels

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The First Beer Lobbyist

Lobbying Against Taxes Despite a Civil War

  • Formation of Brewers Association

in 1862 and Frederick Lauer of PA became the first president. Also

  • ne of the first U.S. trade

associations.

  • Lobbied to lower tax to 60 cents

per barrel in 1863 following rising grain and hops during war.

  • In 1864 the tax was raised back to

$1.00 (wars are expensive)…

  • in 2017 the CBMTRA reduced

taxes from $7.00 to $3.50 for small brewers (60,000 barrels) and $18 to 16 on first 6 million barrels for larger brewers.

Frederick Lauer Statue, Reading PA

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Prohibition The “Great Experiment”

  • Prohibition lasted From 1920 to 1933
  • Started way before 1920 ‐ May 1657 General Court of

Massachusetts made “strong liquor illegal”

  • Economic arguments ‐ Henry Ford insisted that all his

employees completely abstain from alcohol

  • Jan 17, 1920 Volstead Act was passed and the 18th

Amendment ratified. (overriding Pres. Wilson’s veto)

  • April 7, 1933 Cullen‐Harris Act was passed
  • December 5, 1933 the 21st Amendment was ratified
  • The Three Tier System with state based regulation. Promote

and orderly market and independence between brewers, distributors and retailers

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Number of Breweries in U.S. 1990 to 2018

2,000 4,000 6,000 8,000 10,000 12,000

1900 1904 1908 1912 1916 1920 1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 1. 2.

Source: Brewers Almanac, NBWA Notations, 2018

  • 1. 1920‐1933: Prohibition kills the industry, except for medicinal, bootlegging

and home brewing

  • 2. 1945‐1980: Consolidation of many small regional brewers into large

nationals brewers. Refrigeration technology, at home consumption, etc

  • 3. 1977‐1978: Small brewer FET of $7.00 per barrel is introduced. President

Jimmy Carter signed H.R. 1337 creating an exemption from taxation for beer brewed at home for personal or family use.

  • 4. 1997‐2004: The first craft industry shake out
  • 5. 2017: Craft Beverage Modernization and Tax Reform Act (CBMTRA), which

lowers the federal excise tax (FET) for breweries, wineries and distilled spirits producers.

3. 4. 5.

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U.S. Per Capita Beer Consumption 1900 to 2018 Gallons Per Person

5 10 15 20 25 1900 1903 1906 1909 1912 1915 1918 1921 1924 1927 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 GALLONS OF BEER PER PERSON Source: Brewers Almanac, Beer Institute and NBWA, 2018.

A look at U.S. history through beer consumption

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Draft Beer Share of Market 1950‐2018

5 10 15 20 25 30 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 PERCENTAGE SHARE OF MARKET

The good old days of tavern and pub culture are long gone. Big TVs, packaged beer and move to the suburbs shifted consumption away from bars and taverns and into homes.

Source: Brewers Almanac, Beer Institute and NBWA, 2018

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People Like to Go Out and Drink Beer

1950 – Beer Belongs…on the Beach 2018 – Find Your Beach with a Corona Beer has consistently been America’s preferred adult beverage in terms of sales and volumes from 1950 to present day…even with major shifts in consumers share of stomach and wallet

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Alcohol Consumption Over Time Do You Have Occasion to Drink Alcohol?

20 25 30 35 40 45 50 55 60 65 70 75

1939 1945 1947 1949 1950 1951 1952 1957 1958 1960 1966 1969 1974 1979 1981 1985 1988 1990 1994 1996 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Percent who said “Yes”

Source: Gallup Poll, 2018.

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2017 US Breweries by Production Size

84.4% 7.3% 7.6% 0.6% 0.4% 0.9% 24.3% 74.3% 0% 30% 60% 90% 0% 30% 60% 90% 1M+ 100K‐1M 1K‐100K 1K or less % of US Production % of Breweries

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Tracking Beer Supply

Industry Supply = Domestics (TTB) + Import (Commerce)

50 100 150 200 250

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions of Barrels (31 gallons) Import Barrels Domestic Barrels

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Segment Shares in Beer Industry Imports vs Craft

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Imports Share of Total Industry (17.7% of Total Industry 2018) 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Craft Share of Total Industry (13% of Total Industry 2018)

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TTB Permitted Brewery Count 10,115 Permits as of December 2018

Source: NBWA and TTB, February 2019.

State Count State Count State Count Alabama 55 Kentucky 86 North Dakota 26 Alaska 51 Louisiana 47 Ohio 377 Arizona 146 Maine 165 Oklahoma 55 Arkansas 53 Maryland 141 Oregon 386 California 1,236 Massachusetts 230 Pennsylvania 472 Colorado 500 Michigan 510 Rhode Island 33 Connecticut 124 Minnesota 239 South Carolina 94 Delaware 38 Mississippi 19 South Dakota 35 DC 13 Missouri 168 Tennessee 140 Florida 386 Montana 108 Texas 387 Georgia 121 Nebraska 60 Utah 46 Hawaii 38 Nevada 50 Vermont 90 Idaho 87 New Hampshire 106 Virginia 328 Illinois 338 New Jersey 146 Washington 540 Indiana 234 New Mexico 124 West Virginia 32 Iowa 125 New York 532 Wisconsin 303 Kansas 64 North Carolina 387 Wyoming 44

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US Average = 4.1

Source: NBWA and TTB, January 2019

State Count State Count State Count Alabama 1.52 Kentucky 2.61 North Dakota 4.76 Alaska 9.67 Louisiana 1.38 Ohio 4.36 Arizona 2.8 Maine 15.83 Oklahoma 1.94 Arkansas 2.41 Maryland 3.13 Oregon 12.16 California 4 Massachusetts 4.4 Pennsylvania 4.88 Colorado 11.89 Michigan 6.86 Rhode Island 4.1 Connecticut 4.59 Minnesota 5.81 South Carolina 2.48 Delaware 5.21 Mississippi 0.88 South Dakota 5.59 DC 2.39 Missouri 3.71 Tennessee 2.78 Florida 2.35 Montana 13.62 Texas 1.92 Georgia 1.59 Nebraska 4.36 Utah 2.2 Hawaii 3.53 Nevada 2.2 Vermont 18.85 Idaho 7.03 New Hampshire 10.2 Virginia 5.19 Illinois 3.59 New Jersey 2.16 Washington 9.63 Indiana 4.82 New Mexico 8.13 West Virginia 2.33 Iowa 5.46 New York 3.55 Wisconsin 7.03 Kansas 3.07 North Carolina 5.04 Wyoming 10.52

Per Capita Permits (100,000 residents) Through December 2018

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Top Five Suppliers vs. All Others Market Shares in U.S.

Brewer 1977 Share Brewer\Importer 2018 Share AB (1852) 23% ABInbev (1366/1852/1888/2008) 40.8% Miller (1855) 15% Miller‐Coors (1855/1873/2007) 23.5% Schlitz (1849) 14% Constellation (1940) 9.9% Pabst (1844) 10% HUSA (1864) 3.5% Coors (1873) 8% Pabst (1844/2014) 2.1% Top 5 in 1977 70% Top 5 in 2018 80% All Others = 44 30% All Others = 7,000+ 20% Total 100% Total 100% Domestic Brewer Counts* 49 Domestic Brewer Counts* 7,000+

Source: Beer Marketer's Insights, 2019. *Brewer counts do not include importers.

In 2018, more than 50% of “Others” from past 5 years!

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U.S. Per Capita Beer Consumption

2010 to 2018 (Based on 21+ Population)

20 21 22 23 24 25 26 27 28 29 30 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gallons Per Person 21+

Source: U.S. TTB, U.S. Commerce and NBWA Industry Affairs

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Beer Segment Shares Growing High‐End Beyond 40 Share

26.0 27.2 29.6 32.3 34.8 37.2 38.9 40.9 43.1 48.4 48.0 46.9 43.6 42.0 40.6 39.5 37.7 35.9 25.1 24.3 23.1 23.7 22.8 21.7 21.2 21.0 20.6 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Segment Share of Total Volumes High End (Craft/Imports/FMB/Cider) Premium Sub Premium/Malt‐Liquor

Source: Beer Marketers Insights, 2018.

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100.0 105.0 110.0 115.0 120.0 125.0

1/1/2008 3/1/2008 5/1/2008 7/1/2008 9/1/2008 11/1/2008 1/1/2009 3/1/2009 5/1/2009 7/1/2009 9/1/2009 11/1/2009 1/1/2010 3/1/2010 5/1/2010 7/1/2010 9/1/2010 11/1/2010 1/1/2011 3/1/2011 5/1/2011 7/1/2011 9/1/2011 11/1/2011 1/1/2012 3/1/2012 5/1/2012 7/1/2012 9/1/2012 11/1/2012 1/1/2013 3/1/2013 5/1/2013 7/1/2013 9/1/2013 11/1/2013 1/1/2014 3/1/2014 5/1/2014 7/1/2014 9/1/2014 11/1/2014 1/1/2015 3/1/2015 5/1/2015 7/1/2015 9/1/2015 11/1/2015 1/1/2016 3/1/2016 5/1/2016 7/1/2016 9/1/2016 11/1/2016 1/1/2017 3/1/2017 5/1/2017 7/1/2017 9/1/2017 11/1/2017 1/1/2018 3/1/2018 5/1/2018 7/1/2018 9/1/2018 11/1/2018 1/1/2019 3/1/2019

Index Base 100 at 2008

Alcohol Beverage Inflation BLS at Home (Off Premise) Consumer Price Index Jan 2008 to March 2019

Beer CPI

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100.0 105.0 110.0 115.0 120.0 125.0

1/1/2008 3/1/2008 5/1/2008 7/1/2008 9/1/2008 11/1/2008 1/1/2009 3/1/2009 5/1/2009 7/1/2009 9/1/2009 11/1/2009 1/1/2010 3/1/2010 5/1/2010 7/1/2010 9/1/2010 11/1/2010 1/1/2011 3/1/2011 5/1/2011 7/1/2011 9/1/2011 11/1/2011 1/1/2012 3/1/2012 5/1/2012 7/1/2012 9/1/2012 11/1/2012 1/1/2013 3/1/2013 5/1/2013 7/1/2013 9/1/2013 11/1/2013 1/1/2014 3/1/2014 5/1/2014 7/1/2014 9/1/2014 11/1/2014 1/1/2015 3/1/2015 5/1/2015 7/1/2015 9/1/2015 11/1/2015 1/1/2016 3/1/2016 5/1/2016 7/1/2016 9/1/2016 11/1/2016 1/1/2017 3/1/2017 5/1/2017 7/1/2017 9/1/2017 11/1/2017 1/1/2018 3/1/2018 5/1/2018 7/1/2018 9/1/2018 11/1/2018 1/1/2019 3/1/2019

Index Base 100 at 2008

Alcohol Beverage Inflation BLS at Home (Off Premise) Consumer Price Index Jan 2008 to March 2019

Beer Liquor Wine

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Average Weighted ABV for All Beer 2000 to 2017

4.51 4.51 4.60 4.66 4.70 4.00 4.10 4.20 4.30 4.40 4.50 4.60 4.70 4.80 2000 2005 2010 2015 2018 ABV

  • Average Weighted ABV = Sum of ethanol from each top 100 brands / total volume
  • Covers 90% of total industry volume the balance of 10% is weighted at 5%
  • All Craft Style = 5.4% weighted ABV vs All Light Beer = 4.2% weighted ABV

Source: NBWA industry Affairs, 2018

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4.54 4.56 4.58 4.60 4.62 4.64 4.66 4.68 4.70 4.72 2010 2017/18

Average Weighted ABV Beer

Growth in ABV for Beer and Liquor 2010 vs 2017

37.4 37.6 37.8 38.0 38.2 38.4 38.6 2010 2017

Average Weighted ABV Liquor

Source: NBWA, Industry Affairs – Calculated on average weighted ABV across top 100/150 brands

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Total U.S. Ethanol Per Capita 2010 to 2018

1.34 1.31 1.31 1.30 1.30 1.30 1.29 1.26 1.25 0.37 0.38 0.38 0.38 0.38 0.38 0.39 0.39 0.39 0.79 0.81 0.83 0.84 0.84 0.86 0.87 0.90 0.90 0.0 0.5 1.0 1.5 2.0 2.5 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gallons Per LDA Beer Wine

Source: Compiled by NBWA from TTB, Discus and BIG, 2019 (2018 wine volumes estimated by NBWA)

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0.00 0.50 1.00 1.50 2.00 2.50 3.00 2010 2011 2012 2013 2014 2015 2016 2017

United Kingdom Per Capita Consumption of Total Alcohol (15+)

Sources: HMRC, National Statistics, BBPA, 2018

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500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 AGE

Fewer new drinkers each year

Source: U.S. Census and NBWA 2017.

U.S. Population by Age 2017

3 out of 4 people are 21+

Two generations at formidable transition points in their lives

40 is the most irrelevant age?

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124 106 90

20 40 60 80 100 120 140 Age 21‐24 Age 25‐34 Age 35‐44 Age 45‐54 Age 55‐64 Age 65+

Index Base = 100

Liquor All Beer Wine 21‐24 drinkers are 9.0% of respondents / 7.3% of pop of population = 124

Differences Across Age Groups Alcohol Past 30 Days

Source: NBWA and Scarborough USA+ 2018 Release 1

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US Demographics Legal Drinking Age Adults (21+ / LDA)

210 215 220 225 230 235 240 245 2010 2011 2012 2013 2014 2015 2016 2017

Millions

Total Legal Drinking Age Adults

70.5% 71.0% 71.5% 72.0% 72.5% 73.0% 73.5% 74.0% 2010 2011 2012 2013 2014 2015 2016 2017

LDA Share of Total Population

Source: Compiled by NBWA from U.S. Census Bureau 2018 US Fertility Rates Have Plummeted Into Uncharted Territory. 60.2 babies were born in 2017 for every 1,000 women of 'childbearing' age (15-44) – a low not seen in the US since officials began charting.

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Shifting Consumer Demand Who, Where and What People Drink

Over 1,700 state alcohol laws have changed since 2012. More states have passed Sunday sales legislation and Sunday sales ban repeal efforts continue in 2019. Increased access for liquor across grocery and convenience channels. Cultural acceptance of alcohol sales spreading into barbershops, beauty salons, laundromats, libraries, zoos, theme parks, retirement homes, and many other non traditional drinking places. Great beer is not enough. Brewers are expanding the beer experience with yoga, art lessons, and other experiential side shows: alpaca sheering and sweater knitting?

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And, There is More Drinking.. at the Library…

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Total U.S. Retail Establishments Selling Alcohol 2008 to 2018

531,705 536,807 553,458 571,290 585,690 602,757 610,299 625,276 631,699 644,647 644,939 400,000 450,000 500,000 550,000 600,000 650,000 700,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Alchohol Retail Source: TDLinx Account Tracker Report: Beer, Wine or Spirit Selling Accounts, 2018.

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E‐Commerce, Apps and Alcohol

The Evolution of the Wine Club

  • Amazon
  • Drizly
  • Minibar
  • Klink
  • Saucey
  • Hopsy
  • Total Wine
  • USPS
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As New Retail and E‐Commerce Expands The End of the Traditional Bar and Tavern?

U.S. BLS: Establishment Counts

40,000 41,000 42,000 43,000 44,000 45,000 46,000 47,000 2010 2011 2012 2013 2014 2015 2016 2017 Count of Establishments

Number of Establishments in Private NAICS 722410 Drinking places, alcoholic beverages for All establishment sizes in U.S. TOTAL

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Beer Serves America Economic Impact Study

  • The beer industry generates 3.1 million

jobs through direct, supplier and indirect employment.

  • $382.2 billion in economic output for

the U.S. economy – 2.0% of U.S. GDP.

  • Pays $126.6 billion in wages and

benefits

  • Generates $46.3 billion in taxes for

federal, state and local governments. (consumption and business taxes)

www.BeerServesAmerica.com

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Beer is Everywhere!

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Thank you Lester Jones, Chief Economist National Beer Wholesalers Association ljones@nbwa.org Twitter@joneslester