The Changing US Beer Market - Dr. Bart Watson, Brew ers - - PowerPoint PPT Presentation

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The Changing US Beer Market - Dr. Bart Watson, Brew ers - - PowerPoint PPT Presentation

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The Changing US Beer Market - Dr. Bart Watson, Brew ers Association 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 0 1894 1897 1900 1903 1906 1909 1912 1915 1918 1932 1935 Breweries, Last 125 Years 1938 1941 1944

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The Changing US Beer Market

  • Dr. Bart Watson, Brew ers

Association

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 1894 1897 1900 1903 1906 1909 1912 1915 1918 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

Breweries, Last 125 Years

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0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 1890 1893 1896 1899 1902 1905 1908 1911 1914 1917 1920 1923 1926 1929 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

Breweries Per 100,000 Population (US)

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2010 2011 2012 2013 2014 2015 2016 Permit Year

TTB Permits vs Dec Active, 2 years Later

TTB Permits BA Database - 2 yr lag

* November 2018

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2 2017-Q3 TTB Permits BA Active Changes to Bonding Provision

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SLIDE 7

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

Breweries and Brewery Permits, 1995-2019 (est)

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Opens/Closes as % Of Operating Brew eries, 1986-2018

0% 5% 10% 15% 20% 25% 30% 35% 40% Opens Closes

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2017 US Brew eries by 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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The Changing Craft/Beer Industry

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Alcohol Consumption Over Time

Do You Have Occasion to Drink Alcohol?

10 20 30 40 50 60 70 80 Percent who said “Yes”

Source: Gallup Poll, 2016.

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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 Spirits

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

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US 21+ Beer Shipments 2000-2018

23.00 24.00 25.00 26.00 27.00 28.00 29.00 30.00 31.00 32.00 Gallons per 21+ Adult

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170,000,000 175,000,000 180,000,000 185,000,000 190,000,000 195,000,000 200,000,000 205,000,000 210,000,000 215,000,000 220,000,000 Dec-94 Nov-95 Oct-96 Sep-97 Aug-98 Jul-99 Jun-00 May-01 Apr-02 Mar-03 Feb-04 Jan-05 Dec-05 Nov-06 Oct-07 Sep-08 Aug-09 Jul-10 Jun-11 May-12 Apr-13 Mar-14 Feb-15 Jan-16 Dec-16 Nov-17 Oct-18

U.S. Beer Shipments, 12 Month Rolling Total,

  • Dec. 94-Aug. 19
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Per Cap Demo Index

~30% demographics ~70% Other Stuff

30% Demographics

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Prices Another Primary Driver

80 85 90 95 100 105 110 Dec-94 Apr-95 Aug-95 Dec-95 Apr-96 Aug-96 Dec-96 Apr-97 Aug-97 Dec-97 Apr-98 Aug-98 Dec-98 Apr-99 Aug-99 Dec-99 Apr-00 Aug-00 Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19

Beer, Wine, Spirits, Real Price Indices

Beer Wine Spirits

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0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Beer's Premiumization Trends

Tier 1 (Old Regionals + Value) Tier 2 (Premium) Tier 3 (Craft, Import, SuperPremium, FMB)

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6.5 12.2 13.2 13.9 11.9 21.0 24.1 25.3 5 10 15 20 25 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Craft Volume and Dollar Share over Time

Volume $ Share

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Craft Production Grow th Rate

Why? Big Numbers Distribution Competition

2 4 6 8 10 12 14 16 18 20

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (MY)

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Craft Grow th, Reframed

100 200 300 400 500 600 700 800 900 1,000 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Growth Growth per brewer

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  • 1,000

1,000 2,000 3,000 4,000 5,000 6,000 7,000 2013 2014 2015 2016 2017 2018 2019

Beer, High End Growth, 2013-2019 (est)

Craft/Specialty Superpremium FMB/Cider Import

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So far in Production Survey…

  • Slightly stronger than last year

(but not much)

  • 12M+ barrels reported, up

6.3%.

  • Same group was up 6.2% in

2018, so expect some decline in overall (4% overall last year)

  • 4% current projection.
  • Micros and

brewpubs up ~20% in early results

  • Will drop, but lots
  • f growth there
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Scan Data by Size

Source: IRI MULO+C, (Rolling 52 wks through 12-29-19) BA Craft Definition

Total US US Size (CEs), YA Growth % (52w vs YA) % Volume (52w) 1,000,000+ 0.3% 63.0% 100k to 1M

  • 0.5%

18.0% 10K to 100K 8.0% 15.5% Less than 10K 31.8% 3.5%

Median growth = 0% Median growth = negative

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One Implication, Weaker Pricing

Year CE Avg Price 6 Pack Avg Price CE Price Growth 6 Pack Price Growth 2015 $36.43 $9.31 2016 $37.59 $9.59 3.2% 3.0% 2017 $38.27 $9.82 1.8% 2.4% 2018 $38.90 $10.02 1.6% 2.0% 2019 $39.33 $10.16 1.1% 1.4% Source: IRI Group, Total US, MULO+C, BA Analysis

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Styles/Hop Specific Issues

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Top Grow th Styles 2019 (share terms)

Total US - Multi Outlet + Conv American IPA Imperial IPA Pilsner American Lager Other IPA Blonde Ale Sour Ale

  • Similar trends to 2018
  • Much harder to tell a simple style story these days
  • Trends and classics
  • Hoppy and sessionable
  • How to stand out?
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IPA’s Rise

14.3% 17.9% 22.4% 26.6% 29.6% 32.7% 36.3% 1.5% 2.0% 2.6% 3.1% 3.6% 4.0% 4.2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2013 2014 2015 2016 2017 2018 2019

IPA Share by Channel

Craft Scan Total Beer Scan Total Beer (Est.)

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Overall Beer and IPA Markets by Brew er Size

Size (2018 CEs) Overall Share Share of IPA Overall Growth IPA Growth Share of IPA Change 18 to 19 100M+ 80.2% 16.1% 0.4% 9.7%

  • 0.4%

10M to 100M 13.4% 3.7% 13.5%

  • 15.3%
  • 1.2%

1M to 10M 3.4% 47.2% 4.8% 15.9% 1.3% 100K to 1M 1.6% 15.9% 1.2% 7.9%

  • 0.7%

10K to 100K 1.1% 13.9% 9.5% 15.6% 0.3% <10K 0.3% 3.3% 49.9% 47.8% 3.3%

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20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000

Hop Industry Model, 2008-2020

Exports-Imports Domestic Usage Production

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Export Value Booming

$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 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 2019

Real Export Value (Customs Data), 1992-2019

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SLIDE 31
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WA State, Real Avg Price vs Acres, 2004-2019

Source: USDA-NASS, Brewers Association Analysis

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50

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SLIDE 33

CHEERS!

bart@ brew ersassociation.org @ brew ersstats