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Over the past four weeks, alcohol sales have settled into a steady rhythm, still greatly outpacing last year's volumes during the same timeframe and remaining at a steady high. Beer purchases parallel how Americans are now approaching shopping behavior, with about 70% of consumers buying enough groceries at a time for pantry-stocking of two weeks or more, according to IRI. "Fill-in," "special purpose," and "quick trip" visits to the store are all in decline, even after states adjust to patterns influenced by the rise, fall, and plateau of COVID-19 cases.
With some amount of social distancing likely to last the rest of the year, simplicity, price, and familiarity are set to reign for the foreseeable future, creating a once-in-a-generation-type product reset.
These changes bring about a fundamental question created after three full months of COVID-19 in the U.S.: if people are buying large volume packages and trying to save money, how does that impact the potential for craft beer?
As this becomes beverage alcohol's "new normal," a common question has focused on how this will impact decision making with the coronavirus expected to adjust public life for months. We already know big brands have benefited from an off-premise focus, and even IRI estimated that about 600,000 "new buyers" were acquired by "major brewers," although the market research firm didn't specify what companies that includes.
IRI may be mum on details, but we can at least get an idea of who these companies are. IRI-tracked beer (excluding FMBs and non-alcoholic brands) grew almost 4% in grocery, convenience, and other chain stores in the first quarter of 2020 vs. the same timeframe last year. To put that in perspective: the beer category has been slightly negative in annual IRI-tracked growth when you remove FMBs and non-alc brands. The biggest category jumps in volume came from:
Premium Plus: +13.7%
Import: +8.2%
Value Light: +6.9%
Craft: +6.4%
In each case, it's easy to pinpoint key brands and portfolios that drove growth:
Premium Plus: Michelob Ultra, +21% in three-month period
Import: Corona Premier, +30%; Modelo Especial, +20%; Corona Extra, +10%;
Value Light: Busch Light, +17%, Natural Light +3.7%
Craft (IRI definition): New Belgium, +24%; Sierra Nevada, +18%; Blue Moon, +15%;
This kind of spending on understood and trusted brands aligns with broader purchase decisions that shifted in March toward comfort foods and ingredients to create them on their own: pancakes, pastries, breads, or popcorn, according to IRI. As people have adjusted to their life at home, sweets (or ingredients to make them) have dominated with year-to-year growth from grocery store spending, with all of food and beverage growing 48.4% in the four weeks ending April 5 compared to the same time in 2019. Spirits (45.6%), wine (40.5%), and beer/cider (38%) weren't far behind, ahead of "salty snacks," (37.5%) ice cream (35.8%), cookies (33%), and more store-ready treats.
Part of this sweet tooth may have moved into beer purchases, where IRI-defined "fruit" beers were the third fastest-growing category mid-January to mid-March, selling 18.1% more volume than last year. It's a funny style to pin down in IRI-defined terms, which includes non-seasonal fruit/veggie/spiced/infused brands that includes something like Short's Brewing Soft Parade (made with strawberries, blueberries, raspberries and blackberries), but not 21st Amendment Hell or High Watermelon, which is a part of that brewery's seasonal SKU. Abita's family of brands is down 3.4% in this period, and its Purple Haze Raspberry Lager (+8%) and Strawberry Lager (+52%) represent the only growth.
In the last month of IRI data from March 22-April 19, just three beer categories beat their four-week average of volume in the most recent sales week April 12-19: craft, flavored malt beverages, and imports. FMBs' success has been largely driven by hard seltzer, with White Claw (+604,000 BBLs) and Truly (+214,000 BBLs) showing some of the largest raw volume gains of any IRI-defined beer product from mid-January to mid-March vs. 2019. Similarly, imports have been driven by the Constellation Brands portfolio (+339,000 BBLs over 2019) that include brand families of Modelo Especial (+206,000 BBLs), Corona (+108,000 BBLs), and Pacifico (+19,000 BBLs).
So what's making the difference for "craft"? Again, it's the familiar brands that are ubiquitous in chain stores, readily available in the supply chain, and generally have lower shelf prices than local or regional craft players offer.
For example, Blue Moon, which has had steady decline and lost almost 100,000 BBLs of sales in these stores 2015-2019, is up 19% to start 2020. Lagunitas, which was effectively flat in sales 2018-2019, is up 6.2%. If you're looking for inspiration from smaller craft outfits, moderate gains—based on size and distribution—have largely been led by IPAs. Here's a brief list of brands that have sold at least 500 more BBLs in mid-January to mid-March 2020 vs. last year:
Troegs Perpetual IPA
Rogue Batsquatch Hazy IPA
SweetWater 420 Strain G13 IPA
Scofflaw Basement IPA
Saint Arnold Art Car IPA
And a non-IPA set:
Shiner Ruby Redbird Lager
Boulevard Wheat
New Glarus Spotted Cow
Montucky Cold Snacks Lager (read about this wild growth brand on GBH)
Odell Sippin’ Pretty Fruited Sour Ale
While some of the country’s largest breweries have found wild success in recent months, there have still been opportunities for smaller craft, even as many companies have faced tremendous odds during the COVID-19 pandemic. Later this week, we explore what that’s like now—and will be in the future.
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