Keeping Beer Competitive in a Changing Market
Back in May, Beer Business Daily (BBD) reported on growing clouds surrounding the beer segment of the beverage alcohol industry. While beer has been showing strength in recent memory, there are some troubling portends for brewers; but only if they are not taking steps to stay ahead of the natural evolution of tastes, trends and economic factors. Here’s what brewers need to know if they wish to stay abreast of change and remain profitable.
First, a digest of the bad news as reported in BBD.
- Beer as a share of all alcohol sold in the US is at the lowest point the category has ever experienced. Still top among all categories, at just below 50% it has never been lower.
- Craft beer – recently the hottest trend – is overly reliant on own-premise channel sales. BBD says “taprooms, brewpubs and other direct sales accounted for ALL of the growth of craft in 2017”. Removing own-premise sales from the equation and craft beer sales are flat or even a bit down year over year.
- Import volumes are slowing down from around 6% in 2014, 2015 and 2016 to an anemic 3.2% in 2017.
- Unemployment is very low. Typically, beer enjoys an inverse correlation to employment. When unemployment is higher, less beer is sold. So with unemployment near historic lows, there is not much upside left for growth (at least with respect to this particular correlation).
The BBD article also had some troubling data regarding channel performance and container performance which augur poorly for Team Suds.
Now for the good news. With above-mentioned bad news for beer, how will your brand succeed and grow given these trends? Simple! Steal share from other beers.
“How does one do that,” you may ask? Easy! Beer suppliers must implement a tight and well-managed sales strategy to out-execute the competition at retail. This means getting greater distribution into the right places. Get more handles. Get more displays. Do more “ride-withs” with your distributors and then, follow up with a vengeance.
At the same time, brewers must actively avoid the following bad practices:
- Falling victim to the corrosive myth that beer consumption trends will kill your brand. There is plenty of beer being consumed. You just need to make sure it’s your beer by beating your competition at putting it in front of consumers.
- Relying on distributors to do all the work while focusing to the point of distraction on depletion reports. Get out there and EXECUTE at retail!
- Putting too much credence in marketing. Having a well-designed marketing package is a must. But this alone will not move the needle. The brands that win are those which best execute at retail, regardless of packaging or even taste of the product.
Want some help developing, implementing and improving upon the well-managed sales strategies and marketing packages referenced above? Let’s talk!
