ALEXANDRIA, Va.—The number of U.S. brewing companies is at a record, but domestic beer production my hit a decade-low before New Year’s Day, reports Forbes. According to the Beer Institute (BI), the U.S. brewing industry’s trade association, American brewers shipped approximately 2.6 million fewer barrels of beer year-to-date (YTD) through October, compared with 2018.
That represents a 1.8% decline over last year when U.S. beer companies combined sold roughly 142.3 million barrels of beer through the first 10 months of 2018. If that rate of decline holds through the remainder of the year, 11,000-plus U.S. breweries would ship about 163.6 million barrels in 2019.
However, based on taxes paid to the Alcohol and Tobacco Tax and Trade Bureau (TTB) during the past nine years, U.S. brewers traditionally ship between 24 and 26 million barrels during the final two months of the year. If beer sales rebound in November and December, it’s possible the industry could ship about 165.6 million barrels in 2019, which would still represent a roughly one-million-barrel decline versus last year.
At the start of the current decade, 2,343 permitted U.S. breweries combined to ship 181.1 million barrels of domestic beer. So, how did the industry lose more than 15 million barrels since 2010?
National Beer Wholesalers Association chief economist Lester Jones has researched the beer industry for nearly 20 years. He suggests there could be discrepancies in the data as more breweries producing a wider variety of beverages have created “confusion and delay” with reporting. “The industry has changed dramatically in just 10 years,” he said. “Larger legacy brands have lost significant share to countless alcohol beverage innovations.”
That’s seen by the country’s two largest companies: Anheuser-Busch InBev and Molson Coors. They’ve shed a combined 26 million barrels since 2010. During that period, craft brewers added about 15 million barrels of beer to the category, according to the Brewers Association. Meanwhile, sales of White Claw, a flavored hard seltzer that makes up about 60% of the sub-segment, are projected to top $1.5 billion in 2019.
“These innovations are slowly blurring the lines of the standard industry accounting for beer, wine and spirits,” Jones noted. “All this makes for a tough job of accurately and reliably reporting industry trends.”
Beer has slowly ceded market share to wine and spirits during the past 20 years. Figures from the Distilled Spirits Council show that beer accounted for 54% of total beverage alcohol dollar sales in 2003. By 2018, that figure had fallen to 46% as consumers shifted more of their spending to spirits, the Beer Institute reported earlier this year.
Despite the trends for traditional beer production moving toward a decline over the near-term, category sales have been boosted by sales of hard seltzers, such as White Claw and Truly. Currently, there are about 100 different hard seltzer brands, and most are classified and taxed as beer. Those products have brought consumers back to the beer category.
According to market research firm IRI, which tracks sales at large off-premise retailers, volume sales of beer were up about 2% through Nov. 3, driven in part by a 40% increase in flavored malt beverage and hard seltzer sales.
For a closer look at beer sales at c-stores, see the Category Close-Up “Chugging Along” in the October 2019 issue of NACS Magazine.