The shift to smaller brands on draft since re-opening (BUD)
This year's growth in beer sales is being driven by the recovery in the on-premise channel, while the off-premise channel is seeing some reversal of the shift it enjoyed during the pandemic. Beer depletions were up 9% YTD through the 27th week of the year compared to the prior year, according to Fintech, a beverage alcohol invoicing and logistics firm. However, according to NielsenIQ, off-premise beer category sales have fallen 1.7%.
In the on-premise channel, draft beer sales gained 1% share to 51%, cans gained 1% to 20%, and bottles lost 4% to 27%. When the on-premise channel began to reopen, consumers’ brand preferences shifted from larger brands to smaller ones. Through the first 20 weeks, the top nine draft brands accounted for a 60% share of the draft. Since then (through week 27), the share of other beer brands has increased from 40% to 56%, while the top nine brands fell to 44%. While Michelob Ultra gained 0.4% share to 9.7% YTD on draft, Bud Light's share dropped from 16.5% last year to 14.9% YTD.
Part of our investment thesis on Anheuser Busch InBev has been the tailwind from the re-opening of on-premise. Losing share in draft on-premise sales during the re-opening is a negative development. In addition, Altria recently completed the sale of Ste. Michelle Wine Estates. Altria’s lockup agreement for the sale of its BUD holdings expires in October. The winery divestiture raises concerns about Altria’s exit and will likely be an overhang. As a result, we are moving BUD shares lower on our long list, as seen below.
Hard seltzer share shifts (SAM)
According to Fintech, retailers purchased more than 2.5 million cases of hard seltzer in week 26, ahead of the 4th of July. That represents 500,000 more cases than the same week a year earlier and 1.5 million cases more than the same week in 2019. White Claw’s share has fallen from 45.4% last year to 38.1% this year. Truly gained about half the share loss of White Claw.
Bud Light's share fell 1% point to 9.1%. The battle for 4th place was between Michelob Ultra Organic Seltzer at 3.4%, Vizzy Hard Seltzer at 3.3%, Corona Hard Seltzer at 3.3%, and Smirnoff Spiked Sparkling Seltzer at 3.1%. New launches have not exceeded 1% share except for Topo Chico at 1.4%.
Hard seltzer has reached 3.3% of volume share in the on-premise channel, up 0.4% points from last year. This compares to an industry share of 8.2% YTD. The on-premise share is higher when adjusting for the re-opening happening in week 20. Variety packs dominate hard seltzer sales in the off-premise channel at 78% of sales, but single flavor packs comprise 70% of sales in the on-premise channel.
Supermarket CPG demand remains down LSD% (KR)
Total CPG demand in the supermarket channel for the week ended July 4th decreased 4% YOY, decelerating 1% from the prior week. The edible category was down 3% YOY, while the non-edible category was down 5%. The alcohol beverage sub-category was -7%, the weakest in the edible category. The meat department was one of the weaker departments, with demand down 8% YOY. On the other hand, the deli department, +11%, is one of the strongest departments against easy comparisons last year. Produce demand was down 4% YOY, decelerating from -1% for the previous three weeks. Fresh produce demand is a good indicator of home meal consumption levels because it is not stored. Since lapping the stockpiling period in March, grocery demand has recovered to only down LSD% since the end of May. The multi-outlet retailers and convenience stores continue to outperform the supermarkets lapping the pandemic.
