1. We are presenting our Black Book at 12:30ET today.
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2. Alcohol sales decelerate
The third week was expected to be the peak growth in alcohol sales of 55%. The following week ended March 28, decelerated to +22%, according to Nielsen. Wine and spirits sales each grew by 27%. Overall beer sales grew 10% with craft up 15%, budget beer up 7.3%, and imports up 8.7%. Hard seltzers continued to outpace up 327%, gaining 2.5% market share. Large packs up 41% for cases and 30%+ for 30 and 36 packs outpaced smaller package sizes indicating some stockpiling is just consumption. According to BWC, among the top 15 growth brands in the beer category were eight hard seltzer brands, including Bud Light and Corona hard seltzer variety packs. Constellation Brands sales for the trailing four-week period were up 24%, while Anheuser-Busch InBev was up 11.6%, Molson Coors was up 10.6%, Heineken was up 7.5%, and Boston Beer was up 55.1%.
2. The pain in craft beer
Beer sold in the taprooms of craft breweries has been undercounted in the industry data. With the restrictions on consumption in restaurants and bars, craft breweries that relied on taproom sales for a large portion of their revenues are particularly challenged in the current environment. The Brewers Association (you might recognize their upside-down bottle label on every can/bottle of craft beer) released its survey results of 455 respondents through April 6, which reported a sharp drop in craft beer sales. 46% of craft breweries said their business would likely only last between one and three months. 13% said their company would last just another one to four weeks. Just 5% said their business could continue a year in the current conditions. 2.5% of respondents said they were planning to close. The median respondent’s onsite sales declined 77%, with an average drop of 66%. The Texas Craft Brewers Guild said its members’ revenue had decreased an average of 71%. On-premise sales for the craft beer industry is estimated to be 40% of total revenues. One-third of beers sold on-premise is expected to be a craft beer. Retail sales will not bail out the industry either. The National Beer Wholesalers Association Beer Purchaser’s Index reached an all-time low of 35 for craft beer in March (a reading below 50 indicates contraction). The at-risk inventory (at risk of going over code in the next 30 days) was 65. If the surveys are correct, and the current conditions continue, the shakeout in the beer industry should change market share trends for several years.
