Beer Purchasers’ Index Rises (BUD)
The National Beer Wholesalers Association reported that its monthly Beer Purchasers’ Index rose 26 points YOY to 80 in September, up from 74 in August. A reading over 50 indicates expansion, while a reading below 50 indicates contraction. “Beer distributors continue to take an aggressive stance in their ordering to minimize out of stocks, compensate for lost draft beer volumes, and continued on-premise closures.” Flavored malt beverages rose 12 points to 91, the highest across all segments, down 1 point from August. Premium light beer was 75, up from 36 last year and 70 last month. Premium regular rose to 60 from 27 last year and 53 last month. The below premium was 50, down from 56 last month, and has been decelerating since May. Craft beer was 55 up from 45 last year, and 50 last month. Imports were 65, accelerating from 60 last month.
Hoping the beer can shortage eases post-Labor Day (TAP)
As COVID-19 restrictions closed on-premise venues, packaged beer sales jumped. Taxable keg production in April 2020 was 1.3% of its total in April 2019, according to a recent report from the US Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau. In April 2020, domestic brewers produced 17,441 taxable kegs of beer, down from 1.29M a year ago. Packaged beer production increased to 13.4M barrels in April from 12.9M a year ago. Microstar Logistics is one of the largest keg solutions providers in the beer industry. It owns nearly 5M kegs and leases and moves them for the majority of brewers. The company “went to zero revenue in March and April.”
The shift away from kegs to cans for the beer industry has led to shortages. The small brewers are generally worse off, but Molson Coors said it shifted production of some brands to conserve can supplies. Last month the US Brewers Association issued an advisory on the can shortage. “The can shortage may threaten the ability to survive the pandemic for some craft brewers. The smallest brewers are most likely to have orders delayed or canceled, as can manufacturers are more efficient when they don’t have to change out the printing plates as often. A company ordering a half or full truckload may be less of a priority.” Wisconsin Aluminum Foundry said, “Orders for beer cans typically take two days to fulfill now take up to five months.” The tightening shortage in beer cans is starting to impact non-alcoholic beverages. Dr. Pepper noted that it was short cans in mid-August. Beer sales typically slowdown post-Labor Day, so the industry is hoping it can catch up on demand. With on-premise sales still well below year-ago levels, having can supply is mission-critical for many breweries.
NY and CA migration seen through grocery spend (SFM & GO)
COVID-19 outbreaks have been the most severe in California, Florida, New York, New Jersey, and Texas. In New York and California, grocery sales have been consistently below average during the pandemic suggesting an outward migration. In the Northeast, Vermont has seen a 13% increase in grocery sales in August. Vermont has consistently outperformed the national trend while New York has underperformed, as seen in the following chart.
On the West Coast, grocery data suggests Arizona may have picked up the most California residents during the pandemic. California’s grocery spend has lagged the national trend while Arizona has consistently outperformed, as seen in the following chart.