Bump Williams Consulting’s latest industry analysis offered a stark assessment of the latest state of play within the beer industry.
“Everyone is worried about the health of the soft trends of their business,” Williams wrote.
For retailers, it’s the lower basket rings for beer.
For wholesalers, it’s “fewer pallet drops.”
For brewers, it’s the difficulty of cycling 2020’s pandemic “panic-buying and pantry-loading trends.”
And then there’s the persistence of the pandemic and lower-than-expected vaccine rates threatening the comeback of the on-premise channel.
“On-premise has always been a wild-card, and my fear is that we haven’t seen the worst of COVID’s reappearance/impact this year; and this class of trade will once again suffer again through closings, restrictions and suspension of services,” Williams wrote of the uptick in COVID cases across the country that have led major cities such as New York City to restrict indoor dining and entertainment and others to reinstitute mask policies. “It’s so important for manufacturers to anticipate this change for back-half 2021, and develop a sales/marketing plan for an aggressive off-premise strategy ‘just in case.’”
If the on-premise channel is a wild-card, “the off-premise landscape has been anything but predictable when it comes to forecasting.” As such, Williams urged suppliers, retailers and wholesalers “to remain on top of what you can control in terms of supply, execution and quality to make the most out of the avenues available today to reach consumers.”
Williams noted that price increases in the latter half of 2021 will be “interesting to watch as spirits and wine continue to gobble up beer purchase occasions.” He added shortages of glass and aluminum packaging “will accelerate the discontinuing of brands and packages that should have been eliminated years ago, hopefully making more room on the shelves for higher velocity/beyond beer brands that are constantly OOS [out of stock] due to lack of facings/shelf space.”
Molson Coors pulled the plug on 11 economy brands — and Movo Wine Spritzers — last week.
Williams also offered a look at the latest trends within market research firm NielsenIQ’s data through July 24 and found that although “off-premise trends across all outlets have been tumultuous at best when compared against 2020 for the category at large,” some segments have stood out, including hard seltzers, imports and FMBs. Those segments have added “incremental sales on top of the substantial gains” from 2020
“Digging a bit deeper into the class of trade-level data, it is evident that most, if not all of the incremental gains for these segments are due to their performance in the convenience channel,” Williams wrote.
Within c-stores, four segments — hard seltzers (+36%), imports (+6%), FMBs (+2.5%) and super premiums (+1%) — have grown their collective dollar sales compared to a year ago. Breaking down the growth even further:
- Within FMBs, all of the segment’s year-to-date dollar sales growth across off-premise channels is coming from c-stores;
- Within imports, more than 80% of the year-to-date dollar sales growth across all outlets are coming from the segment’s c-store performance;
- Within hard seltzers, more than half (57%) the segment’s year-to-date dollar sales growth across all outlets are coming from its performance in c-stores;
- Within super premiums, the growth in the c-store channel have offset losses in xAOC, and the segment is “almost breaking even across off-premise outlets (-0.8%)”;
- And within non-alcoholic beer and ready-to-drink offerings, both segments “continue to pile up double-digit points across all classes of trade.”
Also of note, over the last four-week period, hard seltzers have reached “their annual high of 9% [share within the c-store channel] (so far) vs. their YTD average of 6.1%.” And imports have grown to 23% of beer sales over the last four weeks compared to the segment’s 21.9% year-to-date average.
All of this points to a lot of uncertainty for the rest of 2021. But the big takeaway from this: Create a break-in-case-of-emergency sales and marketing plan focused on the off-premise channel just in case the pandemic creates more on-premise turbulence during the next six-plus months. Better to have that plan ready to implement than to be scrambling.