Beer continues to record declines in the off-premise, and “we have a long way to go before we see a ‘return to normalcy,’” according to Bump Williams in his monthly report for his data consulting firm, Bump Williams Consulting (BWC).
Imports, flavored malt beverages (FMBs) and non-alcoholic (NA) beer continue to be the only beer segments to record off-premise dollar sales gains year-to-date (YTD). In the latest 52-week period (ending September 16), NA beer increased dollar sales +24.5%, followed by FMBs (+14%) and imports (+4.8%), Williams wrote, citing NIQ data (total U.S. xAOC + liquor plus + convenience).
All other segments recorded dollar sales declines between -2.1% and -4% YTD, with total beer sales declining -3%.
Trends remain similar across individual off-premise channels, with the exception of convenience, where hard cider and craft have been able to record dollar sales gains as well. In the last 52 weeks, c-store hard cider sales increased +6.5%, while craft sales increased +2.5%.
Williams focused his October report on the differences in beer manufacturer growth strategies versus retailer growth strategies, as well as consumer and retailer feedback on the continued declines of Bud Light, now more than six months removed from the conservative-led boycott of the Anheuser-Busch brand that accelerated the light beer’s losses.
One of the biggest differences in manufacturer versus retailer strategies is manufacturers are focused on attracting “new shoppers,” while retailers want to “focus on core brands that generate high [dollar] sales for them,” Williams wrote. Additionally, manufacturers are focused on “revenue growth management” while retailers are focused on promotions and foot traffic.
Williams identified 10 common strategies for both manufacturers and retailers, based on his personal observations at boardroom meetings this year.
Manufacturers:
- Increase price “selectively” to “drive long-term profits and volume;”
- Build relationships with and support from business through the National Beer Wholesalers Association (NBWA);
- Use “IT systems, automation and AI [artificial intelligence] to reduce operating expenses” and improve efficiencies;
- “Leverage revenue management to drive optimal pack mix for volume and profit;”
- Compete in places “where you have advantage,” whether that’s through distribution, your portfolio, network or demographics;
- Attempt to scale in “adjacent categories” such as NA;
- And “focus on logistics efficiency with customer friendly strategies that minimize inefficient order and drop size.”
Retailers:
- Promote brands that “deliver foot traffic and loyalty;”
- “Leverage trade events” such as the NBWA Annual Convention and the National Association of Convenience Stores (NACS) Show to “build supplier relationships and align strategies;”
- “Improve shopper experience” with investments in people and “in-store conditions;”
- Build consumer trips and retailer margins and profits with single-serve offerings;
- Carry “leading core brands” to address shopper needs and “reinforce convenience” for consumers;
- “Deliver variety” on shelves, while still meeting shopper demand, driving incremental trips and purchases;
- “Offer private label in price sensitive categories to drive shopper loyalty and enhance profits;”
- Offer new formats to “address shopper dissatisfaction” in terms of convenience and “shop-ability;”
- “Develop category expertise and insight in the categories that you are making strategic bets” on to create a better return on investment;
- And “reward” suppliers that “overdeliver on growth and profitability.”
Williams characterized the different approaches as “new CEO mentality” versus “old CEO thinking,” observing that the newer mentality focuses on taking price to driving “90-day earnings reports,” while the old mentality focuses on promoting key brands and packages to drive volume.
Bud Light Consumers Not Gone Forever, But Timeline for Recovery is Uncertain
BWC partnered with 1Q, a mobile market research platform, to survey consumers on their purchasing habits, including “brand switching” and brand loyalty. The survey focused on consumers in the Midwest, Mid-Atlantic, Southwest and Southeast – areas that saw many switch buying habits away from Bud Light.
In the survey, consumers were asked: “What’s it going to take to bring you back to your favorite beer and start buying it again?”
Williams wrote: “Their response was simple – ‘Apologize for the way you disrespected me, tell me you made a mistake in how you stereotyped me, and I will come back. I might not come back right away, but if you’re sincere with your apology, I will (eventually) come back.’”
Williams noted that Bud Light’s conflict with some consumers wasn’t “an error in the marketing intent,” as attempting to attract new consumers is “one of the three ways to build categories, segments and brands.”
The “error” came from leadership remarks about consumers and advertising that some perceived as “condescending,” Williams wrote, likely in reference to Bud Light’s former VP of marketing Alissa Heinerscheid’s comments about combatting Bud Light’s declines by changing its “fratty” image and “out of touch” marketing.
“The question in everyone’s mind is ‘when will the declines stop, how many loyal customers have we lost, will they EVER come back and what is it exactly that made the customer STOP drinking the No. 1 beer brand in the United States?’” Williams wrote.
Williams also shared feedback he’s received from conversations with retailers over the past six months about their relationships with wholesalers.
A common theme from retailer responses was “many of the retailers asked me to pass along a message to the distributor community that reads, ‘Please make sure to tell your distributor customers that THEY make a difference to us.’” Williams wrote.
Other standout comments include:
- “We still have faith in our local distributor to do the right things and do not hold them accountable for what comes out of HQs;”
- “Our relationships with our distributors have never been wrong and we want to help them navigate these unprecedented, tough times in any way that we can. They are our neighbors and friends;”
- “I worry about the distributor sales people on the street who make their living from selling beer. What happens to them if sales continue to suffer, do they quit, lose their job or will that impact their ability to service my stores?”
Comments that directly addressed retailer feelings about Bud Light include:
- “I never in my wildest dreams thought Bud Light would ever be dethroned. … My biggest fear right now is will the new leaders be able to meet this increased demand?”
- “This problem was created by people that have no ‘street smarts,’ but the distributors are paying the price and that isn’t right;”
- “Bud Light will come back to life, but it won’t be tomorrow or next year, we still don’t know where the bottom is for it, but it will still be a top money-maker for my chain;”
- “I’m not going to discontinue Bud Light just because of what somebody thought was a good marketing promotion.”