Craft dollar sales declined -5.9% year-to-date through August 20 in multi-outlet plus convenience channels, according to Bump Williams Consulting (BWC), citing NielsenIQ data.
As reported yesterday, the segment has lost shelf space, distribution and SKUs. But the concerns aren’t entirely a “sign of doom” for the segment, BWC’s Brian “BK” Krueger and Dave Williams, shared during a Brewers Association (BA) Collab Hour last week. “Above-average” performing styles such as hazy and pilsner, and growing package formats such as 19.2 oz cans and variety 12-packs, could help craft producers at retail.
Hazy and High ABV Styles ‘Winning” on Surface, But Opportunity Available in Other Styles
Within craft, the largest growth styles in off-premise channels year-to-date (YTD) through August 20 were imperial/double/triple IPAs, both hazy (+181.7% in dollar sales to $48.18 million) and non-hazy (+7.7% to more than $300 million). Both styles also increased their share of craft: non-hazy +1.1%, to 8.4% dollar share; and hazy +0.9%, to 1.3% dollar share.
Hazy IPAs recorded a -2.6% decline in dollar sales year-over-year (YOY), but gained +0.3% dollar share of craft, becoming the No. 2 craft style below IPA (26.4% share, -0.3% share YOY). On the other end, No. 3 seasonals recorded the largest share loss (-0.6%), with a -12.1% decline in dollar sales.
Similar to Hazy IPA, blonde/golden ales (-2.6%) and pilsners (-1.6%) recorded dollar share declines YOY, but gained share of craft dollars (+0.3% and +0.1% respectively), indicating opportunity for craft producers, Williams said.
While it may be intriguing to put out a hazy imperial due to its significant dollar share growth in the last year, Williams encouraged producers to look at how “top heavy” that growth is. While 30.9% of the 109 brands in the style have recorded growth in the past year – above the craft average – the vast majority of the dollar sales growth (87.8%) has come from the top five brands in the style.
“That tells me that it’s pretty top heavy, so while I might be able to find some success, a lot of the scale, a lot of the size of the growth that we saw on the previous slide is really driven by the leaders in this style right now,” Williams said.
Similarly, about 25.6% of 932 imperial/double/triple brands have recorded YOY growth, but more than half of the dollar share growth (51%) is from the top five brands.
Hazy IPAs recorded “above-average success,” with 30.9% of the styles 1,043 craft brands recording growth YOY, while only 39% of the styles dollar sales growth is from top five brands, indicating opportunities for more producers, Williams said.
“[Hazy IPA] is not as top heavy, it’s more dispersed, it’s more evenly shared across the participating landscape,” Williams said. “That’s what makes hazy IPAs still an appealing style, even though their collective trends might be slightly below breakeven on a larger scale of things.”
Similarly, pilsners could be a style to look out for, as 37.3% of the 579 craft brands in the style have recorded YOY growth. Less than a quarter of the style’s dollar sales gains (23.6%) are contributed to by the top five brands, indicating a more open playing field.
Single-Serve Offerings ‘Not Just a Big Brewers’ Game’
Within the top 15 craft package formats, 19.2 oz cans recorded the largest dollar share increase (+54.8%), with more than $165.3 million in sales YTD through August 20. The package increased its dollar share +1.8% to hold 4.6% share of craft formats.
The package format is now No. 6, below 16 oz. can 4-packs (8% share), which increased share +0.1% YOY, despite a -5.1% decline in dollar sales. Similarly, 12 oz. can 6-packs gained 0.2% share of craft dollar sales, now accounting for 26.6% of sales, despite a -5.1% decline in dollar sales YOY.
The largest share gaining format was 12 oz. can 12-packs, which increased share +2.3%, to 15.9%, with a +10% increase in dollar sales, now No. 3 after 12 oz. can 6-packs and 12 oz. bottle 6-packs.
The majority of the top 25 producers in 19.2 oz. can sales are top-50 craft breweries. However, the package size – which has about 300 SKUs now – is “not just a big brewers’ game,” Williams said.
“There are other brewers or brand families across the U.S. on a smaller scale and more isolated footprint scale that have also been able to find success in this format,” he continued.
Escondido, California-based Arrogant Consortia (referred to by BWC as Arrogant Bastard) was ranked No. 24 in craft sales of the package format, while it ranks No. 211 in NielsenIQ-defined craft brands. Further down the list, Auburn, California-based Knee Deep Brewing Co. was the No. 30 producer in the format (No. 181 craft brand), Turlock, California-based Dust Bowl Brewing Co. ranked No. 34 (No. 108 craft brand) and Winston-Salem, North Carolina-based Foothills Brewing ranked No. 37 (No. 109 craft brand).
“[19.2 oz. cans] should be something that should at least be talked about or considered when trying to find a new class-of-trade penetration strategy, or trying to find some incremental dollars that aren’t going to source from your other core packages or SKUs that are currently the foundation of your business,” Williams said.
12-Packs Craft’s No. 2 Growth Format
The number of craft SKUs sold in total off-premise outlets declined -3.1% YTD compared to the same period in 2021, a difference of 663 SKUs. However 12-pack SKUs are on track to increased YOY for the fourth consecutive year, led by an increased in can 12-packs.
In 2021, craft 12-packs increased to 1,646 SKUs, with an additional 170 can SKUs and 36 fewer bottle SKUs compared to 2020. This year, while 12-packs SKUs YTD are down to 1,620 SKUs, they are above where the count was during the same period in 2021 (1,550 SKUs).
“12-pack cans [are] the No. 2 growth format for craft,” Williams said. “From a pure SKU-count standpoint, 12-pack cans are not only finding success in sales, but they’re finding success when it comes to placement on the shelf, and availability at retail as well.”
Of the about 2,500 craft brand families tracked by NielsenIQ, less than a quarter (19.3%) have a 12-pack offering. But when looking at just the top 250 brand families, the number of breweries with a 12-pack offering increased to “more of a 50/50 split,” with 12-packs increasingly more popular with higher volume breweries.
“More often than not – when it comes to driving scale, when it comes to introducing a package that’s there to drive volume – it’s becoming more and more prevalent among those brewers that want to climb the ranks and drive volume at retail or through the off-premise,” Williams said.
“The other thing too is it doesn’t just have to be an IPA anymore,” Williams continued. “We are seeing some brands start to have a little bit more fun or stretch their legs a bit in this space with certain styles beyond just the usual suspects out there.
Assorted-style 12-packs make up eight of the top 25 new craft can 12-packs, including No. 1 Sierra Nevada’s Little Things Party Pack, which features Sunny Little Thing citrus wheat ale, Hazy Little Thing IPA, Wild Little Thing sour ale and Big Little Thing imperial IPA. Other assorted packs on the list include:
- No. 4. Stone Brewing’s Stone IPA variety pack;
- No. 6 Leinenkugel’s Lodge Pack;
- No. 15 Brooklyn Special Effects Non-Alcoholic Variety Pack;
- No. 17 Porch Chillers variety pack (featuring four brands from Anheuser-Busch InBev’s Brewers Collective craft division);
- No. 20 Creature Comforts Variety Pack;
- No. 21 Hop Valley Stash Pack;
- No. 23 Toppling Goliath Mix Pack.
IPA packs are the next most popular 12-pack, with seven SKUs in the top 25, including No. 2 Lagunitas’ Variet-I-PAck and No 5. Samuel Adams’ Wicked Party Pack. American lager packs are third, with two SKUs: No. 9 Firestone Walker’s 805 Cerveza and No. 24 Odell Brewing Co.’s Lagerado.
BWC also shared details on price strategy, in-store promotion opportunities and what retailers are prioritizing in beer. More to come tomorrow.
Read previous coverage: Bump Williams Consulting Pt. 1: Declines in Craft Distribution and Shelf Space Concerning