The health of the beer category is the top concern across all distributor networks “by a significant margin,” per a biannual survey conducted by the National Beer Wholesalers Association (NBWA), president and CEO Craig Purser shared in his remarks during the opening General Session of the trade group’s 2023 Annual Convention.
“This isn’t a red, blue/silver, gold or green network issue, folks,” Purser said. “This is an industry-wide, five-alarm fire. And the only way we’re going to fix it is to run toward that fire with purpose and with a plan.”
Purser laid out the reasons why the industry is at a “crossroads,” from political upheaval to food and beverage giants entering the alcohol industry, to the federal government’s review of competition in the brewing industry, to terminations without cause, to the conservative-driven boycott of Bud Light.
Purser also zeroed in on the industry’s struggle to appeal to younger (21- to 24-year-old) legal-drinking-age consumers. Purser pointed to 2018, when there were 17.5 million 21- to 24-year-old consumers, 46% of whom said they had a beer in the last 30 days. Meaning there were about 8 million occasional beer drinkers in that age range.
Now, that number is down to 5.9 million occasional beer drinkers as the number of LDA consumers in that age has declined to 15.5 million, with only 38% of them saying they drank a beer in the last 30 days.
“In plain English, the industry has lost about 30%, or 2.2 million, of its youngest LDA consumers in five years,” he said. “This is a pattern, and the current brand crisis has accelerated this broader category concern.”
Purser ticked off other reasons for concern, including the annual Gallup survey showing “a significant increase in the percentage of adults under 35 that abstain from alcohol altogether.”
Although some distributors “are selling more beer than ever” as consumers shift their brand of choice, “someone sitting in the row behind you is facing dramatic declines that have nothing to do with anything they did or didn’t do.”
“Beyond the personal pain that this brand disruption has caused – from employees being harassed to businesses being forced to make difficult decisions – the fact is, the entire beer category is paying a price,” Purser said. “This affects us all.”
Purser quoted Boston Beer Company founder Jim Koch’s leaky bucket theory in regards to the lost brand volume, with some going to light lager competitors, and some being siphoned away to spirits, wine, non-alcoholic beverages and cannabis.
Purser recalled a conversation with an on-premise, draft-centric chain retailer who shared that his restaurants “have seen a dollar [share] decline from 70% beer to 61% beer in just three years,” and has added wine and pre-mixed cocktails on draft.
“This is a wake-up call,” Purser said. “And also an opportunity for you to think about how to meet that changing demand.”
So how does the industry fix the issue? Purser said it’s twofold:
First, it’s recognizing that this “is a category-wide problem” that won’t be “solved by ‘fixing’ brands.” Suppliers must lead the effort to make beer more appealing to younger adults and a broader consumer base.
“This must include balancing the expectations and values of our existing consumers while making more room at the bar for new customers,” Purser said.
Second, distributors must diversify their beverage offerings “with an eye on our future.”
Purser referenced summer blockbuster Oppenheimer as an example of “people of all backgrounds, some of whom hated each other’s guts, setting those differences aside for a common objective.”
“I don’t know if we need a Manhattan Project for beer – I think we’ve seen enough explosions already this year – but we need to bring that spirit of unity, collaboration and problem solving to address these category-wide challenges,” he said.
Purser also referenced a BuzzFeed story on the “17 Ways Women Singlehandedly Saved The U.S. Economy This Summer,” highlighting the Barbie movie, Beyoncé’s Renaissance and Taylor Swift’s Eras tours as economic drivers over the summer.
“That is the kind of energy and excitement that our industry needs to harness,” he said.
Purser highlighted the Next Generation group of young distributor leaders, the BREW initiative and the Alliance for Women in Beer’s Making Moves event, and the National Black Brewers Association, which was founded by former NBA star and Sacramento Mayor Kevin Johnson, as opportunities to reach the new consumer groups. He assured the audience these efforts are not about checking a box but “could prove absolutely essential as we look to grow the beer category and sell more beer.”
“The data says beer is losing relevance with emerging LDA consumers,” he continued. “Who better to provide input on young people than next gen leaders? The beer industry still doesn’t do a sufficient job in marketing to female consumers – even though they are 51.5% of the population. BREW could make a difference. And everyone would agree that the industry could do more to earn the business of Black Americans and all people of color. The Black Brewers Association could help us broaden our reach with vital consumers who have sometimes been overlooked.”