Beer Industry Update January 2019 Lester Jones, Chief Economist National Beer Wholesalers Association ljones@nbwa.org Twitter @joneslester https://www.youtube.com/watch?v=xizcodu3_1e
# of Months 130 120 110 100 90 80 70 60 50 40 30 20 10 0 115 June 2009 to December 2018 Length of Economic Expansions: Current vs. Previous Six Longest 120 March 1991 to March 2001 106 Feb 1961 to Dec 1969 92 Nov 1982 to July 1990 73 Nov 2001 to Dec 2007 58 March 1975 to Jan 1980 45 Oct 1949 to July 1953
What will kill this expansion? Most likely, high interest rates as Fed responded to rising inflation. Just like the late 1950s, late 1960s, late 1980s. Energy/Oil shock inflation In 1974 caused a recession as higher prices eroded purchasing power. Collapse of dot.com investment boom of late 1990s, together with stock market crash. Collapse of housing and excess leverage that led up to 2008-09 financial crisis.
Service Employment 135,000 130,000 125,000 120,000 115,000 110,000 105,000 Total U.S. Goods Producing vs Service Providing BLS Employment: Jan 2008 to Dec 2018 For now the country has historically low unemployment rates, consistently adding new jobs, and experiencing wage growth across broader categories even in goods producing sectors blue collar 24,000 22,000 20,000 18,000 16,000 14,000 12,000 Goods Producing Employment 100,000 1/1/2008 4/1/2008 7/1/2008 10/1/2008 1/1/2009 4/1/2009 7/1/2009 10/1/2009 1/1/2010 4/1/2010 7/1/2010 10/1/2010 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 4/1/2012 7/1/2012 10/1/2012 1/1/2013 4/1/2013 7/1/2013 10/1/2013 1/1/2014 4/1/2014 7/1/2014 10/1/2014 1/1/2015 4/1/2015 7/1/2015 10/1/2015 1/1/2016 4/1/2016 7/1/2016 10/1/2016 1/1/2017 4/1/2017 7/1/2017 10/1/2017 1/1/2018 4/1/2018 7/1/2018 10/1/2018 10,000 Service Employment Good Producing Employment
92.5 92.0 91.5 91.0 90.5 90.0 89.5 89.0 88.5 88.0 87.5 U.S Labor Force Participation Rates Who is Working? Men 25-34 2008 2010 2018 76.0 75.8 75.6 75.4 75.2 75.0 74.8 74.6 74.4 74.2 74.0 Women 25-34 2008 2010 2018 Source: U.S. BLS: Labor Force Statistics from the Current Population Survey
160 Differences Between Genders Alcohol Past 30 Days 140 Index Base = 100 120 100 80 60 40 Craft Beer Import Beer Light Beer Liquor Cider FMB Wine Male Female Source: NBWA and Scarborough USA+ 2018 Release 1
US Demographics Legal Drinking Age Adults (21+ / LDA) 245 Total Legal Drinking Age Adults 74.0% LDA Share of Total Population 240 73.5% 235 73.0% Millions 230 225 72.5% 72.0% 220 71.5% 215 71.0% 210 70.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Compiled by NBWA from U.S. Census Bureau 2018 US Fertility Rates Have Plummeted Into Uncharted Territory. 60.2 babies were born in 2017 for every 1,000 women of 'childbearing' age (15-44) a low not seen in the US since officials began charting.
5,000,000 U.S. Population by Age 2017 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Fewer new drinkers each year 40 is the most irrelevant age? Two generations at formidable transition points in their lives 3 out of 4 people are 21+ 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 AGE Source: U.S. Census and NBWA 2017.
18.5% Hispanic Share of U.S. Census Population 2010 to 2017 18.0% 17.5% 17.0% 16.5% 16.0% 15.5% 2010 2011 2012 2013 2014 2015 2016 2017
160 Hispanic Preferences Alcohol Past 30 Days 140 120 Index Base = 100 100 80 60 40 20 0 Source: NBWA and Scarborough USA+ 2018 Release 1 Imports Light Beer FMB Hard Liquor Wine Domestic Regular Hispanic Ethnicty Cider Craft
Imports and Mexico Share of Volume 1990 to 2018 20% Imports Share of Total Industry (17.7% of Total Industry 2018) 80% Mexico Share of Total Imports (70% of all Imports 2018) 18% 16% 14% 12% 70% 60% 50% 10% 40% 8% 6% 4% 2% 0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 30% 20% 10% 0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: U.S. Commerce and NBWA.
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Count of Brewers and Craft Share of Volume 2000 to 2018 Count of Breweries 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Count of Breweries 14% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 Craft Share 2007 2008 2009 2010 Craft Share 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. TTB and NBWA.
Beer Segment Shares Growing High-End Beyond 40 Share Segment Share of Total Volumes 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 25.1 24.3 23.1 23.7 22.8 21.7 21.2 21.0 48.4 48.0 46.9 43.6 42.0 40.6 39.5 37.7 26.0 27.2 29.6 32.3 34.8 37.2 38.9 40.9 2010 2011 2012 2013 2014 2015 2016 2017 High End (Craft/Imports/FMB/Cider) Premium Sub Premium/Malt-Liquor Source: Beer Marketers Insights, 2018.
Total U.S. Ethanol Per Capita 2010 to 2017 2.5 Gallons Per LDA 2.0 1.5 1.0 0.5 0.79 0.81 0.83 0.84 0.84 0.86 0.87 0.9 0.37 0.38 0.38 0.38 0.38 0.38 0.39 0.39 1.34 1.31 1.31 1.30 1.30 1.30 1.29 1.27 0.0 2010 2011 2012 2013 2014 2015 2016 2017 Beer Wine Spirits Source: Compiled by NBWA from TTB, Discus and BIG, 2018 (2017 wine volumes estimated by NBWA)
2.6 2.6 Total U.S. Ethanol Per Capita 2010 to 2017 Better economic times = a little bit of incremental consumption Gallons Per LDA 2.6 2.5 2.5 2.5 2.5 0.79 0.81 0.83 0.84 0.84 0.86 0.87 0.90 2.5 2010 2011 2012 2013 2014 2015 2016 2017 Beer Wine Spirits Source: Compiled by NBWA from TTB, Discus and BIG, 2018 (2017 wine volumes estimated by NBWA)
125.0 Alcohol Beverage Inflation BLS at Home (Off Premise) Consumer Price Index Jan 2008 to Nov 2018 120.0 Index Base 100 at 2008 115.0 110.0 105.0 100.0 1/1/2008 4/1/2008 7/1/2008 10/1/2008 1/1/2009 4/1/2009 7/1/2009 10/1/2009 1/1/2010 4/1/2010 7/1/2010 10/1/2010 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 4/1/2012 7/1/2012 10/1/2012 1/1/2013 4/1/2013 7/1/2013 10/1/2013 1/1/2014 4/1/2014 7/1/2014 10/1/2014 1/1/2015 4/1/2015 7/1/2015 10/1/2015 1/1/2016 4/1/2016 7/1/2016 10/1/2016 1/1/2017 4/1/2017 7/1/2017 10/1/2017 1/1/2018 4/1/2018 7/1/2018 10/1/2018 Beer CPI
125.0 Alcohol Beverage Inflation BLS at Home (Off Premise) Consumer Price Index Jan 2008 to Nov 2018 Index Base 100 at 2008 120.0 115.0 110.0 105.0 100.0 1/1/2008 4/1/2008 7/1/2008 10/1/2008 1/1/2009 4/1/2009 7/1/2009 10/1/2009 1/1/2010 4/1/2010 7/1/2010 10/1/2010 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 4/1/2012 7/1/2012 10/1/2012 1/1/2013 4/1/2013 7/1/2013 10/1/2013 1/1/2014 4/1/2014 7/1/2014 10/1/2014 1/1/2015 4/1/2015 7/1/2015 10/1/2015 1/1/2016 4/1/2016 7/1/2016 10/1/2016 1/1/2017 4/1/2017 7/1/2017 10/1/2017 1/1/2018 4/1/2018 7/1/2018 10/1/2018 Beer Liquor Wine
Index Gap between CPI over Time 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0-2.0-4.0 Alcohol Beverage Inflation Gap for Beer/Wine and Beer/Liquor BLS at Home (Off Premise) Consumer Price Index Sept 2018 Trend in Beer/Liqour CPI Gap Trend in Beer/Wine CPI Gap 1/1/2008 3/1/2008 5/1/2008 7/1/2008 9/1/2008 11/1/2008 1/1/2009 3/1/2009 5/1/2009 7/1/2009 9/1/2009 11/1/2009 1/1/2010 3/1/2010 5/1/2010 7/1/2010 9/1/2010 11/1/2010 1/1/2011 3/1/2011 5/1/2011 7/1/2011 9/1/2011 11/1/2011 1/1/2012 3/1/2012 5/1/2012 7/1/2012 9/1/2012 11/1/2012 1/1/2013 3/1/2013 5/1/2013 7/1/2013 9/1/2013 11/1/2013 1/1/2014 3/1/2014 5/1/2014 7/1/2014 9/1/2014 11/1/2014 1/1/2015 3/1/2015 5/1/2015 7/1/2015 9/1/2015 11/1/2015 1/1/2016 3/1/2016 5/1/2016 7/1/2016 9/1/2016 11/1/2016 1/1/2017 3/1/2017 5/1/2017 7/1/2017 9/1/2017 11/1/2017 1/1/2018 3/1/2018 5/1/2018
Growth in ABV for Beer and Liquor 2010 vs 2017 Average Weighted ABV Beer Average Weighted ABV Liquor 4.72 38.6 4.70 4.68 38.4 4.66 38.2 4.64 4.62 38.0 4.60 37.8 4.58 4.56 37.6 4.54 2010 2017 37.4 2010 2017
Source: NBWA industry Affairs, 2018 ABV by Beer Segment 2017 7.0% 6.5% 6.5% 6.0% 5.0% 4.0% 5.4% 5.0% 5.0% 4.7% 4.2% 3.0% 2.0% 1.0% 0.0% FMB Malt Craft Other Regular Import Light
IRI Scan: Total US: Multi Outlet + Conv 12/30/2018 Volume Sales Change vs YA % Change vs YA BEER 1,469,082,136-3,729,563-0.3% ANHEUSER-BUSCH INBEV 696,817,906-15,263,507-2.1% MILLERCOORS BREWING 368,149,746-11,851,173-3.1% CONSTELLATION BRANDS 142,348,482 15,150,185 11.9% HEINEKEN USA INC 50,153,414-3,042,985-5.7% BOSTON BEER CO 28,561,186 4,434,547 18.4% MARK ANTHONY BRANDS INC 22,497,335 4,444,936 24.6% PABST BREWING CO 28,928,122-1,555,424-5.1% DIAGEO BEER COMPANY USA 13,735,058 1,273,551 10.2% D G YUENGLING & SON INC 16,722,439-251,723-1.5% SIERRA NEVADA BREWING CO 7,171,843 83,089 1.2% FIFCO USA 11,132,454-944,740-7.8% NEW BELGIUM BREWING COMPANY 5,525,883-473,052-7.9% THE LAGUNITAS BREWING COMPANY 4,748,144 74,935 1.6% PHUSION PROJECTS INC 4,543,452-314,861-6.5% THE GAMBRINUS COMPANY 4,098,904-168,242-3.9% CRAFT BREW ALLIANCE INC 3,587,619-277,515-7.2% FOUNDERS BREWING CO 3,387,061 929,772 37.8% STONE BREWING CO. 1,753,418 170,544 10.8% BELLS BREWERY INC 1,981,682 71,276 3.7% CANARCHY CRAFT BREWERY COLLECTIVE 1,794,098 213,689 13.5% FIRESTONE WALKER BREWING COMPANY 2,049,306 308,204 17.7% DESCHUTES BREWERY 1,748,468-180,977-9.4% SWEETWATER BREWING COMPANY, LLC 1,866,343 24,879 1.4% ARTISANAL BREWING VENTURES 1,076,672 150,200 16.2% DOGFISH HEAD CRAFT BREWERY 951,349 99,209 11.6%
14.0% IRI Beer Segments Growth CY Ending 12/30/2018 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% DOM SUPER PREM FLAV MALT BEV IMPORT CRAFT DOM SUB- PREMIUM NON- ALCOHOLIC DOM PREMIUM
Access to Alcohol is Expanding! Fast Food Bed, Bath and Beyond Nordstrom's Whole Foods Barbers and Salons Taprooms Movie Theaters Laundromats
Even at The Library
Total U.S. Retail Establishments Selling Alcohol 2008 to 2018 700,000 650,000 600,000 550,000 531,705 536,807 553,458 571,290 585,690 602,757 610,299 625,276 631,699 644,647 644,939 500,000 450,000 400,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: TDLinx Account Tracker Report: Beer, Wine or Spirit Selling Accounts, 2018.
Even as Retail Expands in Virtual Space The Evolution of the Wine Club Amazon Drizly Minibar Klink Saucey Hopsy Total Wine Brick and mortar
U.S. BLS: Establishment Counts 47,000 As New Retail and E-Commerce Expands Traditional Bars and Taverns Close? 46,000 Count of Establishments 45,000 44,000 43,000 42,000 41,000 40,000 2010 2011 2012 2013 2014 2015 2016 2017 Number of Establishments in Private NAICS 722410 Drinking places, alcoholic beverages for All establishment sizes in U.S. TOTAL
20,000 Growth in Alcohol Beverage Wholesalers 2010 to 2018 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2010 2011 2012 2013 2014 2016 2017 2018 Source: U.S. TTB and U.S. BLS/CQEW, 2018
Source: NBWA and TTB, September 2018. TTB Permitted Brewery Count 9,865 Permits as of Sept 2018 State Count State Count State Count Alabama 54 Kentucky 83 North Dakota 26 Alaska 50 Louisiana 48 Ohio 363 Arizona 143 Maine 160 Oklahoma 53 Arkansas 52 Maryland 136 Oregon 376 California 1,204 Massachusetts 225 Pennsylvania 457 Colorado 492 Michigan 500 Rhode Island 33 Connecticut 120 Minnesota 236 South Carolina 92 Delaware 36 Mississippi 19 South Dakota 34 DC 14 Missouri 162 Tennessee 137 Florida 376 Montana 107 Texas 370 Georgia 115 Nebraska 60 Utah 45 Hawaii 34 Nevada 49 Vermont 89 Idaho 85 New Hampshire 105 Virginia 322 Illinois 329 New Jersey 139 Washington 531 Indiana 229 New Mexico 124 West Virginia 31 Iowa 124 New York 520 Wisconsin 298 Kansas 59 North Carolina 374 Wyoming 43
State Count State Count State Count Alabama 2 Kentucky 10 North Dakota 4 Alaska 5 Louisiana 5 Ohio 39 Arizona 13 Maine 29 Oklahoma 10 Arkansas 8 Maryland 20 Oregon 29 California 98 Massachusetts 36 Pennsylvania 46 Colorado 44 Michigan 48 Rhode Island 6 Connecticut 17 Minnesota 22 South Carolina 8 Delaware 5 Mississippi 3 South Dakota 6 DC 1 Missouri 17 Tennessee 17 Florida 38 Montana 9 Texas 37 Georgia 13 Nebraska 7 Utah 6 Hawaii 6 Nevada 3 Vermont 5 Idaho 9 New Hampshire 17 Virginia 35 Illinois 38 New Jersey 16 Washington 32 Indiana 16 New Mexico 14 West Virginia 4 Iowa 9 New York 49 Wisconsin 37 Kansas 6 North Carolina 44 Wyoming 4 Source: NBWA and TTB, September 2018. TTB Permitted Brewery Count 1,002 New Permits Through September 2018
Brewery Permits per 100,000 Residents 2018 LDA Pop (est) State Count State Count State Count Alabama 1.49 Kentucky 2.52 North Dakota 4.76 Alaska 9.48 Louisiana 1.4 Ohio 4.2 Arizona 2.74 Maine 15.35 Oklahoma 1.87 Arkansas 2.36 Maryland 3.01 Oregon 11.84 California 4.12 Massachusetts 4.3 Pennsylvania 4.73 Colorado 11.69 Michigan 6.73 Rhode Island 4.1 Connecticut 4.45 Minnesota 5.74 South Carolina 2.43 Delaware 5.21 Mississippi 0.88 South Dakota 5.43 DC 2.57 Missouri 3.58 Tennessee 2.72 Florida 2.29 Montana 13.49 Texas 1.84 Georgia 1.51 Nebraska 4.36 Utah 2.15 Hawaii 3.16 Nevada 2.16 Vermont 18.64 Idaho 6.87 New Hampshire 10.1 Virginia 5.09 Illinois 3.49 New Jersey 2.06 Washington 9.47 Indiana 4.72 New Mexico 8.13 West Virginia 2.25 Iowa 5.41 New York 3.47 Wisconsin 6.92 Kansas 2.83 North Carolina 4.87 Wyoming 10.28 Source: NBWA and TTB, September 2018. US Average = 4.1
TTB Brewery Permits Issued Per Day 2010 to YTD September 2018 5.0 4.5 4.6 4.3 Permits Issued Per Day 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.6 1.0 1.6 1.7 2.8 3.1 3.0 3.5 3.4 0.0 2010 2011 2012 2013 2014 2015 2016 2017 18 Q1 18 Q2 18 Q3 Source: www.ttb.gov/beer/beer-stats.shtm and NBWA Industry Affairs, 2018
Small Business Administration Cumulative $1.5 Billion in Loan Approvals/Guarantees since 2009 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 In Addition: 1. Eliminated FET Bond Requirement 2. Reduced Paperwork and Tax Filing (annual) 3. Reduced FET to $3.50 (CBMRTA) 4. Reduced state taxes 5. State and local economic development support 6. Expanded retail and self distribution privileges 7. All = more new entrants on horizon $50,000,000 $0 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Brewing Distilling Whining
Lester Jones, Chief Economist National Beer Wholesalers Association ljones@nbwa.org Twitter @joneslester THANK YOU