Commentary on the US Beer Market 2009 results and 2010 thoughts…

I’d thought I’d share some thoughts on the US beer market based on the 2009 results (starting to be published broadly) and my own insights calling on the distributors and retailers at Pelican Brands representing  Singha Beer.

First, the 2009 beer market was characterized by tough trading conditions overall, consumers trading down from a number of brands while pockets of specialized growth in the craft/better beer segments and certain “newer” imports. Most beer distributors continued to benefit from cost containment (not importantly led by decline in fuel costs from 2008), price increases in 2008 and continued consolidation.

Beverage World published their analysis this week.. it begins:

Craft Beer Sales Skyrocket
Tuesday, 26 January 2010 10:57

ST. LOUIS — Beer sales shot up 36 percent last year at O’Fallon Brewery, a microbrewer located in an industrial park off Interstate 70 in O’Fallon, Mo. And yet, there was disappointment.

“We had hoped it would be a little bit higher,” said Fran Caradonna, who with her husband owns the maker of brews such as 5-Day IPA, Cocoa Cream Stout and Pumpkin Beer.

Caradonna’s reaction might sound surprising. Last year was horrible for U.S. beer sales. Shipments were down 2.2 percent from 2008, the worst single-year decline since the mid-1950s, according to trade publication Beer Marketer’s Insights.

But the pain was not shared equally.

The big boys took the hardest hits. Anheuser-Busch was off 2.1 percent nationwide. MillerCoors was down 1.9 percent. Both companies combined represent almost 80 percent of the U.S. market.

At the same time, craft brewers saw shipments leap almost 9 percent. They added capacity. They tapped new markets. At O’Fallon, for example, brewing was outsourced to increase production, and the company’s beer made its debut in Springfield, Mo. Other brewers mapped out future expansions. Some even hired people — notable in an industry that has been making headlines with layoffs.

And two craft brewers, Boston Beer Co. and Yuengling of Pottsville, Pa., managed to do so well in 2009 that they are now too big to be called craft brewers (defined as producing fewer than 2 million barrels a year).

“The trend is towards flavor, innovation and localness, which craft is playing on,” said Benj Steinman, president of Beer Marketer’s Insights.

Craft brewers — made up of regional brewers, microbrewers and brewpubs — still occupy a small niche, hundreds of brewers who together add up to about 4.7 percent of the U.S. beer market. But the stouts, porters and ales that once found the fancy of just beer snobs have discovered a broader audience in recent years. And 2009 might prove to be the breakout year…”

For complete story click on Beverage World here

So, let’s get this straight… all the major brewer premium brands down (on huge volumes), major shifting to off premise from the on premise (people drinking at home more than at bars) and major growth among key crafts brewers.  In the imported market, Heineken and Corona the two leaders, both suffered significant declines.  That said, brands like Stella (the priority for AB Inbev) and Singha Beer (newly energized by Pelican Brands) showed significant growth.

2010 Expectations…

A continuing tough market for mainstream brands.  Continued fragmentation of consumer interests that drive the “better beer” category – including crafts and imports.  This is a great time to be a beer consumer as the selection and quality of beer has never been as great.  It is a great time to be an entrepreneur in the beer business in spite of consolidation among the big boys.  It I look forward to sharing our experiences in activating the Singha brand along with some other premium import and craft beers we will be adding to the Pelican platform this year.  Stay tuned…

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