Recently published IRI data for Portland, Oregon shows craft beers at a 49% share of market! Along with crafts, imports are at 11% and ciders at 6% share. High-end beers are at an amazing 66% share of market! By the end of 2015, total high-end beers will be well over 70% share. Obviously, the domestic premium beers are the brands taking the big loss in sales.
When I left Coast Distributors of Portland in 1990, crafts were just over a 1%, and Coors light, which was our largest selling brand, had just attained 11% share of market. Not far behind was our Pabst product, Hamm’s, which sold over 2 million cases. Now, in just 25 years, the market has flipped.
This January, ABI agreed to purchase Morgan Distributing in Portland. Morgan services a portion of the three- county market of the city. Maletis Distributing, who services the remainder of Portland, had made an offer to Morgan, however, ABI choose to match the offer. ABI will now add Morgan to Western Beverage. This will give ABI control over 70% of the AB volume in the state of Oregon.
Between 2008 and 2012, AB brands have lost 137,000 bbls. in Oregon resulting in a -3.6% share of market. Maletis and three other small ABI distributors are now the only independent wholesalers remaining in the state. Unlike the ABI operations, however, Maletis has a large portfolio of crafts including Heineken. Columbia, formerly Coast Dist., has MC and the Modelo portfolio, in addition to a number of crafts. ABI also owns the AB operation in Seattle and competes there against Columbia, who also has large operations in Washington.
In 1970, Schlitz shipped 15 million bbls. of beer, and continued selling at a similar volume a decade later. Subsequent years have seen a decrease in the downward spiral of sales. By the time Stroh Brewing Co. acquired Schlitz; many Schlitz wholesalers had, or were in the process of selling out. Some wholesalers bought the local Coors house, but many did not see a future and decided to sell while their distributorship still had value.
Early 2013, shipment numbers indicated AB has lost 10.325 million bbls., or approximately -4% share of market since 2008. AB has dropped to its current market share of 46% from a high of 50%. MC has lost 7.3 million bbls., -11.3%, in the same time period. In just four years, the two breweries have lost more in volume then Schlitz sold as the number two brewery in the US while experiencing their peak year in 1970!
The question going forward is, can the industry look at Oregon and see what is coming? AB wholesalers who did not expand their portfolio’s years ago as Maletis did, are watching their market share drop. Will the AB distributors do the same as the Schlitz wholesalers did and sell out at a premium before they, too, lose additional market share? ABI might see buying these houses as the only recourse to save their remaining market share. To ABI, their ownership in these distributorships is a better option than consolidating AB with multi-brand houses.
Recently Dr. Pullman, who heads up Portland State’s The Business of Craft Brewing online program, asked, “Have we reached the tipping point in Portland with crafts?” The answer to that would depend upon from which side one views the problem. Meaning, is it the beginning of the end or the end of the beginning?