The future is purchased by the present..

Do products or breweries have a life cycle, or does a brand manager have the life cycle?  Perhaps it is not the brand manager, but it is the CEO or Board of Directors that has a life cycle?  Ask the many regional brands from 50 years ago, or ask Schlitz or Coors about life cycle.  Yes, even Coors.  What happened to these fast growing and popular beers who hit the skids and either died or became a memory?

Schlitz and Coors were riding high in the 1970s, but then crashed.  Budweiser and Miller Lite took off like a rocket and maintained that momentum for many years.  Miller slowed some years ago. Budweiser, well we know that story and what has happened the last ten years.

We have seen brands and breweries come and go.  It is inevitable, and is once again happening.  The recent numbers from California indicate there is another brand coming to an end.

Thru the first half of the year, Constellation brands were up +14%, while AB and MC were down three percent.  What makes these numbers even more astonishing is the fact that AB and MC depletions were down seven percent and between five/six percent, respectively.  It has been estimated that both companies have lost 10% of their business in the last two years.  It could mean a total loss of up to 800,000 bbls. this year!  This finding is astonishing considering that 20 years ago, AB and MC had 85% of the California market.  This year they will come in at 50%, a drop of -35%.  AB has lost over 2.5 million bbls.

Through the 7^th of October, in the state of California, Constellation has surpassed AB in terms of dollars.  In dollars, Constellation is now the number one brand in off-premise scan data!  Constellation has jumped 11%, and its share rose +2.9%, while AB numbers have dropped seven percent with a share loss of almost two percent, falling to 26%. This is verses 26.9% held by Constellation.  Consider the magnitude of the losses given that AB owns Michelob Ultra, a hot brand.

What is even more remarkable is that there are over 850 craft breweries in California!  In San Diego alone, there are 150 tap rooms possessing an estimated six percent share of the on-premise market!  Further impacting the market is the fact that that five of the top 10 crafts are down, with four of these crafts down double digits.

Does California, in 2017, look like the other states in 2020? Will Constellation be the dominate brewery along with hundreds of craft breweries and taprooms?  Will AB and MC continue to lose market share?  Will Constellation dominate the chain real estate?

Unless something very out of the ordinary takes place, the US beer industry should take notice of California, if they have done so already.  A wholesaler with Constellation brands is sitting pretty, but if not, then what?  Consider this scenario:  Constellation attains a 50% share of a major market, add in the taproom craft business, along with the business from other crafts.  How much, then, is left for the non-Constellation wholesaler?

There is much speculation in regards to the craft breweries and their future survival.  Perhaps there should be a similar discussion on the future of non-Constellation wholesalers?  If the trends in California continue and spread across the country, these wholesalers could follow distributors of the past,     Distributors like Schlitz and Coors, to name a few, who have come, and sadly gone.  Consolidate or become a minor player.

The future is purchased by the present…