Jan 082019
 

A review of the past fifty years reveals that there were years which not only defined a product but also changed the industry.  In 1975, after several years in test markets, Miller Lite was launched nationally.  This brand was not only successful, but its introduction created an entirely new category of beer.  Even in today’s market, the light segment remains the most viable.

In 1983, Corona transformed its bottle from a short, stubby brown container to the current clear longneck.  That alteration alone was the most successful package change in the history of the beer industry.  Corona’s victory drove the growth of Modelo Especial and all other Modelo products.  1983 was another defining year for the beer industry.

Five years later, in 1988, the craft segment secured its future with the founding of Rogue, Deschutes, Great Lakes, Brooklyn, Goose Island, North Coast, and Wynkoop breweries.  These breweries and others including Anchor, Boston, and Sierra Nevada have fueled a segment that has again transformed the beer business.  Such successes have led the industry to a record high 7,000 operating breweries.  During the last thirty years, the craft segment has provided wholesalers with the opportunity to add volume and margins while simultaneously solidifying their future.  Crafts have also enabled wholesalers to be less dependent on their main suppliers.

In 1999, AB tested a product in Florida which they believed would resonate with Baby Boomers.  That product was Michelob Ultra.  Twenty years later, Ultra is, and has been the industry’s fastest growing product and shows no sign of slowing down.  The lower ABV and carbs, tied to an active lifestyle, transcends all segments and demographics.  Craft brewers, now realizing the volume potential of the lifestyle segment have jumped on board with their offerings of sessionable beers.  Again, 1999 defined a growing and changing industry segment.

The next defining year in the beer business may well be 2018, given the impact of alcoholic waters and seltzers.  End caps, displays, and shelf space of local retailers are becoming more dominated by these products.  Investment money, from both inside and outside the beer industry, is pouring into this segment.  Seltzers with low ABV, low carbs, low calories, and soon, no carbonation, along with organic and natural ingredients have hit the mark with the Millennials.  Many in the industry see this segment as a short-lived one.  Many suppliers, however, do not see it that way. Boston Beers ’Truly, is planning to double their 2018 volume for 2019.  In fact, Boston Beers recently announced that their wholesalers are already building Truly inventory.  Expect other major suppliers to build inventory in anticipation of substantial growth.

Millennials believe spending six dollars or more for a Starbucks’ cappuccino is worth every penny, yet this same group will cut the cord for cable providers as they see no value in a cable.  Likewise, Millennials will spend the money on an 11.2-ounce seltzer as it fits their lifestyle.  This in itself will define the seltzers category.

Years from now the industry will look back on 2018 as a year that defined industry standards, as did 1999, 1988, 1983, and 1975.

Every new beginning comes from some other beginnings’ end.

 

 Posted by at 7:00 am

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