Biggest beer biz story of 2012 has gotta be volume rebound. After dropping 8.4 mil bbls, nearly 4%, from 2008 to 2011, US beer biz bounced back big time with what's shaping up as 1%+ gain in 2012, barring unlikely Dec meltdown. Brewer trends, scanner data and state shipments all support modest gain scenario. (See above.) At same time, pricing/trade up have been healthy all yr, tho relatively small price hikes showin' up in Q4 scanner data so far. AB's rev/bbl up about 5% for 9 mos, MC's up about 4%. So, while beer probably lost share of volume to wine and spirits again in 2012, it's doin' better on share of $$.
Volume gain driven by innovation by big brewers, especially AB, solid yr for imports and continued craft strength. Craft segment likely up double-digits again in 2012 on base of approx 12.25 mil bbls. And as reported last issue, Bud Light Platinum and Lime-a-Rita combo grabbed about 2.5 mil incremental bbls in 2012. Sure, some of that came out of Bud Light/Bud, but best innovation yr for AB since Bud Light Lime hit in 2007. MillerCoors was laggard in 2012; looks like it will be only big supplier down for yr. Both AB and MC have new brands/tweaks galore comin' in 2013. How much volume innovations can add next yr could be key to overall volume strength. Meanwhile, Crown, HUSA, Pabst each up mid-single digits. They and others will be focused on putting up positive numbers again in 2013. Tho many see shakeout coming in craft, with basically a new player joining the mkt every day, no one expects sharp slowdown in overall craft trend anytime soon. Net-net: too early to say 'happy days are here again' perhaps, but 2012 a huge improvement.
The other biggest story in 2012: lotsa distrib deals, with flurry at end of yr as sellers anticipated tax hike next yr. (See below for details.) Mega distribs got more mega and more approaching mega status (around 15 mil cases). Tho many, including us, expected more craft brewer deals, they didn't happen. Plenty of self-proclaimed buyers out there, from Tenth and Blake to private equity and more, but prices are high, owners apparently not anxious to sell and for now, still plenty of growth on horizon. (One factor that could be slowing craft deals, especially fairly large ones: distrib footprint issues. Buyers are wary of taking on too many new partners.) More popular among craft brewers in 2012: building new breweries back east, with Sierra Nevada, New Belgium, Oskar Blues and Lagunitas each announcing plans for new plants.
Among big suppliers, biggest deals still pending: ABI-Modelo-Constellation and NAB's private equity owners selling out to Costa Rican brewer. Lotsa speculation in recent mos about Dept of Justice seeking possible "structural remedies" in proposed deal to approve AB-Modelo-Constellation, with a coupla DC think tanks criticizing deal and craft brewers voicing concerns about how it could threaten distrib oppys. But no hint yet from DoJ and principals continue to express optimism. See below for Constellation/Crown comments. Click here for some detailed articles on the speculation about what DoJ may or may not do.
Tho storms calmed by year-end, lotsa tension between suppliers and wholesalers again in 2012. The epic MC-Chesbay-Reyes saga got resolved, but not before many rounds of nastiness and erosion of trust throughout MC network. Similar issue, whether supplier free to pick its distribs, still bein' fought out in pending court case between Yuengling and All Star dist in Pennsy. That lawsuit held up big Pennsy deal that was announced this time last yr. Still unclear whether that case will go to trial or be settled. Meanwhile, in years-long battle, AB able to hold on to 30% stake in Chi's City Bev, but again, lots of negativity surrounded it. On top of that, logistics, margin and "alignment" issues continue to strain relationships between AB and its distribs. But, as AB NA prexy Luiz Edmond reminds, AB has made its positions clear and relations have improved. Craft brewers also getting more demanding of distribs, lookin' for easier exits/self-distribution and some state law exemptions. That's led to some interesting legislative and legal tussles, likely to continue into the New Year.
So, as 2012 ends: a welcome volume trend change, healthy dollar sales and, by most accounts, record-high levels of profits and distrib sale prices. No doubt 2013 will have its challenges, from tuffer comps to tax and other legislative/legal battles. But more of the same volume/profit trends would be welcome.
2012 in Review, 2013 in Sights; Will Volume Rebound, Craft Momentum Continue?
Publishing Info
- Newsletter: Beer Marketer's INSIGHTS
- Published: 12/11/2012
- Volume: 43
- Issue #: 23