New brands accounted for 12.6% share of total beer brands in the last 52 weeks (ending February 25), but only 1.2% of total beer dollar sales in NielsenIQ-tracked off-premise channels, indicating a lack of “innovation efficiency,” according to Bump Williams, president and CEO of Bump Williams Consulting (BWC), in the company’s monthly industry update.
The hard seltzer and craft segments were some of the “most egregious offenders,” posting the widest gap in SKU share and dollar share. New hard seltzer brands accounted for 13.6% of total hard seltzer brands in the period, but only 2.9% of segment dollar sales, while new craft brands accounted for 12.9% of craft brands and 2.5% of dollar sales. New brands in “flavor-forward segments” such as cider (8.6% share of brands, 4.3% share of segment dollar sales) and flavored malt beverages (18.2% of brands, 6.9% of dollar sales) “come the closest to a balanced ratio, but even those are 2:1 at best,” Williams wrote.
“Now, this is always the gamble with innovation and it is an almost impossible task for any new brand to become an overnight juggernaut, but with life cycles getting shorter (12 months) and beer feeling the squeeze from other beverage alcohol categories when it comes to shelf space, it has become more important than ever to focus on efficiency when it comes to adding new items to the shelf,” Williams added.
Anheuser-Busch InBev (A-B) was the No. 1 contributor of new brands, with 87 introduced in the past year, followed by Molson Coors (56) and Boston Beer Company (47). While this isn’t surprising, as A-B, Molson Coors and Boston Beer are also within the top-five beer manufacturers, what is “a bit more unexpected” is how many fewer new brands the other top-five manufacturers Mark Anthony Brands (21) and Constellation (14) launched last year, suggesting a more focused innovation approach, according to Williams.
The rest of the top 10 is rounded out by (in order): Phase Three Brewing, Boulevard Brewing, Sazerac Company, Drekker Brewing, FIFCO USA, Duvel Moortgat and Diageo.
Williams also analyzed how “efficient” top beer producers’ innovations were in the period, calculated by dividing a manufacturer’s total dollar sales in NielsenIQ-tracked off-premise channels, by its total number of new brands.
Marky Anthony was the most efficient manufacturer of the top 100 suppliers, followed by Brown-Forman, Molson Coors and Constellation Brands, indicating the possible success of a more focused innovation approach. A-B ranked No. 10 while Boston Beer was No. 21.
New Belgium made it to the top-five, despite not even making the top-30 list of most new brands. Cider also represented on efficiency, claiming six of the top-30 spots on the list, including Golden State Cider, Incline Cider Co., Blake’s, Forbidden Fruit Ciderhouse, Bold Rock and Schilling Cider.
“We believe that adding more SKUs to an already overcrowded shelf and confused consumer oftentimes leads to the deterioration of that brand’s health and velocity on the shelf,” Williams wrote. “I truly believe that we have thoroughly confused the consumer with too much variety and assortment within portfolios today, that all we do with ‘innovation’ is switch a loyal buyer from one brand within our portfolio to another flavor without generating any new purchase occasions or increased turns/velocity at retail.”
That confusion may have also trickled down to retailers, as the rollout of spring resets has been “deliberately slow.”
“There is a lot of concern on the part of the retail community in the decisions that were made at the end of 2022 in terms of adds/deletes [that] are in a ‘holding pattern’ to see how price increases, legislative changes re: RTD [ready-to-drink] beverages, cannabis availability, the overall economy, and certain new product launches are faring,” Williams said. “This has to be the slowest I’ve ever seen spring sets get rolled out in my 43 years in the business.”
The expected “winners” this spring, according to Williams, include:
- “Anything that is (quality) flavor forward/flavor first;”
- “Anything with the word ‘Modelo/Corona’ on it;”
- New Belgium’s Voodoo Ranger brand family;
- A-B’s Michelob Ultra;
- Spirits-based RTDs;
- Boston Beer’s Twisted Tea;
- Mark Anthony Brands’ Mike’s Hard Lemonade and White Claw Hard Seltzer;
- Single-serve, “especially if it’s a 19.2 oz.;”
- Higher ABV offerings;
- And “non-alcoholic/better lifestyle characteristics.”
“The fight for keeping your shelf space, never mind expanding your space at retail will be the true battleground in the future … and the future is today,” Williams said. “My guess is that with legislative changes leveling out the availability of spirits-based products in beer/wine only stores is going to happen sooner rather than later, then the shelf space enjoyed by beer and in some cases wine, will have to make room for all of those spirits brands vying for their fair share of facings and pack-out.”