An analysis of the top 150 craft suppliers found those with more focused portfolios are posting “stronger trends and outperforming their competitors,” according to Bump Williams Consulting’s latest craft report.
“Of course there will always be exceptions on an individual basis, but from what we have seen over the latest 52 weeks [ending June 22], perhaps right now ‘less’ could end up being ‘more’ as it relates to the craft beer business,” the firm wrote.
Focus and where to channel it is an area of the business fully within these companies’ control, Bump Williams Consulting continued.
“This is not to say that craft suppliers shouldn’t consider expanding into other categories, segments, or styles, or continuing to develop new products,” the firm wrote. “It is, instead, to say that it’s clear from this analysis that focusing on your core business remains critically important and is a great place to start.”
In his first report since joining the firm, chief strategy officer Dan Wandel examined “the importance of focus” for category expansion, style diversity and/or priority, portfolio depth and role of innovation among the top 150 craft suppliers
The report examines the top 150 craft suppliers based on NIQ volume sales data for the last 52-week period ending June 22, and analyzes their portfolio performance to assess their level of focus and the impact on its core business.
The analysis excludes Molson Coors, Anheuser-Busch InBev, Boston Beer Company, Heineken, Monster, Hornell Brewing (maker of AriZona Hard Iced Tea), Constellation Brands, United States Beverage, August Schell and Central Beer Import/Export due to craft not being the largest share of their total portfolio volume sales. Those 10 suppliers’ craft cases declined -9.2% in the 52-week period and -9.6% year-to-date through June 29, the firm reported.
Also excluded was Athletic Brewing due to Bump Williams Consulting’s belief that the non-alcoholic beer maker’s “reach” goes beyond the craft beer drinker and sources its volume from across total bev-alc.
After those exclusions, the remaining 150 craft suppliers account for 83% of total craft sales and collectively are showing moderate declines in volume sales over the last 52-week period (-1%) and year-to-date in 2024 (-2.4%).
Five metrics were used to analyze the 150 craft suppliers’ core business:
- Category diversity beyond “traditional craft beer;”
- Number of craft style offerings with products selling;
- The significance of IPA to their total craft volume;
- Total number of items (UPCs) selling greater than 10 cases;
- Number of new craft items selling more than 10 cases.
The 66 craft suppliers exclusively selling in craft beer grew their case volumes (+1.9% compared to a year ago) and outperformed other suppliers collectively, Wandel wrote, citing NIQ total U.S. off-premise data for the 52-week period ending June 22.
Even as those focused on craft alone posted growth, the number of craft suppliers getting into flavored alcoholic beverages or traditional beer and spirits, has increased +40% to 84 suppliers, up from 60 in 2020. The firm noted that the increase is probably “conservative” due to not including own-/on-premise channels, control states or small and independent outlets that aren’t captured in scans.
The 18 suppliers who added non-alcoholic beer collectively declined -10%, while the 66 suppliers who entered flavored alcoholic beverages collectively declined -1.1% in NIQ scans for the 52-week period ending June 22, Wandel wrote.
Looking at the number of styles being offered, the firm found that “suppliers who are selling the fewest number of craft styles [six or fewer styles] are experiencing collective growth in their volume sales (+4%),” Wandel wrote.
Those offering seven to 10 craft styles collectively declined -3% in the 52-week period ending June 22, while those selling 11 or more craft styles dropped -1.5%, Wandel wrote.
“Once again, the results point to greater focus correlating to stronger volume sales trends,” he added.
Zeroing in on craft’s dominant style IPA, which accounts for 46% of total craft case sales, the 42 craft suppliers in the top 150 with IPA making up two-thirds of their total case volume or more, collectively grew +5.2%. On the flip side, the 108 suppliers whose IPA business make up less than two-thirds of their portfolio declined between -2.7% and -5.4%.
“While portfolio diversity is a staple of craft beer, these trends could suggest that in tougher times it may be in a supplier’s best interest to maintain a focus on ‘fishing where the fish are,’” Wandel wrote.
Retail shelf space is also “tightening up,” making it difficult for any “supplier to secure multiple facings outside of perhaps their home markets.” The average number of craft UPCs selling among the top 150 craft suppliers was 51, which is inflated by rotational/special releases and diversity in package formats.
The 66 craft suppliers with fewer than 30 UPCs selling over the 52-week period ending June 22 was the only group to grow volume sales (+4.7%). The rest – suppliers with 30 to 59 UPCs selling and those with more than 60 UPCs – shed volume.
“Yet, another example of how less can be more with the craft suppliers and more evidence of focus winning in the market,” Wandel wrote.
Finally, the firm examined innovation from the 150 craft suppliers over the first six months of 2024. The average number of new craft items sold was 3.2. This also showed that the 52 craft suppliers with the fewest number of new items – fewer than two new products – collectively posted +1.7% growth.
Those with two or more new offerings posted declines, with the 48 suppliers with two to three new items declining -5.7% and those with four or more new products declining -2.6%.
“While innovation very much remains a useful tool that can be leveraged by craft suppliers (or anyone competing in the beverage-alcohol business) to find new ways to connect with their consumers, the results here further drive home the narrative that balancing (focusing) the core against innovation could yield a more stable outcome for the long-term,” Wandel wrote.