Editor’s Note: 3 Up, 3 Down with 3 Tier Beverages is a quarterly insights series available to Brewbound Insiders, via the Chicago-headquartered, beverage-alcohol-focused consulting and data firm.
In this latest installment of 3 Up, 3 Down, 3 Tier consultant Danelle Kosmal shares a trio of insights on industry growth and three underperforming areas during the summer selling season, with NIQ off-premise data through August 10, 2024.
THREE UP
Non-Alc Beer Drives Overall Bev-Alc Growth
Non-alcoholic (NA) beer is one of the fastest growing segments in beverage alcohol for this summer. Over the past 13 weeks ending August 10, NA beer sales surged by +26.5% in NIQ-measured off-premise channels. This growth is attributed to both new brands launched in 2024 and established favorites.
Milford, Connecticut-headquartered Athletic Brewing continues to be a major driver, with sales increasing by +58% and contributing 28% to the overall growth of non-alcoholic beer. The second largest contributor to growth was Molson Coors’ Blue Moon NA, followed by Heineken 0.0, Corona NA and Sierra Nevada’s Trail Pass brand family, which together account for nearly 60% of the total growth in non-alcoholic beer.
As brewers seek additional opportunities for growth in the no-alcohol segment, it is unlikely that they will find through distribution gains, as the segment has more than its fair share of distribution points compared to its total dollar share of the category. Continued growth most likely will come from an increase in occasions and purchase trips from drinkers.
4th Category Bright Spots
Pockets of beyond beer are growing. Within beyond beer (or the fourth category), segments frequently shift in their growth dynamics year by year. Currently, hard tea and hard coffee are the growth leaders for beyond beer, with the most recent sales up +17.2% and +9% respectively during the 13-week period ending August 10.
Boston Beer’s Twisted Tea and Mass. Bay Brewing’s Dunkin’ Spiked lead as top growth contributors to hard tea and hard coffee. Other strong growth contributors include New Belgium Voodoo Ranger HardCharged Tea, AriZona Hard Iced Tea and Monster’s Nasty Beast.
The convenience channel has been a natural fit for these segments, accounting for 40% of overall hard tea dollar growth in NIQ off-premise channels.
Price increases for hard tea have been minimal in c-stores, up +2.7% compared to the same 13 weeks last year. However, price has been even more stable across all outlets, up only +1.7% from last year, and in line with total category price increases.
Value-Priced Spirits on the Up
Spirits’ value price tier is growing in dollars and volume. For the 13 weeks ending August 10, the value price tier in spirits grew by +0.3% in both dollars and volume across NIQ off-premise channels.
Growth was slightly higher in the liquor channel (+1.5%) the most important channel for spirits, as well in convenience stores (+2.7%), where the spirits category has a small but emerging presence. Spirits’ value tier growth in liquor and c-store was able to offset declines in the grocery channel (-2.3%).
Despite slight price increases (+1.2% in liquor channel and +2.3% in c-stores), which have surpassed those of the total spirits category in these same channels, volume trends for the value price tier remain stable, suggesting that these price adjustments have not significantly impacted consumer purchasing patterns.
THREE DOWN
High-End Spirits …. Kind Of
Growth and performance of high-end spirits is mixed. The super premium segment has declined by -5.2%, while the ultra-price tier remains positive but with slowing growth — up +5% over the latest 13 weeks and slowing to just +2.5% over the most recent four weeks ending August 10.
These trends are for total spirits, but different dynamics emerge when we dig into high-end price tiers in specific categories. For example, ultra-priced whiskey (-3.3%) is the primary driver of high-end growth slowing, and is contributing to nearly 80% of declines across ultra-priced spirits.
On the other hand, ultra-priced tequila grew +20.1% compared to last year. This segment alone continues to drive nearly all the growth of ultra-priced spirits in NIQ-measured off-premise channels.
The dynamics are quite different in the super premium price tier (the second highest price tier in spirits, following ultra), with super premium whiskey up +1.4% and super premium tequila down -6.3%.
These divergent trends illustrate the importance of fine-tuning pricing strategies for these two critical categories in spirits.
Hard Seltzer, Lemonade and Kombucha Dragging 4th Category
Beyond beer is down -3.2% in dollars and a bit more in case volume (-3.3%). Hard seltzer (-11.0%) continues to drive the majority of beyond beer’s negative trends, accounting for 80% of declines.
However, hard lemonade (-13.3%) and kombucha (-17.2%) are also in the red, but with much smaller contributions to the total decline compared to seltzer. Hard seltzer remains slightly over-SKU’d, holding approximately 8.2% of beer/malt distribution points, but accounting for slightly less of total beer/malt dollars (7.5% dollar share in NIQ off-premise channels for YTD ending August 10).
It is important to note that while the total seltzer segment is down, there are still strong brands that are of great interest to consumers. As the largest brand in seltzer, Mark Anthony Brands’ White Claw grew in dollars for the latest 13 weeks and remains in the top 10 brands of the total beer/malt category. Additionally, Boston Beer’s Truly Hard Seltzer remains within the top 15 brands in the category.
Table Wines from Portugal Slump After 2 Strong Years
After two previous summers of growth for Portuguese table wine in the U.S., the segment is now in slight decline in off-premise channels, down -2.4% compared to last year.
Note from Danelle: Yes, Portuguese wine is a small player across the total wine category, but Portuguese white wine is a favorite summertime drink in my household, so I wanted to see if we were drinking on trend or not. Declines in Portuguese table wine in the U.S. are driven by several different varietals, but primarily from rosé and red blends.
Portuguese Cabs and Tempranillos are still growing, along with my summer favorites – vinho verde and albarino/alvarinho. (If anyone would like to know where to find vinho verde in Tokyo, I’ve got some tips.)