Beer’s battle for shelf space is nowhere near over, according to data from Bump Williams Consulting (BWC), shared by president Dave Williams earlier this month during Beer Business Daily’s Beer, Wine and Spirits Summit in Palm Beach, Florida.
Beer has fought to keep its shelf space, working against calls for more beyond beer offerings. However, the number of beer SKUs have now been cut for the second consecutive year as space continues to shrink, according to Williams.
Total beer SKUs at off-premise retailers declined -6% in 2024, to just over 35,000, Williams shared, citing NIQ data through December 28, 2024. The contraction follows a -3% decline in 2023, to more than 37,000 SKUs.
The largest cuts came from hard seltzer, which saw its SKUs reduced by -12% in 2024, followed by craft and imports (-6%, each).
New SKUs entering the market are declining at an even more rapid pace. In 2024, new beer SKUs declined -19.9%, to 3,542. That followed a -17.3% decline in 2023, to 4,424.
Similar to total SKU trends, hard seltzer recorded the largest year-over-year (YoY) decline in new SKUs (-40%), followed by craft (-23%) and imports (-12%).
Tides could also be shifting for hot segments such as flavored malt beverages (FMBs) and spirits-based, ready-to-drink cocktails (RTDs). Total FMB SKUs were flat in 2024, but new SKUs declined -15% versus the influx of new offerings in 2023. Similarly, total spirits-based RTD SKUs increased +7% in 2024, but new SKUs declined -28%.
SKU cuts have become a necessity as shelf space shrinks for nearly all beer segments, and retailers continue to prioritize trending segments such as NA beer and RTDs.
The average number of beer items on shelf per off-premise location declined -1.4% YoY in 2024, to 234.5 items.
Two beer segments gained shelf space – FMBs (+6.9%, to 40.6) and imports (+2%, to 44.8) – which were outweighed by all other beer segments recording a decline in average number of items, including:
- Hard seltzer (-11.4%, to 17.9);
- Craft (-4.6%, to 57.9);
- Hard cider (-3.6%, to 8.3);
- Premium (-2.3%, to 34);
- Super premium (-1.4%, to 17.6);
- And below premium (-1.2%, to 18.9).
Meanwhile, NA beer (+16.2%, to 10 items), wine cocktails (+10.8%, 14.3) and spirits-based RTDs (+9.4%, to 48.2) all recorded gains.
“Everyone’s getting a little smarter about space being finite,” Williams said. “You gotta focus on the must haves versus nice to haves, and so the number of new brands hitting the shelves is not a firehose of new anymore.
“And I’m not suggesting innovation is going away or it should go away – it’s a vital part of the business,” he continued. “It’s just getting a little bit more controlled. And some of the space that maybe would have gone to those new products is instead being allocated to fast-moving proven winners on the shelves at retail across the country.”
Continued beer reductions are expected in 2025 and 2026, according to the results of BWC’s annual survey of manufacturers, distributors and retailers. Williams ranked the top 10 growth strategies and priorities from the three tiers.
Distributors and retailers aligned on consolidation. Distributor respondents’ third highest priority was reducing brands and SKUs, and No. 8 was reducing beer inventory, while retailers’ fourth and fifth highest priorities were eliminating duplicate SKUs and being “selective” with innovation additions, as well as the reallocation of selling space (ranked No. 8), Williams shared.
Additionally, both groups are looking at increasing their participation in total beverages. Distributors’ No. 1 growth strategy for the coming years is expanding their total beverage portfolios, according to survey respondents. No. 10 is increasing total beverage training.
Other distributor strategies include:
- No. 2 Assess M&A opportunities;
- No. 4 Succession planning;
- No. 5 Account segmentation;
- No. 6 Research Delta-9/THC;
- No. 7 Expand industry presence;
- And No. 9 Expand Hispanic portfolio.
Retailers’ strategies and priorities beyond SKU reduction include:
- No. 1 Manage pricing and promotion;
- No. 2 Market basket value and composition;
- No. 6 Health and wellness and NA merchandising;
- No. 7 Analysis of shopper demographics;
- No. 10 “Value packages.”
Suppliers are recognizing that distributors’ and retailers’ priorities require action on their part, and some are adapting, including:
- No. 4 Adding NA offerings to their portfolios;
- No. 5 Exploring Delta-9 and THC;
- No. 8 Continued innovation;
- And No. 10 Protecting space at retail.
However, manufacturer growth strategies are more focused on business efficiencies, including partnering with other industry members, with “find a strategic partner” listed as the No. 1 priority of survey respondents.
“Efficiency makes a lot of sense when you think about struggles on that collective [beer] volume,” Williams said. “Manufacturers are willing to invest in the reality that they’re dealt with, and work together to try to combine success.”
Other top strategies for the next two years include:
- No. 2 Control expenses;
- No. 3 Fix core brands;
- No. 6 Manage price and promotional mix;
- No. 7 Distributor execution;
- And No. 9 Operation efficiencies.