2020’s First Half: Large Breweries Maintain Share; Can Popularity Soars; Hard Seltzers Grow Share

In a time when off-premise beer sales top $1 billion weekly, without the on-premise half of the trade, the beer industry still has “a hole to dig out of,” National Beer Wholesalers Association chief economist Lester Jones said during a webinar presented by invoice tech firm Fintech.

The full effect nationwide closures due to the COVID-19 pandemic has yet to be felt, and will likely rear its head in the second half of 2020.

“We have to do something to protect the hospitality industry — we’re talking millions and millions and millions of jobs are at stake,” Jones said. “We haven’t begun to see the bankruptcies and the closures in restaurants and bars and taverns that are going to unfold.”

Below are highlights from Jones’ presentation.

Large Brewers’ Market Share

Even with the pandemic upending the beer industry, market share for Anheuser-Busch InBev, Molson Coors Beverage Company and Constellation Brands has held steady so far in 2020, Jones said. A-B products year-to-date account for 42.3% of the market, up 0.3% from 2019. Molson Coors’ share declined 1%, to 23.7%, and Constellation’s share increased 0.4%, to 10.2%.

However, market share has fluctuated more for the next tier of producers, particularly for those who produce hard seltzers. White Claw maker Mark Anthony Brands’ share increased nearly 2%, from just over 2.5%, to just under 4.5%. Truly Hard Seltzer maker Boston Beer Company’s share increased almost 0.5%, to just under 3.5%. Heineken USA’s share declined almost 0.5%, from 4% to just over 3.5%. Share of other producers in the tier — Pabst, Diageo, Yuengling and FIFCO USA — held steady, increasing or declining about 0.25%.

“It’s like watching a horse race — we’ll go back and forth over the course of the year, ‘til we get to the end of the year and we get to see what the final numbers are,” Jones said. “It is interesting to see that red bar for Boston and Heineken… Depending on how aggressive Boston is with its portfolio, [it] may actually get to overtake Heineken in the second half of the year.”

Packaging Shifts

Before the COVID-19 pandemic shuttered on-premise establishments in mid-March, draft beer accounted for 8% of the industry’s volume. It declined to 0% for six weeks. During that time, cans consumed the volume draft left behind, while bottles’ share held mostly steady.

For the first 11 weeks of 2020, 60% of all beer sold was in cans, and 32% was in bottles. As bars and restaurants closed, cans’ share increased 7%, but bottles’ share only increased 1%.

Due to the slow reopening (and sometimes, re-closing) of the on-premise channel that started in Week 21, draft beer’s share has only increased from 0% to 2%. Draft beer’s share turned negative during the nationwide closures as kegs were returned from retailers, much of which is still unaccounted for.

“We don’t know yet how much beer was shipped and sold into retail and just never got sold,” Jones said. “It ended up being either destroyed or got turned into hand sanitizer or got converted into ethanol alcohol. Any number of things can happen to it, but it’s going to be a while before the industry can actually sit down and figure out exactly how much actual consumption did occur in 2020.”

At bars and restaurants, bottles accounted for about twice the volume of cans in the first 11 weeks of the year, before the pandemic forced those establishments to close. Then, cans overtook them for about seven weeks.

“When you see what’s going on in the on-premise … without draft, the market has radically changed,” Jones said. “Once COVID hit and everything shut down, the on-premise that remained open relied on the can package to drive their volumes.”

That shift to cans during the shutdown can be attributed to to-go orders, Fintech director of distributor accounts Jim Kallies said.

“They also got a taste of the pricing for can packages over bottles, so it will be interesting to see if this continues,” Kallies said, adding that many retailers Fintech has spoken with have cut their number of tap handles in half.

After bars and restaurants began reopening in Week 20, bottles overtook cans again, but by a slim margin and not at all close to the nearly doubled rate they had pre-COVID.

“If restaurants and bars and taverns continue to rely on beer to-go and food to-go, it’s going to be easier to throw a couple of cans of beer in there,” Jones said. “You don’t have to worry about breaking them and dropping them, and it’s just an easier package in a to-go world for the on-premise.”

Changing Segment Share

With the year broken into three defined segments (pre-COVID, shut down and reopening), only the FMB/hard seltzer segment has maintained share growth. The segment started the year with an 8.3% market share, which increased 3% over the shutdown weeks, and increased another 2.1% as states began reopening, to 13.4% of the category.

“This is a segment that you’ve seen a huge increase in share of total industry,” Jones said.

The only other segment to grow its share since reopening began was premium plus lights, up 0.5% to 37.6%.

Imported beer, which was threatened by the shutdown of beer production in Mexico — where 70% of imports to the U.S. come from, according to Jones — only saw a 0.3% decline in share.

Share of craft beer — the segment with the most exposure to the on-premise — declined 2.2% during the shutdown, but that decline slowed to 0.5% between Weeks 21 and 30. In the first 11 weeks of the year, craft accounted for 10.8% and has 8.1% share heading into the back half of 2020.

“Huge story here because craft, as we know, has a great long tail and it skewed heavy in draft,” Jones said. “They’ve lost, but that’s because they’re changing and they’re shifting, and they’re changing their business models and learning how to adapt without taprooms as such a primary driver to that business.”

Leading craft breweries saw moderate increases in share during the shutdown when consumers were stocking their fridges and relying on well-known brands. But their share declined as the on-premise began to reopen, and share gains were basically lost.

New Belgium gained half a percentage point of share during the shutdown, but lost 0.7% after reopening. Sierra Nevada gained 1% between Week 12 and Week 20, but lost 0.8% between Week 21 and Week 30. Molson Coors-owned Leinenkugel’s gained 2.8% during the shutdown, perhaps because of the return of popular summer seasonal Summer Shandy on February 28. Its share held steady at 4.3% after Week 20.

Craft’s long tail lost 5.4% during the shutdown weeks, but gained 4.1% after reopening, for a net decline of 1.4%, to 49.6% of all craft beer volume.

Hard Seltzer Share

Unlike craft beer, where the “all others” bucket contains about half the volume, the top 10 brands in the hard seltzer segment account for 98.4% of the market. And the undisputed segment leader, White Claw, has lost 6.5% of its share between Memorial Day (Week 21) and Week 30.

During the shutdown period, White Claw gained just 0.1% share, but Boston Beer’s Truly Hard Seltzer gained 6%, more than any other brand in the top 10. Truly’s share only increased 0.7% in the reopening period. Jones attributed the shift to White Claw’s out of stock issues.

“Things have changed now, maybe that’s because they’ve oustripped their supply and they’re seeing some shortages in key SKUs and that’s giving Truly some opportunity to grab some share,” Jones said.

Bud Light Seltzer, which launched in January, lost 6.3% in share during the shutdown and gained 1.4% after reopening, leaving it in third place with 9.6% share. Corona Hard Seltzer, Constellation Brands’ entrant that launched in the spring, accounts for 4.1% of hard seltzer share. It lost 0.6% share and its fourth place spot to Diageo’s Smirnoff Seltzer, which gained 2.5% in share, to 4.7%.

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