Beer Market Share Falls Below 50 Percent in 2018

Beer no longer holds a majority of the share of total alcohol servings in the U.S.

Beer Institute chief economist Michael Uhrich reported today during a State of the Industry presentation that beer’s share of total alcohol servings fell to 49 percent, down about 1 percent, as hard liquor (35.6 percent) and wine (15.4) both gained share.

Speaking to Brewbound, Uhrich said the share losses amounted to about 2.4 million barrels last year. And 2019 isn’t looking much better, as Uhrich projects beer volumes to decline as much as two percent due to largely unchanged macroeconomic conditions.

“2019 is shaping up to be a fairly rough year for beer,” Uhrich said.

Although consumer spending on beer has slowed over the last four years, spending increased 0.4 percent in 2018, growing 0.6 percent in on-premise channels and 0.2 percent in off-premise channels. The slowdown in spending isn’t likely to improve in 2019 as growth in disposable income is expected to remain “largely unchanged,” Uhrich said.

“We’ve had no growth in beer volume, but we’ve had growth in beer spending,” he said. “If this [trend] continues — and I’m expecting that it will — before long, we will see negative growth in terms of beer spending.”

Nevertheless, two segments showed strong growth as volumes of imports (driven by an increase of about 2 million barrels in Mexican imports) and FMBs (mainly hard seltzers) grew 3.6 percent and 9.5 percent, respectively.

Still, volumes of two of the industry’s largest segments — mainstream and economy brands — both declined more than 3 percent last year. And, after growing volume 1.6 percent in 2017, craft beer volumes (including brands owned by large beer companies) declined 0.5 percent in 2018. Uhrich attributed those declines to craft offerings being less sessionable.

Earlier this week, the Brewers Association, which represents the interests of small and independent beer companies, reported that craft volumes grew by 4 percent.

So why do the BI’s numbers differ from those reported by the BA? Uhrich said the two trade groups use different data inputs as the BI takes a “more expansive” view of craft, similar to market research firms IRI and Nielsen.

The news wasn’t all bad for craft brewers, though. Volumes sold through brewery taprooms and brewpubs increased 16.4 percent last year, which Uhrich said accounted for all of the craft growth last year. He added that the own-premise channel gained about 2 percent of the craft share last year.

“By my estimate, one in eight craft beers today in America is sold through some type of ‘own premise’ [establishment],” he said, adding that direct-to-consumer sales topped 3 million barrels in 2018, in-line with BA estimates.

Off-premise channels again gained share from on-premise channels, as traditional bars and taverns closed, Uhrich said, with the strongest off-premise retail sales growth last year occurring within the grocery channel as consumers sought out more affordable options.

Looking ahead to 2020 and beyond, more headwinds may be on the horizon for the beer industry as Uhrich believes there’s an increased risk for a recession in either 2020 or 2021. Although consumers historically have turned to economy and mainstream beer brands during a recession, beer typically loses about double the amount of share it gained in the years after a recession.

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