Halfway through 2022, off-premise scan data of the craft beer segment is “somewhere in between expected and alarming,” Brewers Association (BA) chief economist Bart Watson wrote in an update about craft’s performance ahead of his mid-year review of craft production, scheduled for July 28.
Off-premise dollar sales of craft beer declined -7.7% year-to-date through June 12 at multi-outlet food and convenience stores tracked by market research firm IRI compared to the same period last year. Craft’s decline outpaces the overall beer segment, which has declined -2.2% in dollar sales for the same period. Only hard seltzer (-8%) and assorted (-20.1%) have recorded larger declines than craft beer.
However, off-premise scan data can only paint a partial picture for craft, which skews more on-premise heavy than the broader beer category. At-the-brewery sales, a lifeline for craft breweries during the pandemic, are completely excluded from scan data, which Watson described as “‘underwhelming’ or even ‘concerning’ depending on your point of view” for the first six months of the year.
“The more pessimistic take would note that even if channel shift explains the weak overall volume and dollar trends, at best, there clearly is very little momentum behind craft beer at chain retail at the moment, continuing a string of several years where this is the case,” he wrote. “At worst, scan volume was basically at 2019 levels (0.1% higher) in a first half where distributed draught was pretty clearly still weaker than it was pre-pandemic. At-the-brewery sales might make up some of that gap, but regardless, chain packaged independent craft hasn’t grown over the past three years.”
Off-premise dollar sales of BA-defined craft beer for Week 26 (ending July 3) were less than those in the same weeks in 2021, 2020 and 2019. While bar and restaurant closures and restrictions shifted consumer spending to the off-premise in 2020 and 2021, a mostly reopened on-premise has 2022 weekly sales settling into peaks and valleys similar to those of 2019. In 2022, BA-defined craft dollar sales have also dipped below 2019 levels during Week 21 (ending May 29) and Week 24 (ending June 19), according to IRI data Watson shared.
Craft’s share of total beer off-premise dollar sales declined -0.65%, to 10.74% year-to-date through June 12 in IRI-tracked channels. Only domestic premium (-0.8%) recorded a larger share loss in the same period.
Within IRI’s top 30 craft brands, only 10 are from BA-defined craft breweries (smaller than 6 million barrels annually and no more than 25% owned by a beverage-alcohol producer that is not also a craft brewery):
- No. 3 Sierra Nevada Hazy Little Thing;
- No. 4 Sierra Nevada Pale Ale;
- No. 5. Shiner Bock;
- No. 9 Firestone Walker 805;
- No. 11 Samuel Adams seasonal;
- No. 13 Samuel Adams Boston Lager;
- No. 19 Cigar City Jai Alai IPA;
- No. 22 Sierra Nevada Torpedo Extra IPA;
- No. 25 Sierra Nevada Big Little Thing Imperial IPA;
- No. 26 Samuel Adams variety pack.
Of those, only four have gained share within the craft segment:
- Sierra Nevada Hazy Little Thing (+0.29%, to 2.32%);
- Samuel Adams seasonal (+0.01%, to 1.41%);
- Cigar City Jai Alai (+0.04%, to 0.89%);
- Sierra Nevada Big Little Thing (+0.28%, to 0.59%).
Firestone Walker 805 (1.49% share) and Samuel Adams variety pack (0.59%) were flat. Sierra Nevada Pale Ale (-0.12%, to 1.97%), Shiner Bock (-0.03%, to 1.95%), Samuel Adams Boston Lager (-0.09%, to 1.1%) and Sierra Nevada Torpedo (-0.14%, to 0.68%) all lost share.
“The real open question is how much improving draught and onsite trends might be making up for package weakness (and how much non-measured distributed package might look different),” Watson wrote.
Seasonally adjusted sales at food service and drinking places during the first half of 2022 showed improvement compared to the first half of 2021, although January ’22 sales started from a lower baseline than where July ’22 sales left off, according to U.S. Census Bureau monthly retail trade data Watson analyzed and shared. Food service and drinking place sales increased +15% for H1 2022 compared to last year (+24% before controlling for inflation).
Restaurant reservations booked through OpenTable have been mostly flat to 2019 levels this year, and far outpaced the first half of 2021, when they reached 2019 in only three weeks in May and June.
Interpreting available on-premise data for craft performance is an inexact science as “draught sales won’t track perfectly with either of these numbers due to changes in restaurant composition and consumer buying patterns,” Watson wrote.
“In closing, craft has benefited in the past year from the return of on-premise,” he continued. “In that context, weak scan data in the first half falls somewhere in between a continuation of good news and a sign of future weakness. Draught certainly grew in the first half versus a year ago, but we won’t know how much until we have better data. And while I’m confident at-the-brewery sales are still growing, I’m less confident they are growing fast enough for everyone to be growing, particularly given continued brewery count growth.
Craft brewers are invited to participate in Watson’s mid-year production survey to help provide a fuller picture of the segment’s performance thus far in the year.