The craft segment’s slide into the red in off-premise scan data against tough year-ago comps may not be a bad thing for craft brewers, according to Brewers Association (BA) chief economist Bart Watson.
“Taking a step back and remembering what scan covers and where it fits into the overall picture, I think it quickly becomes clear that we shouldn’t read these numbers in a vacuum, with little to no context as to why they might be that way,” Watson wrote in a member’s only article this week. “It’s quite plausible that for many brewers, a weak year-over-year May in scan for craft is actually a really good sign.”
Watson explained that the unique circumstances for sales in 2020 — a closed on-premise channel and a shift in purchasing to off-premise retailers — makes year-over-year comparisons difficult to put into context. Although BA-defined craft dollar sales for this year tracked by market research firm IRI have consistently trended downward since March compared to the same rolling four-week periods in 2020, the same periods trend upwards compared to 2019, when IRI sales were more “normal.” BA craft scans were up as much as 25% in April 2021 compared to April 2019, and up more than 15% in May 2021 compared to May 2019.
To get a more accurate picture of how craft is performing, Watson pointed to dollar share figures within scan data, which have remained much more stable compared to 2020. Independent craft is earning nearly identical shares of IRI dollar sales this year, suggesting there isn’t much change in the demand for craft, Watson wrote.
Watson also emphasized the importance of on-premise sales to craft, which over-indexes in the on-premise channel compared to most other segments. As on-premise establishments re-open, consumers are shifting their spending away from off-premise retailers and back to bars and restaurants. As such, negative year-over-year scan trends for craft may in fact indicate those sales are returning to the on-premise channel, which could actually be positive for craft, according to Watson.
A growing number of consumers are eager to return to bars and restaurants, according to the latest research firm CGA, which found that 38% of consumers surveyed plan to go out for a drink in the next two weeks (June 4-7), up 13% from the previous month. As that number continues to rise, Watson said to watch how sales numbers for craft change in-turn.