Brewers Registering Fewer New Product Labels

Since the COVID-19 pandemic began, new product innovation at breweries has declined by nearly half, according to alcoholic beverage compliance firm Sovos ShipCompliant.

New product registration from breweries declined 43.4% in April and May in Sovos ShipCompliant’s database, compared to the same months in 2019, according to a press release.

Without taprooms open to offer small batches of new beers and solicit customer feedback, some brewers seem to have paused innovation.

“Craft beer innovation takes place in the taproom,” Sovos ShipCompliant vice president and general manager Larry Cormier said in the release. “With limited retail shelf space, many newer brewers focus on taproom sales rather than traditional distribution. So when tasting rooms closed, the newest and smallest brewers took the biggest hit.”

In comparison to beer’s sizable decline, Sovos ShipCompliant saw just a 0.3% year-over-year decline in new product registration for its total beer, wine and spirits business in April and May, and a 2% decline when compared to February and March.

“The closure of tasting rooms beginning in mid-March left many industry producers struggling to make ends meet,” Cormier said. “Breweries, in particular, appear to have rallied around their core products rather than investing in seasonal or limited releases, as a way to cut costs.”

In the time since the pandemic forced Americans to stay home in mid-March, beer sales at off-premise retailers have skyrocketed. In the two weeks leading up to and including Memorial Day weekend, off-premise beer sales topped $2 billion, according to market research firm Nielsen, which tracks scan data from chain retailers.

Dollar sales of craft beer have increased 16.5% in the week ending June 6, driven by established brands such as New Belgium (+27.4%) and Sierra Nevada (+28.7%). Craft breweries that have found success at off-premise retail during the pandemic often have national reach and chain presence.

In many cases, decades-old brands are seeing double-digit growth that has eluded them over the past few years. Dollar sales of Sierra Nevada Pale Ale, the Chico, California-based brewery’s 40-year-old flagship, have increased 19.7% in the four weeks ending May 17, according to market research firm IRI. And that trend is accelerating — dollar sales of Sierra Nevada Pale Ale increased 14.6% over the 12 weeks that ended May 17, a period that began in the last week of February, before pandemic-related shutdowns. By comparison, the beer’s 52-week dollar sales are down 1.4% for the period.

Other craft breweries have delayed new product launches. Framingham, Massachusetts-based Jack’s Abby Craft Lagers postponed rolling out a planned summer seasonal to the brewery’s distribution footprint. A small batch will be brewed for Jack’s Abby’s taproom, which reopened for outdoor, on-premise service on Wednesday, June 17. Cincinnati, Ohio-based Christian Moerlein Brewing has delayed the launch of new offerings from its Little Kings brand until 2021.

However, one beer segment that has not seen slowed innovation is hard seltzer, according to Sovos ShipCompliant. Registration of hard seltzers have declined 15.7% year-over-year, a much gentler decline than the 43% drop in the beer category.

Hard seltzer’s share of beer category registrations is on the rise. Along with premixed wine coolers, hard seltzers have accounted for 60% of new federal registrations in the malt-based beverage category in 2020. In 2019, these products accounted for 40% of new registrations.

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