When nearly everyone is in decline, success has to be measured by whomever has the smallest losses. And those winners within beverage-alcohol are the companies with the most focused portfolios, according to Bump Williams Consulting’s (BWC) latest monthly report.
This summer was yet another unexpectedly soft season for beer sales, with category dollar sales declining 4.1% year-over-year (YoY) and volume down 5.6% in the 18 weeks ending September 20, BWC reported, citing NIQ off-premise data. Those losses marked an acceleration in declines compared to year-to-date (YTD) trends (dollar sales -4.6%, volume -2.9%).
Craft’s own trends worsened over the summer, with dollar sales declining 8.4% and volume down 6.4% YoY, compared to down 5.9% and 7.8% YTD, respectively. Now the segment is on pace for its “largest volume and value sales declines of the last three years,” BWC founder Bump Williams wrote.
Note, some of those declines are from there being fewer players in the game compared to a couple years ago. Since 2023, the number of craft vendors in NIQ-tracked channels has declined 10%, to 2,403, while sub-brands have declined 13%, to 15,992 and SKUs have fallen 12.5%, to 20,044.
Some of that contraction is from some companies exiting the craft business. However, the trend is also a sign that remaining vendors are refocusing their portfolios and resources, and many of those players are being rewarded for those efforts, despite collective declines, according to BWC, analyzing trends among top vendors.
The top 100 craft vendors account for 83.5% of total craft volume YTD. That share is up 0.6 share points, despite a collective 7.3% decline in volume YTD. All other craft vendors’ volume has fallen 11.1%.
Note, non-alcoholic (NA) volume was excluded from the figures, separated as its own segment. Additionally, the top 100 includes Anheuser-Busch InBev (A-B), Heineken, Molson Coors, Monster and U.S. Beverages, “even though craft does not make up the majority of their total sales.
Across the six companies above, volume has fallen 8.1% YTD, more than 2X the percentage recorded by the 32 top 100 vendors who operate exclusively in craft. Twenty-three of the top 100 craft vendors have been able to find volume growth, with collective case sales increasing 7.7% YTD.
Trends across the top 100 support that companies with focus are being rewarded – whether that’s focus in style, number of brands and SKUs or how much innovation they’re adding to shelves.
Thirty of the top 100 craft vendors sell six or fewer bev-alc styles. Among those 30, volume has fallen 2.3% YTD, well below declines for those that sell seven to 10 styles (37 vendors, volume -7.9%) and 11 or more styles (33, volume -7.7%). Additionally, 19 of the top 100 operate exclusively in craft, and they recorded even smaller losses (-1.3%), according to BWC.
Nearly half of total craft volume YTD (49%) is from IPAs. For the majority of the top 100 craft vendors (37), two-thirds (66%) or more of their own volume can be credited to IPA sales. Those vendors have a collective volume loss of 5.5%. Meanwhile, vendors with 35-65% of their volume from IPAs (33) recorded a 6.8% volume loss, and those with 35% or less (30), fell 9.5%.
Additionally, among the aforementioned 23 vendors who have found volume growth YTD, IPAs accounted for 66% of total volume and 88% of the vendors’ volume growth. Thirty-eight percent of that volume growth came from high ABV brands (8% ABV or higher).
“This is not an endorsement to evolve one’s craft portfolio to be exclusive to IPA, but it does help to underscore the importance of prioritization in the portfolio,” Williams wrote.
Similarly, top vendors with fewer sub-brands have recorded smaller volume losses. Thirty-five top 100 craft vendors sell 17 or fewer craft sub-brands, and have recorded a collective 3.4% decline in volume YTD. The largest volume declines were recorded by the 31 vendors who have 30 or more sub-brands (volume -7.7%), followed by the 34 who have between 18 and 29 (-7%).
The top 100 vendors with 25 or fewer total craft SKUs (31 vendors) recorded the smallest collective volume decline (-2.2%), followed by those with 26-49 SKUs (34 vendors, volume -5.9%) and those with 50 or more (29, volume -7.8%).
Twenty-seven top 100 vendors have one or no new items in market (13 one item, 14 no items) and recorded a -2.8% decline in volume YTD, well-below declines for those with two to three new items (33 vendors, volume -5.9%) and those with four or more new items (40 vendors, volume -7.7%).
BWC did not dive into correlations between focused distribution and volume trends. However, a similar pattern would likely emerge, as only four of the previously highlighted 23 top vendors with volume growth have a category weighted distribution (CWD) percentage above 5% – suggesting the majority of growing vendors have small distribution footprints.
“As shelf space continues to contract across the beer category in off-premise channels, it likely will increasingly become more challenging for craft vendors to maintain as much depth in their sub-brands and SKUs going forward,” Williams wrote. “Thus, having a good sense for which ones offer the greatest incrementality and consumer reach to win new consumer[s] is essential.
“The barriers to jumping into a new segment or category remain relatively low, so it’s understandable why one would want to compete in areas where growth is occurring,” he continued. “However, success is not guaranteed by simply expanding one’s brand or SKU portfolio into segments that are growing, or by entering new categories altogether.”