Retailers will have an increased “intense scrutiny” of new product launches and bev-alc shelf sets in 2024, according to Bump Williams in his monthly report for Bump Williams Consulting (BWC).
The past few years of constant innovation and fast trends, along with the threat of consumer price sensitivity and shifts in shelf reset periods, are all contributing to what Williams expects will be a significant shift in 2024.
“Retailers are going to change the way of the bev-alc world in 2024,” Williams wrote.
For suppliers to best tackle changes, Williams suggested looking beyond national trends and even total bev-alc, to overall beverage and divisional/regional trends.
Total beverage dollar sales increased +5.1% year-over-year (YoY) in 2023, according to NIQ off-premise data (total U.S. xAOC + convenience) for the 52 weeks ending December 30.
“This sounds like good news as consumption ticked up in total, prices went up and consumer purchase behavior changed the mix of what went in the market basket,” Williams wrote. “But we know that not all beverages are created equal in growth and share.”
Beer – including flavored malt beverage (FMB), hard cider and hard seltzer – held its position as the No. 1 beverage by dollar sales, with 23.9% share of total beverage dollar sales. Wine was No. 4 (7.2% share), after soft drinks (20.1%) and energy drinks (10.3%). Spirits were No. 6 (6.1% share), behind water (7%).
“A lot of this has to do with distribution/availability in the off-premise world, but it also has to do with consumer loyalty, purchase frequency and volume/shopping occasion,” Williams wrote.
Both beer and wine lost a “significant amount of share” in 2023, according to Williams – -0.6 and -0.3 share points, respectively – the largest share losses within total beverage. Spirits were flat, as “consumers shifted from buying 1.75 L bottles to smaller packages of RTD [ready-to-drink] spirits.”
With beer’s share losses, “big ACV retailers” are replacing beer shelf space and displays with “other faster-selling beverage categories,” such as soft drinks (+0.7 share points) and energy drinks (+0.6 share points), Williams warned.
“That’s NOT good for growing the business and hence the importance of enhanced service levels to remain in-stock without displays to serve as in-store inventory,” Williams wrote.
Non-Alc, FMBs and Malt Liquor Only Segments to Grow Across All Divisions
As beer looks to maintain shelf space, zooming in on trends within the regions a brand operates is vital, according to Williams.
“Regional/divisional and local is where the power of the data is,” Williams wrote. “Just like the weather, you should be looking to your local forecasters for information on your climate/conditions to make the right business decisions and walk out the door prepared for what is ahead.”
NIQ divides the U.S. into nine divisions: East North Central, East South Central, Middle Atlantic, Mountain, New England, Pacific, South Atlantic, West North Central and West South Central.
Total beer off-premise dollar sales increased +0.1% in 2023, but trends range on a divisional level, from -2% in the Pacific, to +3.2% in West South Central. The category was flat or positive in five of the nine divisions: East South Central (+1.5%), Middle Atlantic (+0.6%), Mountain (flat), South Atlantic (+0.4%) and West South Central. All other regions were down at least -1.2%.
When including solely alcoholic beers, the category grew or maintained dollar sales in only three divisions: East South Central (+1.2%), Middle Atlantic (flat) and West South Central (+2.9%). Across all divisions, alcoholic beer dollar sales declined -0.4% YoY.
Non-alcoholic (NA) beer increased dollar sales +37.2% across all divisions in 2023, and recorded double-digits gains across all divisions individually, ranging from +30.9% in the West North Central division, to +50.3% in New England.
FMBs (+14.5% in total U.S.) and malt liquor (+4.6%) were the only other segments to record growth across all nine divisions. FMB growth ranged from +6% in the West North Central division, to +22.2% in the Pacific, with the majority of divisions recording double-digit growth. Malt liquor growth ranged from +1.6% in East North Central to +22.8% in New England. The majority of divisions recorded single-digit growth for the segment.
Super premium (-2.2% total U.S.) and hard seltzer (-21.2%) recorded declines across all nine divisions. Super premium declines ranged from -5% in the Pacific, to -0.6% in the Middle Atlantic. Hard seltzer declines were harsher, declining double-digits across all divisions, from -25.8% in the West North Central division, to -17.5% in the Middle Atlantic.
Craft dollar sales declined -1.6% YoY across the total U.S., driven by declines in the New England (-4.9%), Pacific (-3.8%), and Mountain divisions (-3.5%). East South Central (+2%), West North Central (+1.6%) and West South Central (+0.7%) recorded craft dollar sales gains.
RTDs ‘Most Dynamic’ Business, But There Isn’t ‘Room for Everyone’
Williams also analyzed trends within spirits-based RTDs, which continue to record double-digit dollar sales gains. Spirits-based RTDs increased dollar sales +42.5% in total NIQ-tracked off-premise channels in 2023. The segment also increased its share of total spirits to 9.3%, an increase of +2.3 share points YoY.
The segment increased dollar sales by double-digits across all nine divisions:
- Pacific +31.1% (claiming 9.1% share of total spirits dollar sales);
- Mountain +42.2% (8.4% share);
- West South Central +37% (6.8% share);
- West North Central +56% (8.6% share);
- East North Central +45.9% (10% share):
- East South Central +25.1% (5.9% share);
- New England +54.6% (17.3% share);
- Middle Atlantic +38.8% (8% share);
- South Atlantic +52.3% (9.8% share).
Beer-based RTDs did not fare as well, with dollar sales declining -7% across total U.S., and between -9.9% and -3.3% across all nine divisions.
“The spirits RTD space is the most dynamic in our business right now, but that doesn’t mean there is room for everyone in this highly contested and extremely well-funded slice of the shelf,” Williams wrote. “While there may be space and share available at a local/regional level, the competition at store level for that consumer is against the largest names in the bev-alc/spirits and CPG industries is at an absolute fierce level.”