Cans Grew in On-Premise Retailers in 2019, while the ‘Long Tail’ Increased Draft Share

Beer depletions (sales from wholesalers to retailers) in 2019 were mostly flat compared to 2018, although there were a few spikes around summer holidays, National Beer Wholesalers Association chief economist Lester Jones shared during a webinar hosted by Fintech, a data, analytics and invoice processing platform for wholesalers.

“As the year unfolds in front of you, you get a feeling of just how important things like holiday shifts are — I call it holiday spread — or even weather impacts are on the industry,” Jones said.

Changes to the calendar can affect consumer purchasing behavior as they plan to host or attend holiday celebrations. Although some holidays are fixed to a certain day of the week, such as Memorial Day and Labor Day, others are fixed to a date, such as New Year’s Day falling on January 1. Those fluctuations can affect whether sales spike or carry over into multiple weekends.

For example, in 2018, Independence Day was on a Wednesday, which resulted in a one-week sales peak. However, the holiday fell on a Thursday in 2019, elevating beer sales on the weekend before the holiday as shoppers prepared for Independence Day and the weekend after as celebrations continued.

During the presentation, Jones also discussed shifts in package types, changes to category share and craft beer’s draft gains on-premise.

Cans Taking Share from Draft On-Premise

Cans now make up more of the packaging mix compared to bottles in total beer data. From 2018 to 2019, cans increased share two points to 64% of all off-premise depletions, while bottles’ share declined two points to 36%.

On-premise depletions remained roughly flat for bottles at 30%. Cans, however, gained six points to 42% of on-premise depletions. Draft depletions decreased 5 points to 28%.

“What took the brunt of the change in the dynamic of the on-premise was the draft,” Jones said. “The cans aren’t necessarily cannibalizing the bottles in the on-premise; they’re really going after the draft market.”

Meanwhile, when data from Brewers Association-defined craft breweries is isolated, the packaging mix changes.

Citing data from market research firm IRI, BA chief economist Bart Watson shared in a members only post last week that bottles accounted for 53% of volume sold in 2019, while cans accounted for 47% of the volume.

For 2020, Watson projected that craft can sales will overtake craft bottle sales. In 2019, BA-defined craft breweries of all sizes posted double-digit declines in bottled beer production.

Hard Seltzer Share is Up; Premium Plus Light is Down

Most product categories held share between 2018 and 2019 in both off- and on-premise retailers. However, there were two exceptions: premium plus light and hard seltzer/FMB segments. In on-premise retailers, premium plus light products declined 4.1 points to 40.3% of depletions, while hard seltzer/FMB offerings gained 2.4 points to 4.7%.

In off-premise retailers, premium plus light products declined 1.8 points to 38.1%, while hard seltzer/FMB offerings gained 3.2 points to 7.7%.

Craft beer depletions remained mostly flat, accounting for 7.8% of off-premise depletions and 15.5% of on-premise depletions.

Nevertheless, when category volume share is distilled down to can packages, craft beer gains are slightly higher. Craft cans gained 1.1 points to 4.2% of off-premise depletions and gained 1.3 points to 5.8% of on-premise depletions.

“Can packages for craft are doing incredibly well,” Jones said.

In the on-premise draft space, craft was the only category to gain significant share, increasing 4.9 points to 35.2%. Those gains came at the expense of premium plus lights, which declined 3.9 points to 40.2%. Premium plus brands also declined 0.8 points to 6%, while imports decreased 0.1 points to 14.5%.

Despite draft launches from Boston Beer Company’s Truly Hard Seltzer and Diageo’s Smirnoff Spiked Sparkling Raspberry Rosé, the hard seltzer/FMB category’s draft share remained flat at 0.5%.

‘Long Tail’ Gaining Share on Draft

Of the largest 15 brands in Fintech’s on-premise keg share database, only Bud Light saw a significant share change, declining 2.9 points to 16.6%.

The other 14 brands either gained or lost fewer than 1 point, but the “all others” group — what Jones called “the long tail” of beer brands — gained 6 points and accounted for 30% of on-premise keg volume. Of those brands, Golden Road, Sierra Nevada, Karbach, Deep Ellum, Elysian, Wicked Weed, Funky Buddha, Firestone Walker, Brooklyn, Kona, Stone and Bold Rock led the pack.

Many of these brands belong to large beer manufacturers such as Anheuser-Busch InBev (Golden Road, Karbach, Elysian, Wicked Weed, Kona) or Constellation Brands (Funky Buddha).

“That long tail is still growing in the on-premise in draft, still going out there, grabbing those draft handles from some of the larger players,” Jones said. He added that the gains show “consumer interest is still there, at least between 2018 and 2019, for experimenting in the draft market.”

For more from Jones, watch his presentation from the 2019 Brewbound Live business conference below.

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