Category Health, Beer Delivery and Labor Issues Discussed at Beer Institute Meeting

The on-again, off-again effort to improve category health through an industry-wide campaign for beer is on once again.

During the Beer Institute’s annual meeting, held Tuesday in St. Louis, president and CEO Jim McGreevy said the industry’s three top trade associations — the BI, the Brewers Association (BA) and the National Beer Wholesalers Association (NBWA) — have agreed to launch a pro-beer marketing campaign this summer.

Category health was just one of several themes to develop during the two-day meeting, as multiple speakers touched on the growth opportunity in home delivery of food and booze, as well as the growing number of jobs open in the manufacturing and hospitality industries.

Here are three takeaways from this week’s BI meeting:

Beer Category Health Campaign Set for Summer

The nearly four-year effort to put together a pro-beer campaign has finally moved beyond the “navel gazing” stage to action, McGreevy explained during an interview for a future episode of the Brewbound Podcast.

“Today, we were able to say in a clear voice that the three trade associations were going to work on finding solutions,” he said.

Specifics were sparse, and McGreevy admitted “a lot of details” were still being worked out. Nevertheless, he called the forthcoming marketing campaign “a seminal moment in beer.”

“We’re not afraid to fight with each other in beer,” he said, “but we’re also growing the muscle of working together more and more, and I think this is an example of that.”

Indeed, the future of the so-called “Beer Growth Initiative,” a year-long effort announced during the NBWA’s annual convention in September 2018, was jeopardized following Anheuser-Busch InBev’s Super Bowl ads for Bud Light, which denigrated the use of corn syrup in competitor offerings Coors Light and Miller Lite, made by MillerCoors.

Those ads and a subsequent lawsuit by MillerCoors have left the fragile alliance among the beer industry’s largest producers on the verge of crumbling. Even though the trade groups are pushing forward with a pro-beer marketing campaign this summer, MillerCoors and Heineken, along with the BI, have each said they won’t be providing funding for the effort, while A-B and Constellation Brands have both pledged contribute financially.

During an opening address Tuesday, A-B North American CEO Michel Doukeris said the world’s largest beer manufacturer “remains committed to working alongside other brewers and our wholesaler partners to reach consumers with a positive industry message that elevates beer.”

Although the BI isn’t contributing money to the effort, the trade group is devoting resources to developing the plan and its execution, McGreevy said. He added that the three trade groups have been discussing plans with advertising agencies, although the final product is “still in development.”

“We have some very good ideas about ways to promote beer to a broad audience of consumers who we hope will buy more beer,” McGreevy said.

The Future is in Beer Delivery

Nearly two thirds of all restaurant traffic comes from delivery, carryout or drive-thrus, according to Hudson Riehle, the National Restaurant Association’s senior vice president of research and knowledge group.

Those “off-premise” dining occasions — including takeout, delivery, drive-thru and curbside orders, as well as food trucks — are expected to grow over the next decade, as more consumers, especially millennials, want the restaurant experience to come to them, Riehle said. A big part of those orders is going to be alcoholic beverages, due to the high margins, he added.

“It is the new frontier for restaurants,” he said.

One way restaurants anticipate growing sales of beer to-go, is through so-called “suggestive selling,” with artificial intelligence suggesting alcohol and food pairings, Riehle said. He called on beer companies and wholesalers to work with third-party delivery services and restaurants to develop those suggestions and “direct that dollar.”

“It will be a very big deal for the beer industry going forward,” he said.

Another emerging business model for restaurants will be “meal plans,” which Riehle described as a more technologically advanced version of those used in college dormitories.

“Think of the Netflix model,” he explained. “You would agree to a subscription plan whereby you could have a minimum amount of guaranteed food and beverage services, and then you can add additional add-ons to that going forward. That takes the pain of payment from every single occasion.”

One company that has jumped into the beer delivery business is Pizza Hut, which began testing its service in late 2017.

Marianne Radley, Pizza Hut chief brand officer, said the chain restaurant plans to make beer delivery a bigger slice of its business moving forward. Currently, 500 of Pizza Hut’s more than 6,500 stores offer beer delivery. Radley’s goal is to offer delivery in 1,000 stores by September 2019 and 60 percent of its system by the end of 2020.

“We are fully built for scale,” she said, noting the company already has the existing infrastructure, with beer licenses and a delivery fleet with more than 7,000 drivers.

According to Radley, offering beer delivery with pizza meets a growing need for consumers who are increasingly staying at home rather than going out. In fact, Radley said 21 percent of consumers have confessed to replacing carryout with delivery. That number is even higher — 30 percent — among 18- to 34-year-olds.

And a growing number of consumers — 41 percent — are using aggregator apps, such as Grubhub and DoorDash, for delivery orders. Radley added that 63 percent of 18- to 29-year-olds said they used a mobile application to place a delivery order.

Although Radley declined to share the threshold for launching a national advertising campaign, she expects Pizza Hut’s beer delivery sales to grow once the campaign does launch.

“As soon as we get to that threshold, we’ll have a much bigger voice and platform and more eyes on it and more awareness of beer delivery,” she said.

Millions of Job Openings in Manufacturing and Hospitality Industries

Although there are millions of jobs open in the manufacturing and hospitality industries, the U.S. is struggling to fill them.

During a keynote address Monday, Tara Sinclair, an associate professor of economics and international affairs at George Washington University, explained that there is less than one person per job vacancy in the U.S. One reason why is the country’s aging population. Sinclair said 10,000 people are turning 65 years old every day, thinning out the workforce.

According to Riehle of the National Restaurant Association, there are now more than 1 million unfilled jobs within the hospitality industry. And Jay Timmons, president and CEO of the National Association of Manufacturers, said there are half a million unfilled manufacturing jobs.

Over the next decade, Timmons said the manufacturing industry would need to fill 4.6 million jobs. If it fails to recruit more workers, 2.6 million of those jobs will go unfilled, he added.

“That dispels the narrative that manufacturing jobs are a thing of the past,” he said, adding that the notion that robots and artificial intelligence are replacing human workers is a “false narrative.”

“We’re always going to need human ingenuity,” he said, adding that the type of work is evolving. “That’s true. That’s the real narrative.

“We still need creators and innovators to make it all possible.”

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