Craft Seasonals’ Growth Slower Than Overall Craft Segment, Causing Uncertainty for Some Portfolios

With the deadline to order packaging looming and the start of the COVID-19 pandemic sowing unrest in the craft beer industry, Jack’s Abby Craft Lagers scrapped plans for a new summer seasonal offering.

“We needed to finalize orders in the middle of March,” Sam Hendler, co-founder of the Framingham, Massachusetts-based craft brewery, said. “There was just so much uncertainty at that point. We felt it prudent to put a hold on it.”

Copper Legend, Jack’s Abby’s fall seasonal and a top seller for the company, couldn’t be risked on an unknown product preceding it in the seasonal lineup, Hendler explained.

“A significant portion of our annual production is tied up in that beer,” Hendler said of Copper Legend. “It just wasn’t worth the risk of guessing wrong on a new seasonal with what is a critical seasonal for us going into the fall.”

Copper Legend, an Oktoberfest-style lager, is Jack’s Abby’s best-selling seasonal beer, moving about 3,000 barrels annually, and accounting for 50% of the seasonal portfolio’s volume, Hendler said. In September and October, it is the company’s No. 1 draft offering.

Jack’s Abby, like many brewers, uses the same UPC code for its four seasonal offerings for ease of stocking at retailers and wholesalers. Retailers often sign on to sell a brewery’s entire seasonal lineup; when seasonal beers change, they receive the incoming product when they’ve sold through the preceding one. If one seasonal in the portfolio doesn’t sell quickly enough at retail, the piled up inventory can delay the release of the next seasonal beer.

The Boston Beer Company pioneered the practice of using the same UPC code, as detailed in founder Jim Koch’s autobiography, Quench Your Own Thirst.

“We needed to help bars manage transition between seasonals so there wouldn’t be a lot of stale beer in the market,” Koch wrote. “That meant helping bars keep track of seasonals using one UPC barcode rather than one for each individual seasonal beer.”

For Jack’s Abby, the combination of a lack of historic selling data for the new beer and the uncertainty of the on-premise channel made it a safer bet to cancel the release rather than run the risk of it not selling and creating a backlog at retail, preventing the punctual roll out of Copper Legend in August.

Instead, Jack’s Abby will release a small batch of Ray Catcher lemongrass lager, the delayed summer seasonal, in its taproom, and collect consumer feedback so it can move forward more confidently with a full seasonal release in 2021.

To keep its seasonal family in stock at retail, Jack’s Abby extended the run of Sunny Ridge, a Czech pilsner that was the brewery’s summer seasonal offering in 2019 but had moved to its spring seasonal slot.

Jack’s Abby isn’t alone in altering its seasonal plans. Once it became clear that the pandemic would affect draft sales, Portland, Maine-headquartered Shipyard Brewing revised its plan for its fall seasonal, Pumpkinhead pumpkin ale, to brew less and focus on packaged beer.

“Fortunately enough, we’ve been able to adjust our forecasts from distributors on Pumpkinhead before we’ve gotten into production,” Shipyard president Bruce Forsley told Brewbound. “That’ll end up being probably about a 35% decline in draft and about a 10% decline in package, for a net decline of about 20%.”

Forsley said Shipyard is expecting to have excess unsold inventory of its Summer Ale at the end of the season, as forecasts for that beer were made before the pandemic shuttered on-premise accounts.

Draft accounts for 40% of Pumpkinhead’s volume, and the loss of those sales will hurt.

“When we lose a chunk of it like we’re going to this year because of the restaurant closures, it’s going to be painful,” Forsley said.

It’s not yet known how open on-premise establishments will be in August, when the beer is slated to hit the market, but Shipyard will be ready to pivot if and when that channel returns.

“The good news is we can react pretty quickly, brewing more draft if necessary,” Forsley said. “We have to order our packaging goods in advance, but draft, we can react to it. So if the restaurants start opening up, we’ll be ready to go.”

The seasonal beer segment hasn’t received the same double-digit bump that skyrocketing off-premise sales have delivered for the overall craft beer segment, according to market research firm Nielsen.

“Craft seasonals in off-premise channels are growing at a slower pace than total craft,” Nielsen VP of beverage alcohol practice Danelle Kosmal said. “For the nine weeks ending 5/2/20 (this represents COVID weeks), total crafts were up 17% in off-premise channels, compared to craft seasonals, which were up 2.7%. This follows the trend of seasonals overall underperforming compared to the total craft segments.”

Before the pandemic began, craft seasonal dollar sales declined 9.1% in the 52 weeks ending February 29. Meanwhile, overall craft dollar sales declined 0.5% in that same period, according to Nielsen.

However, increased off-premise beer buying and the transition from spring to summer seasonals combined to paint a rosier picture for craft seasonals in Nielsen-tracked accounts. Craft seasonal dollar sales increased 2.8% in the 13 weeks ending May 16, and 10.2% in the four weeks ending May 16 compared to the same period in 2019, Nielsen reported.

Since then, off-premise dollar sales in retailers tracked by market research firm IRI show craft seasonals accelerating. The style’s year-to-date dollar sales have increased with each monthly IRI report. Craft seasonal year-to-date dollar sales had declined 6.3% for the week ending February 23, but increased in each of the next three reports: +1.2% for the week ending March 22, +1.8% for the week ending April 19 and 5.7% for the week ending May 17.

The COVID-19 pandemic’s full effect on the seasonal segment has yet to be seen. Prior to the nationwide shutdown of bars, restaurants and taprooms, craft seasonals had been growing at a stronger clip in the on-premise channel than in the off-premise channel, Kosmal said.

“Breweries that lean very heavily towards the on-premise to engage consumers with their seasonal offerings of course will face more challenges over the coming weeks and months with their summer seasonals,” Kosmal said. “Virtual tastings and events, along with curbside delivery and pick up, and strong social media engagement will help to combat that.”

Craft breweries with seasonal portfolio volumes that are more balanced or skew more toward the off-premise will be less affected than those whose lean toward the on-premise, Kosmal said. She added that strong craft seasonal performers since the pandemic began include Samuel Adams, Shiner and Great Lakes.

In 2019, the top-selling seasonal brand families were Molson Coors’ Leinenkugel’s Seasonal Shandy, Samuel Adams seasonal, Bell’s Oberon Ale, Sierra Nevada seasonal, and Blue Moon seasonal, according to Nielsen.

Dollar sales of Samuel Adams seasonal were up 27.9% in the four weeks ending May 17, 2020, compared to the same time last year, according to market research firm IRI. Dollar sales of Samuel Adams’ seasonal portfolio — which includes Cold Snap, Summer Ale, OctoberFest and Winter Lager — accelerated following the launch of Summer Ale in early March. Twelve-week dollar sales for the brand family had declined 1.1% for the period ending February 23 but have increased 13.2% for the 12 weeks ending March 22 (which included the 2020 launch of Summer Ale), increased 22.5% for the 12 weeks ending April 19, and increased 31.8% for the 12 weeks ending May 17, according to IRI.

Leinenkugel’s seasonal shandy family didn’t post dollar sales growth until the May IRI report. That brand family’s dollar sales declined 19.3% for the 12 weeks ending February 23, decreased 3.4% for the 12 weeks ending March 22 (which included the February 28 launch of Summer Shandy) and then increased 0.9% for the 12 weeks ending April 19 and 12.9% for the 12 weeks ending May 19, according to IRI.

Due to the pandemic, Comstock, Michigan-based Bells’s canceled its synchronized launch of summer seasonal Oberon Ale, which had been slated for March 23. Instead, the company told wholesalers and retailers to release the beer as soon as they received it.

For the four weeks ending April 19, dollar sales of Bell’s seasonal offerings had declined 6.8%, compared to the same time last year, according to IRI. But with more time in market for Oberon, dollar sales increased 22.2% for the four weeks ending May 17, the firm reported.

There are indications that seasonals skew toward the on-premise, which was shuttered for much of the spring due to the COVID-19 pandemic. In Nielsen CGA-tracked on-premise retailers, dollar sales of craft seasonals are about 45% of those of IPAs, but seasonals are only 30% of the size of IPA in the Nielsen-tracked off-premise retailers, Brewers Association chief economist Bart Watson told Brewbound.

Not all BA-defined breweries use the same UPC code for their seasonal families, so tracking seasonals can be difficult. While the summer season is beer’s best-selling time period, it’s not necessarily the case for summer seasonals. Seasonal beers’ largest share of sales come in the fall, Watson said.

“Most brewers are still going to want to produce a summer seasonal of some sort so they don’t lose their seasonal tap handle or shelf set allocated to that seasonal SKU,” he added.

With such uncertainty in the marketplace and seasonals on shaky ground, two larger beer companies have forged ahead with new summer seasonal offerings: Anheuser-Busch’s Stella Artois Solstice Lager and Craft Brew Alliance-owned (CBA) Cisco Brewers with its Summer Rays Golden Ale.

“We’ve been seeing the trends over the past couple of years — consumers going for more sessionable and refreshing beers,” Cisco senior director of marketing Marimé Riancho told Brewbound. “We wanted to be a proponent for refreshing beers that reflect that New England coastal summer lifestyle.”

Stella Artois, A-B’s Belgian import brand, launched in May its first-ever summer seasonal, Solstice Lager, a limited-edition offering. The brand first waded into the seasonal category last year with Midnight Lager, a limited edition beer for the holidays. For the 52 weeks ending April 19, Midnight Lager sold just over $2 million. That beer will return later in the fall for the 2020 holiday season, but it and Solstice Lager are the brand’s only seasonal offerings.

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