Memorial Day bev-alc shopping “broadly met or exceeded distributor expectations,” according to Goldman Sachs analyst Bonnie Herzog in the investment management firm’s latest Beverage Bytes survey of distributors and retailers.
Total beverage sales (non-alcoholic and bev-alc) increased +1.7% versus Memorial Day 2023, thanks to a +1.1% increase in traffic. Nearly two-thirds of survey respondents (64%) said bev-alc sales were the same or stronger than 2023, while nearly half (49%) said they were stronger than expected. Thirty-six percent said trends were weaker than expected.
Constellation Brands led beer brands in volume growth, with 47% of respondents saying Constellations’ Mexican import brands were up “significantly,” led by Modelo Especial and Pacifico. Gallo’s High Noon Sun Sips was the second most popular offering, “up significantly” according to 23% of respondents, followed by Molson Coors’ brands (15%) and Anheuser-Busch InBev (A-B) brands (15%).
Molson Coors’ volume increased at least somewhat versus Memorial Day 2023 according to 41% of distributors, suggesting the company’s gains from the conservative-led A-B and Bud Light boycott last year are sustaining. However, the company’s growth is not nearly to the extreme levels it was in 2023, when 89% of survey respondents said Molson Coors volume was up year-over-year (YoY).
Bud Light is “still very soft” according to survey respondents, who continue to have mixed expectations for the domestic light lager brand’s return to growth. Some were expecting a return into the black during Memorial Day. While that “did not happen … the declines moderated meaningfully,” with some respondents noting a shift from -30% to -40% declines in 2023, to now -5% declines, Herzog wrote. Still, those declines are on top of much easier comps as the brand started to lap the initial boycott in April.
More than half of surveyed distributors (56%) said Bud Light volumes increased YoY during the Memorial Day holiday, up from the 9% who said so in Goldman Sachs 2023 survey during the same period. Two-fifths of respondents (41%) said volumes were “somewhat up,” and 15% said volumes were “up significantly.” Still, 11% said volumes declined YoY (down from 64% in the 2023 survey).
Nearly half of respondents (46%) said they’ve seen no improvement for Bud Light, while slightly more than half (54%) said trends have improved. Of those who said there has been improvement, 24% called the improvement “slight.” Meanwhile, sibling brand Michelob Ultra continues to grow, with 79% of respondents noting improved trends for Michelob Ultra versus Memorial Day 2023.
The majority of respondents still believe A-B can regain some of the share it lost, agreeing on an average of +2 points of share, though some believe A-B can regain up to +5 share points. A majority of respondents (64%) believe share gains will happen in 2024 – 18% by this summer, 13% by this fall and 36% by the end of this year. Still, nearly one-fifth (18%) don’t believe A-B will ever regain its lost share.
Boston Beer Company’s beer brands “lagged the broader group,” according to Herzog. Nearly one-quarter (23%) said volumes increased YoY, an improvement from the 9% who said so in the 2023 survey. Just under half of respondents (46%) said volumes were about the same, up from 33% in 2023, while 31% said volumes declined, down from 58% in 2023.
By brand, Modelo Especial had the largest YoY gains, improving volume versus Memorial Day 2023 according to 81% of respondents, followed by Pacifico (53%), Boston Beer’s Twisted Tea (39%) and Molson Coors’ Coors Banquet (32%). Bud Light was the “weakest” brand, followed by Boston Beer’s Truly Hard Seltzer, with 29% of distributors seeing YoY volume gains for the brand.
100% of Retailers Giving More Space to Molson Coors During Resets
A majority of retailers (75%) have completed spring shelf/cooler resets, with 31% completing them in April, 19% in March and May and the remaining completing resets as early as January. Of the one-quarter of surveyed retailers who have not completed resets yet this year, 19% plan to complete them in June and 6% plan to do so in July.
Nearly two-thirds of retailer respondents (73%) said they do not plan to make any changes to the amount of space allocated for bev-alc in resets, down from the 90% who said so in Goldman Sachs’ Q1 2024 survey. As a result, bev-alc’s shelf space on a weighted average store basis is expected to increase +0.1%.
Constellation is expected to be the greatest gainer in resets, with all surveyed retailers expecting the company’s brands to add incremental space, up from 90% in the Q1 survey. Constellation is expected to increase its shelf space by +6.5% on a weighted average store space.
The next largest gainer is Molson Coors, with 45% of respondents expecting to give more space to the company’s brands, down from 80% in the Q1 survey. The company is expected to increase shelf space +2.8% on a weighted average store space, down from 3.1% in Q1.
Other company’s expected to gain space include Heineken (+0.2%, up from -0.1% in the Q1 survey) and Monster Brewing (+0.3%, down from +0.4% in Q1). Craft is also expected to see a boost (+1.5%, down from +2%). Meanwhile, A-B is expected to see a -1.8% decline in shelf space (up from -1.2% in the Q1 survey), along with Boston Beer (-0.1%, down from +0.6%) and Mark Anthony Brands (-0.5%, down from +0.3%).
Inventory Levels Elevated Ahead of Summer Selling Season
One-quarter of distributors surveyed said total beer inventory levels “were up significantly” relative to 2023, while more than half said inventory levels were “up slightly.” Some distributors said suppliers “have highlighted capacity constraints over the summer” and are “encouraging distributors to build up inventory in advance.” Others said oversupply is a function of out of stocks from 2023, with suppliers trying to improve service levels in 2024.
A-B recorded the largest increase in inventory levels, with 74% of respondents noting an increase versus the same period in 2023, 41% reporting a significant increase, and some noting levels as much as 10% higher than 2023. Some distributors said the elevated levels are “to support its share recovery as demand picks up,” while others “attributed it to a build-up ahead of an anticipated strike,” Herzog wrote. A-B reached an agreement with the International Brotherhood of Teamsters in late February, agreeing to a new five-year contract hours before union members’ previous contract with the company was set to expire, avoiding the strike.
Nearly two-thirds of surveyed distributors (65%) said Molson Coors’ inventory levels were elevated versus 2023, 32% noting a significant increase. Some said the increase was due to a build up during the three-month-long union strike at Molson Coors’ facility in Fort Worth, Texas, which ended in late May, and levels are expected to normalize.
More than half of distributors said levels were also elevated for Constellation Brands, 13% noting a significant increase. One respondent shared concerns of potential inventory issues heading into the summer, “especially for Modelo Chelada.”