On-premise retailers spent an estimated $400 million more on beer in 2023 than 2022, suggesting a positive turn and future opportunities for the category, according to National Beer Wholesalers Association (NBWA) chief economist Lester Jones.
Jones dove into 2023 retailer purchasing trends in a webinar last week, co-hosted by Fintech VP of distributor strategy Eric Kiser. The two analyzed purchasing data from 225,000 retailers – 115,000 on-premise, 110,000 off-premise – 80,000 of which were independent.
Combining Fintech data and industry volume estimates, Jones reported that on-premise purchases accounted for 13.9% of total retailer beer purchases in 2023, up from 13.4% in 2022. While the channel is relatively small compared to the off-premise, the on-premise actually spent more incremental dollars last year. Off-premise retailers increased beer purchases by +$100 million in 2023, accounting for 86.1% of total retailer spend in the category (down from 86.6% in 2022).
“This is opportunity, this whole on-premise market,” Jones said. “Yeah, on-premise is only 15% [of the market]. ‘I got all this work to do in the other 85% and how could I spend any time here?’ Opportunity knocks.”
That opportunity includes more than 28,000 tap handles across 9,000 locations that have been vacant for a year or more, according to Jones, citing Drafline data. Many of those tap handles may never return, as the on-premise market has drastically changed since the COVID-19 pandemic. However, there are 10,000 tap handles across 5,000 locations that have been vacant between one week to one month, and they could be easier for beer to recapture.
“I firmly believe that we have a lot of opportunity in the beer industry that sits in the on-premise, that sits at the draft beer market, that sits with the uniqueness and the occasion of beer,” Jones said.
“That 28,000, it may be gone, but that’s too big a number not to focus on it,” Kiser added.
On- and off-premise retailers combined spent an estimated $67.3 billion on beer in 2023, a +1% increase versus 2022, according to Jones. That increase is despite a -3.5% decrease in volume on a 12-month moving average, thanks to a +4.5% increase in price. Beer kept up with or exceeded inflation, particularly in the off-premise, throughout 2023. Meanwhile, wine and spirits were below inflation in the off-premise, giving beer an advantage in the eyes of retailers, according to Jones, citing data from the U.S. Bureau of Labor Statistics’ Consumer Price Index.
“If you are an alcohol beverage retailer and you are selling beer, that beer on your shelf is keeping up with the cost of everything that you have to pay for,” Jones said. “Your insurance, the lights and utilities, the labor, everything that goes into running your business, it’s been more expensive. That’s what inflation is about.
“And beer as a product on a shelf has actually been pretty good at keeping up with inflation, whereas wine, spirits, not so much,” he continued. “We’re giving up volume, but at least the product that’s on the shelf is keeping up with inflation.”
“This has gotta to be communicated to retailers and not just the chains headquarters, but the independent retailers,” Kiser added. “There’s a story there.”
Retailers Spent $1.568 Billion Less on A-B Products in 2023
Beer needs every advantage it can get after 2023, which “didn’t play out the same way 2022 played out,” Jones said, blaming much of beer’s unusual patterns to the conservative-led boycott of Anheuser-Busch InBev’s (A-B) Bud Light, which was sparked exactly a year ago.
“Pretty much for the first [week], up to Week 17, which is right before the boycott, everything looked pretty good,” Jones said. “The industry was playing out the same way it had before, in terms of its relative week-over-week intensity of [retailer] purchases.
“Obviously Week 17 was a shot – that was where the boycott started – and it pulled the industry down,” he continued. “That’s the impact of the boycott on the industry as a whole, not just how it impacted the Anheuser-Busch product lines.”
A-B’s share of retailer spend declined -2.6 share points in 2023, from 36.6%, to 34%, according to Jones. That is equivalent to the loss of $1.568 billion dollars year-over-year (YoY), from $24.444 billion spent by retailers on A-B products in 2022, to $22.876 billion in 2023.
Within the off-premise, A-B’s share of retailer spend declined -2.1 share points, to 33% (-$1.183 billion). In the on-premise, share declined -3.1 share points, to 35% (-$137 million).
“Those are real dollars that are no longer coming into the distributorship,” Jones said. “That is going to make you mad.”
Bud Light started 2023 as the No. 1 brand by retailer dollar spend, and ended the year at No. 2, below sister brand Michelob Ultra, and just above Constellation Brands’ Modelo Especial. Retailers spent an estimated $7.586 billion on the light lager brand, a decline of $1.815 billion versus 2022.
In the off-premise, retailers spent $6.445 billion on Bud Light (-$1.453 billion), below Modelo ($6.581 billion, +$1.158 billion YoY). In the on-premise, retailers spent $1.139 billion on the brand (-$355 million YoY), below both Michelob Ultra ($1.520 billion, +$114 million YoY) and Modelo ($1.152 billion, +$189 million YoY).
Michelob, Bud Light and Modelo Especial ended 2023 nearly neck-and-neck in share of both off-premise retailer spend and total retail spend, with all three brands holding between 11% and 11.4% share of off-premise retailer purchases, and between 11% and 11.7% of total retailer spend. However, in the on-premise, Michelob Ultra came out as a dominant No. 1, with 16.3% of total on-premise retailer spend (+0.5 share points YoY). Michelob Ultra’s on-premise gains also made it the No. 1 brand by overall retailer spend.
The No. 2 brand in the on-premise was Molson Coors’ Miller Lite (12.4% share, +1.6 share points YoY), followed by Bud Light (12.2%, -4.5 share points), Molson Coors’ Coors Light (10.5%, +1 share point), and Modelo (8.7% share, +2.4 share points).
After A-B, retailers spent the most on Molson Coors brands, accounting for 22.1% of total retailer purchase dollars (+1.9 share points YoY). Retailers purchased $12.836 billion of Molson Coors products in 2023 (+$1.378 billion YoY), $10.839 billion of which was for off-premise accounts (+$944 million YoY), and $2.368 billion for the on-premise (+$298 million).
Constellation Brands was No. 3, but seemed to benefit more from A-B’s losses, increasing share of retailer spend +2 share points, to 16.2%. Retailers purchased a total of $10.9 billion of Constellation products in 2023 (+$1.45 billion YoY), with off-premise retailers purchasing $10.723 billion worth of product (+$1.465 billion) and on-premise retailers purchasing $1.296 billion worth (+$199 billion).
Kiser predicted that Constellation will continue to grow its share of the on-premise in 2024, with the company hampered by “keg issues” in 2023.
The next three largest suppliers by share of retailer dollar spend all recorded declines in share: Heineken (4.7% share, -0.1 share points YoY); Mark Anthony Brands (4.1%, -0.5 share points); and Boston Beer Company (4%, -0.4 share points).
Mark Anthony and Boston Beer also recorded significant declines in purchases from off-premise retailers, a trend likely due to continued declines of hard seltzer, Jones said. Off-premise retailers spent $3.478 billion on Mark Anthony brands (-$283 million YoY) and $2.724 billion on Boston Beer brands (-$343 million). Still, both suppliers passed Heineken for off-premise spend, despite the company having the fourth largest total retailer spend.
“It’s hard for me, in the off-premise, to see Mark Anthony much bigger than Heineken and bigger than Boston Beer,” Kiser said. “Now, on-premise, different story, there’s a lot of momentum for Heineken. But if you would have told me that five, six years ago … I didn’t know you then Lester, but I would have told you ‘You’re crazy.’”
The remaining four suppliers within the top 10 by 2023 retailer purchases were Yuengling (1.8% share, $1.177 billion total); Kirin-Lion (1.6% share, $1.077 billion total); Diageo (1.4% share, $908 million total); and Pabst (1.1% share, $740 million total).
The top 10 suppliers accounted for more than 90% of total retailer purchases in 2023. All other suppliers had 9.2% share of dollars spent (-0.7 share points YoY), with retailers purchasing $6.190 billion of product (-$455 million YoY).
The top 10 brands purchased by retailers accounted for more than 72.6% of total spend, 72.1% of off-premise retailer purchases and 74.6% of on-premise purchases.
Retailers spent the following on the top 10 brands:
- Michelob Ultra, $7.877 billion (+$257 million YoY);
- Bud Light, $7.586 billion (-$1.815 billion);
- Modelo Especial, $7.391 billion (+$1.418 billion);
- Miller Lite, $5.771 billion (+$769 million);
- Coors Light, $5.507 billion (+$706 million);
- Constellation Brands’ Corona Extra, $4.618 billion (+$18 million);
- A-B’s Budweiser, $3.086 billion (-$61 million);
- Mark Anthony’s White Claw, $2.895 billion (-$575 million);
- A-B’s Busch Light, $2.334 billion (+$208 million);
- Heineken, $1.675 billion (-$34 million).
All other brands accounted for 27.6% of total retailer dollars (-0.8 share points YoY), with $18.542 billion spent on brands beyond the top 10 (-$393 million YoY). Off-premise retailers purchased $16.175 billion worth of product beyond the top 10 (-$510 million YoY), while on-premise retailers increased spend +$109 million, to $2.372 billion.