In-store displays “are more effective at selling beer” compared to “shrinking” shelf space, Kaumil Gajrawala, analyst for financial services firm Jefferies, wrote in a late June analysis.
“Shelf space gains are incremental to a brand’s growth given increased visibility and inventory – but displays provide more lift,” Gajrawala wrote. “Beer displays helped generate +10% more dollars for the industry over the last year.”
Gajrawala broke down the incremental dollar sales growth from displays by segment, citing 52-week, off-premise NIQ scan data through June 1:
- +32% non-alcoholic beer;
- +21% cider;
- +17% flavored malt beverages (FMBs);
- +16% hard seltzer;
- +12% imports;
- +8% domestic beer.
Meanwhile, retailers have cut beer display space by around 37% since March 2022, “driven by declines in display activity’s ability to drive incremental [dollar sales]” with domestic mainstream brands being “the biggest drag,” Gajrawala added.
Anheuser-Busch InBev’s (A-B) display losses weren’t offset by Molson Coors, he noted. A-B’s percentage of total beer displays has declined from 32%, to 24%, while Molson Coors’ space has remained flat at 17%.
Domestic-made core beer holds more than 50% share of beer category store displays. The segment’s losses have largely benefitted FMBs and ready to drink cocktails (RTDs), due to “higher [dollar sales] efficiency and strong momentum,” Gajrawala wrote. Additionally, nine of the top 10 display space gainers this year are outside of the domestic beer segment.
The top 10 display gainers per 52-week NIQ data, cited by Jefferies, are (in order):
- Twisted Tea (Boston Beer);
- Modelo (Constellation Brands);
- Athletic Brewing;
- Simply Spiked (Molson Coors);
- Cantaritos (A-B);
- Pacifico (Constellation Brands);
- Nasty Beast (Monster Brewing);
- AriZona Hard Tea;
- Coors;
- Happy Thursday (Molson Coors).
Gajrawala wrapped up pointing to Constellation and Boston Beer as the companies “best positioned to gain display space going forward.”
“Higher efficiency categories (imports/FMBs/non-alcoholic) have become the focus; portfolios aligned with these sub-categories should gain at an accelerating rate,” he wrote.
“Constellation and Boston Beer’s portfolios are most aligned with the subcategories gaining share of display, setting them up favorably into the summer and long term,” he continued. “While [A-B and Molson Coors] still hold the No. 1 [and] 2 share, we expect share losses to continue given less favorable portfolio mix.”
Jefferies lists Constellation Brands (STZ) and Boston Beer Company (SAM) stock as “buys,” while Molson Coors (TAP) is a “hold.”