Beverage Industry’s State Of American Beer Report

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The Atlantic magazine had a good round-up of the State of American Beer, based on a report from the trade publication Beverage Industry. Beverage Industry’s March issue had a series of articles on different segments, including Craft brewers’ sales growth continues, Domestic beer case sales decline, Mexican beers dominate imported beer growth and Hard cider draws in consumers from outside the beer category. In addition, at the same time they released a separate report, the 2014 U.S. Beer Category Report.

You could spend the time to read through all of them (and I’d encourage you to do so) but to get an overview of the reports, The Atlantic’s coverage provides the highlights (and even does a better job with the charts). For example, here’s the top craft brands from 2013.

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And here’s case sales by brand in a piechart.

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And this last one, the percentage change in case sales, is amazing because is shows just how fast Lagunitas is growing, though Stone’s doing pretty well on the growth front, too.

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Top 50 Breweries For 2013

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The Brewers Association has also just announced the top 50 breweries in the U.S. based on sales, by volume, for 2013. This includes all breweries, regardless of size or other parameters. Here is the new list:
ba-top-50-breweries-2013

Here is this year’s press release.

Not too much movement again this year, except for a few small shufflings, and no changes at all in the top ten. Only three new breweries made the list; Ballast Point, Narragansett (which had been on the year before in 2011) and Left Hand Brewing.

For the past six years, I’ve also posted an annotated list, showing the changes in each brewery’s rank from year to year. This year, the BA thoughtfully has already done that, saving me a lot of time and math. If you want to see the previous annotated lists for comparison, here is 2012, 2011, 2010, 2009, 2008, 2007 and 2006.

ABI To Buy Back Korea’s OB

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In a strange turn of events, Anheuser-Busch InBev (ABI) has agreed to buy back the South Korean Oriental Brewery (OB) for $5.8 billion, about three times the $1.8 billion that they sold it for in 2008. OB is South Korea’s largest brewery with approximately 60% of the market.

From the press release:

KKR and Affinity Equity Partners (“Affinity”) today announced that an agreement has been entered into whereby AB InBev will reacquire Oriental Brewery (“OB”), the leading brewer in South Korea, from KKR and Affinity for 5.8 billion USD.

This agreement returns OB to the AB InBev portfolio, after AB InBev sold the company in July 2009, following the combination of InBev and Anheuser-Busch, in support of the company’s deleveraging target. AB InBev will reacquire OB earlier than July 2014, as it was originally entitled to under the 2009 transaction.

Since KKR and Affinity entered into partnership with OB in 2009, OB has grown to become the largest brewer in South Korea, driven by strong growth of the Cass brand. OB and AB InBev also remained long-term partners through OB’s exclusive license to distribute select AB InBev brands in South Korea such as Budweiser, Corona and Hoegaarden.

Carlos Brito, Chief Executive Officer of AB InBev, said, “We are excited to invest in South Korea and to be working with the Oriental Brewery team again. OB will strengthen our position in the fast-growing Asia Pacific region and will become a significant contributor to our Asia Pacific Zone.

Bloomberg Businessweek also has more on the story.

Nine Beers In Free Fall

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If you saw my post from this morning about Beer Sales Dropping. The original story mentioned nine brands that have, according to Beer Marketer’s Insights, “declined by more than 25% over the past five years.” 24/7 Wall St. listed the Nine Beers Americans No Longer Drink. They are:

  • 9. Labatt Blue — Sales loss (2007-2012): 28.3%
  • 8. Budweiser — Sales loss (2007-2012): 28.8%
  • 7. Heineken Premium Light — Sales loss (2007-2012): 36.7%
  • 6. Milwaukee’s Best Light — Sales loss (2007-2012): 39.7%
  • 5. Old Milwaukee — Sales loss (2007-2012): 54.0%
  • 4. Miller Genuine Draft — Sales loss (2007-2012): 56.4%
  • 3. Milwaukee’s Best Premium — Sales loss (2007-2012): 58.5%
  • 2. Budweiser Select — Sales loss (2007-2012): 61.5%
  • 1. Michelob Light — Sales loss (2007-2012): 69.6%

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Ouch.

Beer Sales Dropping

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While I don’t normally get my news from AOL (although to be fair it was on the NASDAQ website), this short video “Presented by: The Aol. On Network,” has some interesting factoids contained within it, and begins with the standard line. “Beer is not selling the way it used to. U.S. sales of the beverage declined in four of the past five years. Between 2007 and 2012, beer sales fell by 2.3%, or more than 4.8 million barrels.” More interesting was that sales of the top nine brands have “declined by more than 25% over the past five years,” and that’s according to Beer Marketer’s Insights.

The Big Four’s Regional Breakdowns Compared

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Today’s infographic is yet another pair of slides from a Powerpoint presentation on the Beer Industry by Christian Adeler and Jon Bjornstad in 2011. The first shows that worldwide, the beer industry is dominated by four global conglomerates, ABI, Heineken, SABMiller and Carlsberg.

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The second slide shows the market share for each of the four companies in the major regions of the world.

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U.S. Beer Consumption Increases; Rising Demand for Higher-Priced Offerings

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According to a new report by the Beverage Information Group, “the beer industry saw gains in both dollar and volume in 2012 after a three-year downturn.” Their conclusion was that “well-marketed new products and slight improvements in the unemployment rate contributed to the beer industry’s overall growth.” Here’s the group’s press release with additional findings:

Super-premium, Craft, Imported and Flavored Malt Beverages out-performed the industry overall, as there is increasing demand for higher-priced beer. Super-premium and Premium increased 1.6%, and Craft increased 13.7% to reach 185.2 million 2.25-gallon cases. This is the largest increase for Craft beer in more than a decade.

Imported beer also increased for a third year, even though major brands such as Bass, Beck’s and Red Stripe were removed from the category because they are now domestically brewed. This 1% increase is largely due to consumer demand for a wider selection of products.

Innovations in the Light Beer category, such as the launch of Bud Light Platinum, were not enough to turn things around for the category. Light beer declined for the fourth year in a row. Popular and Malt Liquor also lost volume.

Although the beer industry saw positive changes in 2012, challenges still remain. According to the Beer Handbook, the beer industry will still see increases in the higher-priced categories such as Super-premium, Craft and Imported beer. It remains to be seen if these gains will help the beer industry maintain 2012’s positive direction.

“Today’s consumer no longer sees beer as their only drink option,” says Adam Rogers, senior research analyst, Beverage Information Group, Norwalk, Conn. “Spirits and wine marketers have been savvy in targeting consumers with flavored vodkas, rums and whiskies, as well as sweeter wines which have continued to take share away from the beer industry.”

For a mere $790, you can buy a copy of their annual Beer Handbook.

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Reuters Hinting At Possible ABI/SABMiller Merger

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Rumors and discussions of a possible merger between Anheuser-Busch InBev and SABMiller are nothing new, it’s been talked about by the business press off and on for a number of years now. But it had been quiet lately, most likely because of the deal by ABI to buy Grupo Modelo. But yesterday Reuters fanned the flames of merger once again, in a piece of speculation: Bets on for mega brewer merger as virgin ground shrinks.

With the acknowledged bullet points that “Asia main area with assets left to buy,” and that the ABI and SABMiller would combine the “growth markets” of Africa and Latin America,” they put the price for ABI to buy SABMiller at at least $100 billion. According to Reuters:

Now, with AB InBev planning to return to a comfortable pre-deal debt-to-EBITDA ratio of below two next year, industry experts are betting on a combination of its Budweiser and Stella Artois brands with SABMiller’s Peroni and Grolsch. Some expect a deal within a year.

“It’s more a question of when, not if,” said a banker who has worked on drinks deals. Others, also speaking on condition of anonymity, cited AB InBev’s record as a serial acquirer and the need for a target to match or surpass its $52 billion purchase of Anheuser Busch in 2008.

Asia, they claim, is the next frontier, though many of the bigger breweries are state-owned (which means expensive). Interestingly, while they admit that SABMiller would also be expensive the Reuters’ business analysts believe “a tie-up would be straightforward with antitrust issues relatively easy to fix and immediate benefits of scale.” Other analysts, however, do see potential problems with the merger from “regulators is in the United States and China” because of the market overlap in those countries.

Price, not surprisingly, is the elephant in the room, and the estimated $100 billion ticket price would make such a deal the “fifth-largest corporate acquisition ever.” Reuters places the current value of SABMiller at $84.5 billion and believes it’s in ABI’s best interest “to move fast before SABMiller gets more expensive.” But would SABMiller be interested in selling? “SABMiller’s two top shareholders — cigarette maker Altria Group and the Santo Domingo family of Colombia, which own 27 percent and 14 percent, respectively — ‘may think this is as good as it gets,’ said another banker.” So that suggests that the people behind the curtain might be amiable to the buyout. A couple of years ago, writing about this very possibility of a merger, I recalled that when the AB/InBev merger went down, someone joked that eventually there would be just one international beer company and it would just be called “Beer.” I remember laughing at the time, but truth really is stranger than fiction. So who knows? It should be an interesting year.

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ABI Beer Brands …

plus …

SABMiller-portfolio
SABMiller Beer Brands …

Equals = ?