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Friday, January 25, 2013

The Hastening Death of Grampa's Beer

Mintel, a food and drinks market research firm based in London, released a remarkable report this month on consumption patterns of American beer drinkers.  It's the same company that offered this eye-opener in a report from two years ago:
Only a modest percentage of beer drinkers say they prefer domestic craft or microbrew beers, but an impressive 59% say they like to try them, and 51% would try more craft or microbrew beers if they knew more about them.
This factoid exposes the key mental mistake most of us hold: Americans regularly drink both craft beer (using the term advisedly) and regular tin-can lagers.  Think of it this way.  There are actually three groups: those who drink only craft beer, those who drink only tin-can lagers, and those who drink both.  It's not a binary choice.

With that I bring you Mintel's newest findings, again eye-opening:
  • Craft beer accounts for $12 billion of a $78 billion dollar beer market (15.4%), and craft's growth should rise 50% in the next five years.
  • A quarter of American beer drinkers drank more craft beer in 2012 than the year before.
  • Craft has an even larger share of the draft market, at 22%.
  • Over a third (36%) of Americans regularly drink craft beer, and over half of millennials (under 35) do.  
  • Interestingly, only half of craft beer drinkers are interested in locally-brewed beer, and just a quarter in drinking beer where it was brewed.  (Mintel puts those in positive terms, but they seem far lower than I expected, so I'm flipping the emphasis.) 
  • And from my perspective, one of the most important findings is this one: “Despite the variety of beer releases created by craft breweries, craft beers are not yet everyday beer choices for most drinkers due to a lack of understanding about their taste profiles.  An additional barrier is lack of knowledge. Craft brewers need to focus on education through tastings and classes that inform consumers about the differentiation in flavor between craft beer and other alcoholic drinks.”
Imagine reading this if your business model depended on selling tin-can lagers ("legacy beers"?).  The young generation doesn't like your beer, and the older folks are sadly not immortal.  It's a structural trend a funny new Super Bowl ad is not likely to change.  (Though you notice that beer ads all feature young people now, not weird old farts arguing in taverns?  Guess why.)   Finally, one of the main reasons people don't drink your competitor's beer is because they don't understand it--which means things are only likely to get worse faster.  You're stuck with old drinkers who regard your product as the familiar, safe tipple.

For some years, I've been predicting that the seemingly inviolable hegemony of tin-can lagers is not so.  But it feels like predictions about global temperatures from the 1990s.  All the new data suggests that things are happening way faster than anyone realized.  If I were to make a prediction for the next five years, it would be that the landscape of what we consider "mass-market" beer is going to go through the first tectonic shift we've seen since the 19th century.  That may be premature--it could happen after 2020, say--but I would be shocked if it didn't happen by then.

8 comments:

Pete Dunlop said...

Wait, you're saying the main drag on the growth of the craft beer market is a lack of understanding/education...and you assume that obstacle is going away. What makes you think that? I'm curious to know how you think it's going to happen.

Anonymous said...

This is exactly why I rarely trust foreign sources for domestic statistics. According to the Brewer's Association, which is, after all, paid to shill for the brewing industry, craft beer accounted for 8.7 billion dollars, not 12 billion. Secondly, again according to the Brewer's Association, the overall beer market was worth 95.7 billion dollars, not 78 billion.

Based on these errors, I wouldn't trust much of what these people said

Jack R. said...

@Pete D: 'you assume that obstacle is going away ... curious to know how you think it's going to happen'

For what it is worth: in my zipcode, main stream media is being used to reach / edify the pre-millennials. Eg, I notice
- articles regarding breweries' expansion and increasing annual production and a weekly [Friday] craft beer column in the local newspaper
- a weekly craft-beer AM radio program [I have never listen]
- a weekly half hour television program, 'Colorado Brews', on the primary PBS channel [Rocky Mountain PBS] from April 2013. [I will set my DVR].

Craft brewery, brewpub, taphouse, and brewers' guild outreach will facilitates growth. [to state the obvious]

Jeff Alworth said...

Pete, I'm writing the Beer Bible. What's going to make it happen? Come ON, man!

Anon, the BA's "craft brewery" stats are not gospel--they reflect the numbers of the BA's membership. The actual figures are higher--considerably higher if you include, as I do, brands like Blue Moon.

I can't vouch for either number, but the BA is definitely low-balling it. Do you have a link for that $95.7 mil figure? If so, I'll update the post.

Pete Dunlop said...

I'm looking forward to the Beer Bible...and I'm sure it will be a nice product. But, then, I'm a convert. The potential problem with your book (any book, in fact) as an educational vehicle is the people who need the most education don't read. You'll have to turn it into an app to get their attention. Perhaps it could be turned into some sort of beer trivia game. That might work.

As for the Brewers Association, anything and everything they say deserves to be seriously evaluated for bias and accuracy. They have an agenda.

Jeff Alworth said...

God, don't I know it, Pete. The first thing I asked Workman (the publisher) was whether they planned to make an app. It was clear they weren't even sure what an app was. They said I could make an app if I wanted. I intend to loop back around and ask them to partner with me on that very thing. The Beer Bible would actually be an incredibly handy app, methinks. (I'm not biased, either, so you can trust this assessment.)

But I take heart more generally in the idea that one of the main barriers to adoption is information. We're in the info business, so that means we're maybe not as irrelevant as we usually think.

Anonymous said...

You can find the rounded off number for that $95.7 billion (not million) here:
http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/beer-sales

I agree that the Brewers Assocation figures can be questionable. However, as Pete said "They have an agenda."

And that agenda is to promote and help build the brewing industry. It is not to minimize its successes or belittle its growth.

And Mintel? I wonder what their agenda is?

Jack R. said...

On another front ...
the Colorado State Legislature is considered a 'Drink with Dad' law which would allow children older than 18 yoa to drink alcoholic beverages at bars, taverns, and restaurants [and tasting rooms by logical extension] if accompanied by a parent.

Apparently, such a law is instituted in Wisc.

If passed, this should upping Dad's beer choice.

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