Much like in any industry, growth is where you find it. And in many cases, trends across an entire category can overshadow individual pockets of opportunity. That’s what’s happening in the U.S. beer market: A couple of key sub-groups are killing it while the overall category is posting lackluster gains.
Craft is blazing a frothy trail
In terms of sales, you’d be hard-pressed to find a bigger stand-out in the beer category than craft. For starters, higher-end priced products such as craft are driving most of the growth across the overall beer market, but the total beer category growth has been paltry. In fact, volume for the whole category grew just 0.6% for the 52-week period ending June 20, 2015. Comparatively, however, volume growth of craft beer for the same period was 10.2%—on par with the growth of Mexican imports.
Beer Category Trends
|Sales Share||Sub-Category||Value % Change||Volume % Change||Avg. Price Indexed to Total Category|
|11.9||7.6||Craft (including domestic specialty beer)||+13.8||+10.2||156|
|5.8||4.9||DM Super Premium||+1.2||-0.1||117|
*Sub-category of Imports. FMB—Flavored malt beverages; TTL—Total
Source: Nielsen Scantrack, 52 weeks ending June 20, 2015
The word “craft” inspires consumers—particularly younger legal drinking age males—to purchase beer. According to a recent Nielsen study of craft beverage alcohol conducted online by Harris Poll, 35% of adults 21 and older say they’re more interested in trying an adult beverage labeled craft. Among men 21-24, that figure jumps to 46%.
But craft can often mean different things to different consumers. Overall, most people who buy alcohol are most likely to associate the term with three main traits as it relates to alcoholic beverages:
- Coming from a small, independent company (56% of people surveyed)
- Part of a small batch (50%)
- Handcrafted (43%)
When we look at gender perspectives about craft, men and women both associate it with small independent companies at equally high levels. Women, however, are more likely to associate it with products that are handcrafted (47% vs 41%), while men are more likely to associate the term with small batch production (54% vs 45%).
Age differences in “what craft means” were even more distinct: handcrafted, artisanal, higher-priced and quality were relatively more important to younger consumers (21-34), while small batch production, made by a small independent company and produced locally were ranked at a higher level by older consumers (55-64) compared to younger ones.
Local Leads the Way
When it comes to appeal, local is another trend that’s creating quite a head of foam with beer drinkers. And to find out just how important local is, Nielsen conducted an English-language survey by Harris Poll in February to get right down to the hops and the rye of the matter.
The results show that while local is important across all alcohol drinking consumer groups (beer, wine and spirits), it’s most important to beer fans. And when we look at different age groups of beer drinkers, local is most important to the youngest group of beer aficionados (those 21-34). In fact, 53% of beer drinkers in this demo say local is very or somewhat important. If we look at just craft beer drinkers, the preference for local is even higher.
Consumers’ desire to search for and buy local is growing. Among all alcoholic beverage categories, local has grown in importance the most among beer drinkers. In fact, 22% of beer drinkers said they think the importance of being made locally has grown over the last couple of years, compared with 14% of wine drinkers and only 5% of spirit drinkers.
So where is craft beer growing?
In addition to growing in popularity in certain parts of the country, craft beer is finding new acclaim in a widening array of venues as well beyond the expected places like restaurants, particularly among younger beer drinkers. For example, research from Nielsen Scarborough has found that Millennial craft beer drinkers are purchasing more beer at nightclubs, bars and stadiums.
And much like consumer behavior in general, no two people from any given group have exactly the same consumption habits. Across the country, to no one’s surprise, more Millennial craft beer drinkers are men than women, but the split is far from consistent. For example, Nielsen Scarborough data shows that 55% of the Millennial craft beer drinkers in Denver are male, while the percentage in Grand Rapids, Mich., is much higher at 73%. In Spokane, Wash., where craft beer consumption has grown the most among adults 21 and older since 2010 (182%), 81% of Millennial craft beer drinkers are men.
At the end of June 2015, craft beer accounted for 11.9% of the total dollar volume of the beer category in the U.S. It’s worth noting, however, that craft’s market share varies significantly by channel. For example, it has a much larger share in the grocery channel (20.1%) than the convenience (4.6%) and drug (8.7%) store channels, largely because grocery stores have significantly more floor space available, which allows for greater assortment and options for consumers. That said, however, the convenience channel holds the title for being the leader for overall beer sales, and craft is making a strong run there, growing at a faster pace in the convenience channel (+21.4%) than in grocery stores (+13.7%) for the 52 weeks ending June 20, 2015.
As is the case with many categories, the beer realm is notably fragmented with choice and diversity. Flavored malt beverages are holding their own, and cider continues to explode amid the growing mix, but the craft and Mexican import categories in particular are steadily gulping down larger shares of the overall market as the year progresses.
But no matter how frothy the fragmentation gets, one thing is clear: Americans sure do enjoy a cold one (or two).
The insights from this article were derived from the following sources:
- The sales data was derived from Nielsen Scantrack for 52 weeks ending June 20, 2015.
- Nielsen’s craft beverage alcohol study was based on an English-language survey conducted by Harris Poll. The survey was conducted online May 15-19, 2015, among more than 2,000 U.S. adults 21+.
- Nielsen’s “Importance of Local” study was based on an English-language online survey conducted Feb. 12-17, 2015, among more than 2,000 U.S. adults 21.The Nielsen Scarborough USA+ study was conducted between August 2013 and September 2014. More than 197,000 U.S. adults 21+ were surveyed using a combination of telephone/online/mail surveys administered in both English and Spanish.